Privatisation

For many years it has been held that privatising industries and companies is A Good Thing. The IMF and World Bank have insisted that countries requiring their assistance accept privatisation as a condition of receiving it. The EU has adopted the same policy. Since it seems obvious to me that everything the private sector touches turns to dust I have wondered why we have accepted this nonsense, and continue to do so in face of the absurdity of the argument; and in face of experience of actual outcomes. It makes no sense to me.

I found an interesting article on this here: www.blacksacademy.net/content/3324.html. You can download the full thing once, if you have a mind.

So from this we see that there are a number of claimed benefits from privatisation: they are based on assumptions we should think about.

1. Publicly owned industries are inefficient
2. Private companes are efficient
3. Efficiency is measured by, and indeed defined by, profit
4. Public spending is a bad thing
5. Privatisation reduces public spending
6. Privatisation results in increased investment
7. Extendng share ownership is desirable
8. Those who own shares are more likely to vote for the party which vigorously pursues privatisation
9. Widenng share ownership will foster enterprise.

Those are the assumptions which underpinned the mass privatisations undertaken by the Thatcher Government in this country: and the mindset persists. Both Tony Blair when in office, and David Cameron now, have accepted these notions and they have both at different times bewailed the resistance of public servants to these ideas. David Cameron characterised them as "enemies of enterprise" in a recent speech.

The article I have linked outlines some of the criticisms of these ideas. Those criticisms are not new: for example the folly of privatising a natural monopoly was widely discussed at the time. Made no difference, and so far as I can see this is because the neoliberals are faith-based. They present as pragmatic, but they are not amenable to argument nor to evidence. And by now the arguments are not even discussed: such is the power of the ideological hegemony, powered by the fact that the media is generally big-business based and so benefits from the outcomes this "wisdom" leads to.

So let us look at these assumptions I will use one example to discuss this: buses.

The bus services in most of the UK were run by local authorities until 1985 when they were "deregulated". In line with the assumptions above, it was argued that the introduction of competition would improve services and reduce fares. There is no real expanation of how and why this will happen: it is magic. But in the real world it does not happen and it is astonishing that anyone could have believed that it would. In talking to americans it is plain that their public transport is private: and it is also non-existent in many places. And so it has proved here. Unprofitable routes are not going to be serviced by a private company, for obvious reasons.

Of course that was recognised, and so there was provision for some routes to be subsidised by the Local authority where those were seen to be socially useful, but not commercially viable. What does that actually mean? I contend that it means an increase in public spending. The reason for that is that the Local Authority must pay to provide this essential public service: but no longer has the profit from viable routes to provide income to do so. Privatise the profit and socialise the loss, in other words. It is no surprise that fares can be lowered on the commercially viable routes in those circumstances: though it is debateable whether that happened either, because the competition was swiftly reduced by the dominance of very big companies in some areas: itself a consequence of the utter chaos seen in the early days of deregulation when profitable routes had loads of operators. The streets of central glasgow were choked with buses and nobody knew where any of them went. A lot of them were old and belched out foul smelling exhaust etc. It could not go on, and it didn't. A few very large operators drove out the rest.

If you believe that "efficiency" is a value then what you would have to do to demonstrate that the private sector is more efficient is show that it provides the same service for less money. It doesn't. Rural areas do not have much public transport any more: indeed, where my mum lives there is no bus service at all on Sundays; and through the week it stops at 6pm. My mum does not live in a village: she lives in a large town, though at the edge of it.

It might be argued that this is because the local authority does not take up its responsibility to pay operators to run the unprofitable services: you would be right. But since public spending is a bad thing they do not get the money to do it. They have to make choices and bus services are one of the things which are vulnerable. It is not at all likely that money will be spent on buses at the expense of schools, for example. The people who are dependent on buses tend to be poor, elderly or otherwise disadvantaged. Public transport does not benefit from the "sharp elbows of the middle class" actively campaigning in defence of it: and so it will always lose in a competitive environment.

The costs to those dependent on it of loss of public transport are enormous. We cannot think of this in terms of numbers; at least not if we have any concern for a whole society. It is no good saying it is only a few, and the majority interest has to prevail (even if that could be demonstrated, which I do not think is true if by that you mean lower fares): because that is the point of public service: it is a service to the public: all of it. That is what we have lost sight of, I think.

It is a good thing and a Good Thing. It's more efficient (ie. cheaper and more results-oriented) to privatise public "corporations" and to pay the private entrepreneur for anything required as a public good or service. I might make a few exceptions in the transportation, communications, central banking, emergency and health services sectors, and for the military. Everything else would work much more efficiently in the hands of an entrepreneur.

Mass transit is a really good example.

The private enterprise is presented with a set of conditions upon which it may place bids. If they don't live up to the contract then you cancel it and get someone else to do it. If nobody bids on the contract then you probably have yourself a useless good or service.

The post office comes to mind, too.

You are making assertions which once again you do not evidence. Can you demonstrate that what you say is true?

There is a major crisis in the care of the elderly in in the uk at present. Southern Cross, the major provider of residential care, is losing money. Their financial position is "critical" and there is talk of collapse. They look after 30,000 frail elderly people: the standard of care is already criticised as inadequate: and they have just announced they are to cut a large percentage of the staff. They are also not paying their landlords the full rent on a temporary basis

In the 1980's and thereafter this country decided that we should privatise everything and care of the elderly was no exception. Once again this was going to be cheaper and more efficient and all good things were going to follow

This company is said to be "too big to fail". We seem to have heard that before.....

So again: private profit and public loss. No risk to the "entrepreneurs" despite that being the claimed driver for those expected efficiency gains. But if there is profit they take it.

We see this again and again and again. Yet the faith in this strategy does not falter, apparently. It is a religious mind-set so far as I can see. There is nothing rational about it at all

What are you looking for?

As for the issues with Southern Cross (or any elderly care corporation) it's probable they are using a failed business model. This is bound to happen in the same way nobody drives Hupmobiles or Pierce-Arrows any longer.

Personally, I wouldn't privatise elderly care because there's no money in it. All your customers are terminal. Worse yet, they may live too long and you'll have inventory problems. (Those are all also assertions.) Where is the growth or return to investors?

If caring for the elderly were ever a profitable enterprise then business would have been all over it ages ago.

Practically, of course, your government should raise a bond for Southern Cross and fire the managers who can't make it work after promising results. They did promise results, didn't they? What were the results they promised?

http://investors.schealthcare.co.uk/company-summary.aspx

That's their assessment of the company's financial position. It's pretty slender and without a prospectus or really looking very hard at their numbers, it looks like their biggest problem is lack of revenue growth. They need to charge their customers more. 2.2% annual revenue growth in an aggressive growth sector just sucks.

Well what I am looking for is something to back up your assertions, Stilicho. You said


That is not an outcome I recognise in any privatisation at all here. So I wondered if you could point to an example of that, for I have not seen any. I know it is the mantra. I just don't see anything which would suggest it is true. Nor do I see any logical reason why it should be true even in theory.

We privatised hospital cleaning services and we got MRSA in spades. Might be a coincidence. We privatised hospital catering services and the food is indedible; special diets just don't appear. We privatised catering in schools and Jamie Oliver famously showed how bad the food was and how low the spend. We privatised the care homes and they are failing and will have to be bailed out. We privatised the buses and they just don't provide a service; same thing with parts of london underground but they went bust and the taxpayer had to pay So your example of mass transit just isn't true: or not always. We privatised the utilities: Scottish power is raising prices for gas 19% although it is already more expensive than other companies: and it is said they will follow suit. The privatisation of the postal service in holland appears to be an unmitigated disaster. So can you show me where this has actually done what was promised? What you expect?

I would also like to know the reasoning behind the expectation. What is it about privatisation per se, which is supposed to produce all these good outcomes? You say it is cheaper: sometimes. But where do the savings come from? They come from reducing wages, usually. You may say that they come from efficiency: and if you can show me a company which took over from public service; paid the same wages; paid a profit to shareholders; maintained or improved the service; and charged less for all of that I will be very interested. I have never seen that happen. Never.

I always wonder about these school lunch programmes, Fiona. I take it you're probably from an upper crust in the UK. I'm not in Canada. I have never eaten a school lunch and wouldn't know what one was if it bit me. When I grew up and went to school we made our own lunches, packed them, and once got scolded eating half of mine in French class.

I think school lunch programmes are exotic New York style institutions intended to enrich vendors at the expense of poor people. Poor people need to do what I did when I grew up. Make your lunch. Truck it to school. Eat it during French class.

Personally, I wouldn't send my folks off to a private care facility unless I got the paperwork demonstrating due diligence. Is it different in Britain?

We might have to start a separate thread for each instance of public policy instead of just tarring everything with the same brush. Veering off into energy policy? Well, truth be told, energy is heavily subsidised in all corners of the earth and that's simply a function of democratisation. Energy prices should be an awful lot higher than they are now because demand far outstrips supply. Stop the subsidies and that will work in an autocracy but produces rebellion in a democracy.

I am never sure what your proposals are. Autocracy would make them easier to implement and it may very well be the style of the future.

You have absolutely no idea at all, Stilicho. School lunches are provided free for the poorest in this country, and they are also the cheapest option even when they have to be paid for. Schools have also chosen to implement breakfast clubs in the poorest areas and they do that from budgets which in more affluent areas buy things like gym equipment. They do it because children come to school hungry and it affects their learning. During school holidays poor parents find it very difficult to make up the shortfall in food provided at school the rest of the year.

But you are still not answering my basic questions. I listed a lot of different things which do not support your assertion that things which are privatised are better, in any meaningful terms. I have asked you to explain why you believe that is true in theory: what is the logic? And to show me where it is true in practice.

So this morning there was a report on the ongoing crisis in care for the elderly in the UK. The occasion for the report is a meeting which is to take place between Southern Cross and its landlords. Southern Cross can't pay the rent and so they are reducing what they pay in rent by 30% in the short term: and they want to negotiate what happens next, I gather. The government will have a representative at that meeting. There are 80 landlords and they met last week to develop their own proposals: what they want is for the government and lenders to "write off" some of Southern Cross's debt. I may be wrong, but I think that "write off" means that the government should pay some of it: and lenders should forget about some of it, too. They say ""Our overriding concern at this time remains minimising disruption and concern for residents and their families." In addition they suggest that the landlords should be given three options:
1. take back the residential home and run it themselves
2. take back the residential home and bring in someone else to run it
3. Stick with Southern Cross, but insist they bring in new management.

In the course of preparing this report the BBC tried to look into who these people are. NHP is the biggest landlord, with 249 of the 751 homes Southern Cross runs. It emerged that this company has financial troubles of its own. They describe themselves as a "property investment group specialising in the ownership of freehold or long leasehold interests in modern purpose-built care homes, the majority of which are leased to care home operators on long-term leases". They have, they say, nearly 300 of them: and 249 are leased to Southern Cross. They do not own the homes outright: they have a mortgage on them. The mortgage is 126% of the value of the property (presumably following the fall in property prices which is a consequence of the financial crisis: not sure about that though, because I have not heard that property prices have fallen as much as that; yet).

This is called an "asset to value" ratio, when it applies to a company: but if the same thing happens to ordinary people it is called "negative equity". Where a person is in negative equity it doesn't matter so long as they can meet the mortgage payments and they do not want to move. If they cannot meet the payments they are in trouble. If they sell the house they will not get enough to clear the loan on the property, and so they end up in debt with nowhere to live. Astonishingly, the government does not step in to "write off" the loan: and neither does the lender. Instead the lenders insist on being paid and they eventually foreclose the loan and seize the house. They are reluctant to do that in a falling property market, because they may not get the full amount of the loan back when they sell it. But there are many such instances and in practice there are frequent complaints they do not even reaise the best price when they sell it: so the debtor does not get as much back as would otherwise be the case; and less again because the legal and other costs of the sale come off the price, and they are higher than a straightforward sale because of the costs of the foreclosure itself. The debtor has no control over when or how to sell: because he is no longer the owner. There is some scope for negotiation, of course, but there is also a punitive element which seems to be in play and which leads the lender to take decisions which are not obviously rational: though they can be rationalised as making sure that they do not allow a bad situation to get worse, in a falling market

So why does this not happen to NHP? They are in financial trouble and they cannot pay the loans they have at present: and the rent is to be reduced, which will make that worse. To answer that question the BBC tried to find out how the company works. They couldn't do it. NHP is owned by a holding company: which is owned by another holding company: which is owned by another holding company: which is owned by.....no idea. The trail petered out and the report said that it appeared the ultimate owners are based off shore.

So this morning I have been doing some digging about. NHP plc have a one paragraph website which is quoted above. So that didn't get me very far. But there was a report in the Financial Times of November 2004 and at that time NHP was bought by an American "private equity giant" called Blackstone, for cash (£563 million). Interestingly, the report notes that Blackstone bought Southern Cross for £162 million in September of the same year.

The same report notes in passing that NHP had a new senior management team which was brought in around 2000, and they were so good that the the share price increased 14 fold in the previous 4 years: 83.4% in the preceding 12 months. It also notes that NHP owned 355 homes at that time. But now it is less than 300: it is tempting to assume that they sold off a large number of homes during the property boom: they are, after all, a property investment company, so that is what they do first and foremost: that they specialise in care homes is rather incidental

This acquisition was also discussed in the Investor's chronicle of 17/12/04: it also praises the achievements of the new management team but notes that NHP was a "basket case" prior to them taking over and it recommends shareholders accept the Blackstone bid. The improvements effected are reported to arise from improved bed occupancy and a very large injection of capital investment (up from £7.3 million to £12.8 million over the period). That looks like doing up the house in order to sell it, to me: but I know little of such things. What I do know is that anything which looks as good as this turn around is usually too good to be true. Nothing in the real world I inhabit increases in value 14 fold in 4 years: and I dont believe any of this is due to "good management" or any other hurrah concept. Not if you are talking about running care homes, and not about virtual money based on "confidence" and stufff like that.

Anyway: from 2000 to 2004 there was a "turn around" which made both Southern Cross and NHP into good businesses on the face of it. This seems to have been achieved by investment. The figures are not clear, as to whether the 12.8 million was a one-off or a yearly figure. If we presume the latter, then they put in about £60 million: and for that and the existing equity value they got £563 million for the company from Blackstone. I don't have information about investment in Southern Cross but it was bought for £162 million by Blackstone.

The Daily Telegraph has report dated December 2010 in which it states that Blackstone sold both Southern Cross and NHP "5 years ago": so it appears that they held the companies for less than a year. During that period they "restructured" the lease terms on which Southern Cross paid rent to NHP. They made £1 billion profit when they sold both companies, according to the article.

What strikes me is that this is all smoke and mirrors: but at some point all that money has to be repaid by someone somewhere. Whoever bought the two companies for £1 billlion expected to make a return on that money. Since both NHP and Southern Cross are almost wholly dependent on money from the taxpayer via local authorities, that is where the buck stops. Note that nothing at all of substance changed: the investment of £60 million capital between 2000 and 2004 presumably did improve the asset: and maybe Blackstone spent some more after that: but this is mostly just money, and nothing tangible at all. I certainly see no evidence of the private sector efficiency we are asked to take on trust: I see a scam predicated on the assumption that the revenue stream is bottomless: and that there is no risk because ultimately the care of the elderly cannot be allowed to fail. And so it proves.

A report from Robert Preston of the BBC was published a couple of days ago. Mr Preston reports that NHP has borrowed far too much and is controlled by its creditors. NHP relies on Southern Cross for 90% of its income. And NHP's creditors are "coordinated" by Capita. Mr Preston says that, through Capita, NHP is run by "experts" in corporate restructuring, whatever that means. But one consequence is that there is nobody speaking for NHP: which is why the failure to track down the ultimate owner is significant.

He has written about the situation again yesterday. He reports " a landlord" as saying they will do all they can to keep Southern Cross solvent: I freaking bet they will. All that they can to ensure that the government picks up the tab, I reckon.

GMB demonstrated against the overcharging of rents for Southern Cross in August 2010. They issued a press statement at that time and it sheds some light on the ownership of NHP. According to that press release: NHP was bought in 2006 by a company called Three Delta with funds supplied by the Qatari Investment Authority. That is a company which is owned by the Qatari royal family, apparently. Three Delta seems to have paid £1.3 billion. Astonishingly, given what we saw above about how the company had "turned around" in miraculous fashion, it had £1.17 billion of debt: which Delta sold on as "asset backed bonds" packages

Blackstone also sold Southern Cross, in 2007 netting a four-fold return on its investment. That is peculiar because in 2008 Southern Cross defaulted on loan of £46 million pounds: you would think that would have tended to reduce the price only a year previously: but you would be wrong. The loan was renegotiated, presumably with higher interests rates. That would contribute to a need for high charges for beds in order to service the debt, I imagine.

As already noted NHP is not financially viable either. In 2009 it was restructuring £1 billion in loans which had been in default since the previous year. At that point its "portfolio" was worth £243 million less than the loans secured on them. It is reported that QIA has lost a lot of money: but we cannot really know. They are not required to publish full accounts. It is controlled by the prime minister of Qatar. It has a 7% stake in Barclay's bank and shares in Porsche: it has a 26% stake in Sainsury's, the supermarket chain. It is made more difficult by the fact that QIA controls the property through a part of Delta called Delta Commercial Property and it is registered in the Isle of Man. The returns for that company are consolidated in one of a number of holding companies called Libra {some number}, in this case Libra No. 2 which is based in the Cayman Islands. It was these Libra companies (all registered at the same address as NHP in London's Regent Street) which were the end of the BBC trail the previous post opened with.

If anyone had any doubt that this is corrupt it is also interesting to note that Three Delta as some very intersting non-executive directors, including a former chair of Barclays (QIA has a stake in Barclays) who was also a Permanent Secretary at the Treasury in a previous life: A former official of the Crown Estate ; and a former Tory Cabinet minister. Very cosy

The BBC's Panorama programme sent in an undercover reporter to expose abuse of residents at Winterbourne View hospital in Bristol. The programme has led to closure of the hospital and there may be criminal cases arising from it

www.bbc.co.uk/news/uk-england-bristol-13848877

As the article notes, Winterbourne is run by Castlebeck care.

The satirical magazine "Private Eye" reports about financial and business matters in a serious and invstigative way, very often. They gave the following information in the latest issue:

Castlebeck care are part of CB Care Ltd. CB Care Ltd is owned by a Jersey based company called Castle Holdings. It is controlled ultimately by a Swiss based private equity group called Lydian.

Lydian's money comes largely from Irish financiers, at least one of whom is a substantial donor to the Tory party.

CB Care Ltd has £233 million in debt to the banks and £195 million "subordinated debt": much of the latter yields 15% interest for the lenders, and interest payments were £38 million in the last accounts. The company made a loss of £19 million in 2008: and £10 million in 2009. Thus it pays no tax at all. It is interesting that Private Eye notes that some of the debt (£100 million) was converted to an "interest free loan" in April last year: that does not suggest to me that the arrangements are purely commerial and the natural assumption is that the debt is owed to other companies or investors who are part of the same group. Effectively it pays money to itself with another hat on: and this allows it to avoid tax. It extracts money from the company, and that leaves very little for the ostensible purpose of the enterprise: which is looking after vulnerable people.

The care homes are supposed to be monitored and regulated by government oversight agencies: in this case the Care Quality Commission. This body is useless, as so many of them are. It is a "paper generator". It has neither the staff nor the funding to do a proper job: and it does not even see a problem with that, if the interview with the top banana I heard a few months ago is to be believed: she said that a "paper review system" is more than adequate to ensure good standards of patient care and safety (she was talking about the general system, not about this particular case, but the point stands). It is really touching how naive these folk are.

But even if that were true (which it isn't) Winterbourne was reported to the CQC by "whistleblowers" more than once. They were ignored and I am led to wonder if they were the reason Panorama decided to investigate in the first place. I don't know. But it seems that those who exercise the relatively new legal protections to report abuse are wasting their time.

The linked article notes that Castlebeck has launched an internal investigation, as well as closing the hospital: so that is all right then? No. Southern Cross has been found to allow appalling neglect and abuse in some of its homes in the past. They, too, launched internal enquiries: no staff or managers appear to have been disciplined n any way. "Lessons were learned" though: so we need not have any further concern.

According to Private Eye the CQC had reacted to at least one "whistleblower" who drew attention to the dreadful conditions and care in one of Southern Cross's homes. Their report records poor staff training; lack of equipment; and the fact that residents had to wait till lunch time to be washed and dressed. This apparently means there were no major shortcomings, and the home was given an "adequate" care rating. Adequate is not good: but it does not result in closure nor any effective demand for improvement which can be enforced as a matter of urgency. Private Eye notes that a fifth of Southern Cross's homes are rated "poor" or "adequate": one shudders to think of what "poor" means in light of what passes for "adequate".

These homes get their money from the Local Authority, mostly, as noted in earlier posts. This case may not be typical but I think it is telling:

First: this is the web page for St Michael's View care home in South Shields.

www.carehome.co.uk/carehome.cfm/searchazref/20004504BAMA

It looks nice, doesn't it ? It offers both residential and respite care and I was pleased to see that, in the case of respite, "carers' skills allow them to take on palliative requirements, being experienced in the sensitive situations families face at such times." If I were looking for a care home for a relative in that area I would go and see that one, probably. The facilities are good, and sound like just what i might be looking for.


Of course I would be aware of the fact that homes are rated by the CQC so I would look for that and the website helps me out:


I don't know about you, but as I read that it seemed that the rating was "suspended". There is a link which explains further. But the rating is immediately followed by a sentence which explains that CQC stopped issuing ratings due to a a legal change: and there is a clear implication that they no longer can tell me much. Indeed I think it tends to imply that "suspended" refers to that, rather than to it being a rating in itself. But there is a link. I am not sure that everyone who is old enough to be looking for a care facility, eg for a spouse, is likely to be all that computer savvy, and I think this is an active discouragement for them to click: but I clicked on the basis of "caveat emptor". This is what it says:


Ask yourself if that is what you expected from the way the site presents that information? Caveat emptor indeed. I can see no other explanation for this than that they set out to mislead, while telling no outright lies. Implicature matters, IMHO.

So why are they rated as "suspended"? Here is a clue.

www.thenorthernecho.co.uk/news/8106...s_at_care_home/

The local authority has paid £1 million pounds a year to buy care from this home.

Privatisation: cheaper, more efficient......and deadly

Edited by FionaK - 22/6/2011, 23:58

Another big provider of care for the elderly in the UK is a company called Four Seasons Health Care. According to their website they own and operate 400 care centres and nursing homes. They are the second largest provider on the UK. They are also one of Southern Cross's landlords. That fact has led some to worry that they, too, will get into financial problems and their management has sought to reassure everyone that they are in robust position "well able to manage" their £700 million of debt.

As with Southern Cross there has been a game of pass the parcel. Private equity companies bought and sold Four Seasons and they all made a lot of money.

Four Seasons was formed in 1999 by a private equity company called Alchemy (good name! I am sure the resonance is mere coincidence) which bought and merged two previously existing companies called respectively Cresta Care and Four Seasons Health. Alchemy bought the two of them for £133 million pounds. Alchemy itself paid just £44.5 million of that: the rest was debt.

In 2001 Alchemy spent another £4.5 million to buy more homes for the elderly, and in 2002 Alchemy bought
two other companies and merged them in also: they were called Omega Worldwide and Principal Healthcare Finance. They cost Alchemy £25 million altogether and they meant the company, which started with 100 homes, now had 400. Alchemy's website states that these changes increased revenues from £120 million to £275 million and in 2004 Alchemy sold the company for £775 million to a company called Allianz. So it seems that between 1999 and 2005 Alchemy spent £74 million and made £700 million.

Allianz is a big german insurance company and it beat a number of other private equity companies in bidding for the business, which was seen as a great investment opporunity: Blackstone was bidding, amongst others.

After they bought it Allianz then acquired another company, called BetterCare, which it merged with Four Seasons at a cost of £116 million. So their total investment appears to have been £891 million.

In 2006 Allianz "refinanced" Four Seasons and this was partially achieved by the sale and lease-back of property. Then they sold Four Season in 2006, to Delta Commercial Property Ltd, for a "total consideration" of £1.4 billion, including assumed debts. So in two years they made more than £100 million.

It is "interesting" to note that this came about because RBS and other financial institutions lent Three Delta about £1.5 billion to buy Four Seasons in 2006. Three Delta is the private equity company ultimately owned by Qatar princes and mentioned in relation to Southern Cross in an earlier post. Within a year it became clear that Four Seasons could not service its debt and was on the brink of bankruptcy. Three Delta only invested £100 million: the rest of the money came from the banks which lent to them. During "re-financing" negotiations in 2007 an additional borrowing facitlity of £300 million was made available: at 15% interest. The two top managers were "incentivised" to stay on at the head of the company by getting shares: between 3 and 5% of the company: it is not clear in the news reports of the time just why these people were seen to be valuable, given the mess the company was in. But you find this: a company gets into big trouble and apparently this means that the managers need more money: the workers, naturally, need less money and poorer conditions. Something strange happens once your remuneration package goes above a certain high amount: rewards and sanctions go into reverse. This seems to be a law of nature, so far as I can tell.


Four Seasons was on the brink of collapse by 2009. A consortium of banks agreed to "write off" £800 million of the company's total £1.6 billion debt by converting that debt into shares. What that means is that those banks now own a substantial prt of the company: but there is no guarantee that the shares are worth anything. One of those banks is RBS, which wrote off about £300 million and now has about 40% of the shares: and that means that these potentially worthless shares are owned by the British taxpayer. What version of privatisation is this, that ends up with the public owning a service but with no control over how that service is run?

In 1990 there were 500,000 people in residential care. 200,000 of them were in homes run either by the Local Authority or by the NHS. There are now just 31,000 in publicly provided care. Vast amounts of money have gone into private hands in course of making that shift. I see no evidence of anything other than theft, really. Standards of care are not better: the provision is not cheaper: and public spending has not reduced: in fact the rule appears to be that the taxpayer now pays for everything twice.