Gene Kerrigan: Heavy consequences of the 'light touch'
Go ask the residents of Winterbourne how private investment turned out for them, says Gene Kerrigan
Her behaviour was deemed to be "challenging". This is the term usually applied to patients who make noise, dig in their heels or refuse to do what they're told.
This woman was in a place where vulnerable people with mental disabilities and autism were supposed to be assessed, treated and rehabilitated. Often, such patients are taken in by care homes when carers and relatives have reached their limits. Such patients need infinite patience and well-trained treatment.
She was standing by a second-floor window. A support worker was suggesting she commit suicide. "Go on, do it now I'm here," he said. "I'd love to see you try it. You will go flying."
The support worker was unaware that he was being recorded by a BBC Panorama reporter. He said: "When you hit the floor, do you reckon you will make a thud or a splat?"
That was just one small part of a scandal uncovered last year by the covert work of a BBC reporting team. There was also the taunting, the slapping, the violent restraints, the clothed patient who had water thrown over her. Last week, the last of 11 care workers pleaded guilty to 38 charges of ill-treatment of patients.
"Where's the therapy in any of this?" said Andrew McDonnell, an experienced clinical psychologist to whom Panorama showed the footage. "I would argue this is torture."
The care home, Winterbourne View, in Bristol, was one of about 20 owned by a company called Castlebeck. Winterbourne had 24 beds and charged an average £3,500 per patient, per week -- paid by the National Health Service. It had an annual turnover of £3.7m and was judged by Castlebeck to be the company's "best performer".
Castlebeck was bought six years ago by an investment fund called Lydian Capital Partners. Lydian is based in Geneva. It was set up by Denis Brosnan, one of Ireland's most successful and admired business people. Among his fellow investors are reported to be John Magnier, JP McManus and Dermot Desmond.
A 150-page official report just published reveals that, although there were trained nurses employed, "the majority of the staff at the hospital were unregulated support workers who are not subject to any code of conduct or minimum training standard".
The report said: "Castlebeck Ltd appears to have made decisions about profitability, including shareholder returns, over and above decisions about the effective and humane delivery of assessment, treatment and rehabilitation."
It added: "It is clear that at critical points in the wretched history of Winterbourne View, key decisions about priorities were taken by Castlebeck which impaired the ability of the hospital to improve the mental health and physical health and well-being of its patients."
However, this is no rogue company. And in this matter politicians' hands are hardly clean.
The scandal would have remained hidden but for a whistleblower named Terry Bryant, a nurse at Winterbourne: "I saw a locked, chaotic place, noisy with alarms. There was no direction or meaningful occupation for anyone who lived there."
Bryant quit after three months and, after a series of emails to management and regulatory figures failed to bring a response, he contacted the BBC. A Panorama reporter got a job at the care home and documented the abuse over five weeks undercover.
If any of us personally came across such abuse, we'd no doubt intervene. And there is no reason to believe that Brosnan, Magnier, McManus, Desmond or any other Castlebeck investors are less compassionate than the rest of us. But their involvement with that dreadful place was not one of human-to-human. It was capital-to-investment vehicle.
Investment funds such as Lydian exist only to make money -- the wealthy have " arms length" investments. You put your money in, and you collect your winnings at the other end. The fund buys into whatever it reckons will give the best return.
And in 2006, care homes were all the rage for rich investors. In June 2006 this newspaper reported: "Brosnan is a dab hand at turning nursing homes into successful businesses. He is the key mover behind acquisitive British chain Barchester Healthcare, which is one of the biggest private operators in the country."
There were several investment firms trying to get their hands on Castlebeck, and Lydian had to pay €316m. Three years before Lydian bought Castlebeck, the care home company made profits of £6m. By the time of the sale, the profit was £13m. In 2007 it was £18m, then £26m in 2008 and £31m in 2009.
The long-term project to dilute and dismantle the NHS, backed by Labour and Conservative governments, has created ample room for private investment (just as the run-down of our own public health service has). Private investment replaces state spending, so politicians are happy. It gives investors a guaranteed return -- the state provides a steady stream of customers.
In theory, state regulators, in this case the Care Quality Commission, supervise the private sector. The Financial Times reported that the CQC is understaffed by 300, with a huge drop in inspections. The recent damning report on the Castlebeck scandal admits: "Low cost, light touch regulation did not work."
It's not a coincidence that one of the central problems underlying the Winterbourne scandal was our old friend "light touch regulation". We're familiar with this regulatory approach, having seen the great job it did when applied to the Irish banking system.
"Light touch" isn't just a cheap way of doing things, nor is it a failure of the regulators, or a result of laziness or inefficiency. "Light touch" is a highly political approach. It was born out of the same adulation of "the markets" that created the credit bubble and the current recession.
The theory is that the markets can be trusted to behave efficiently. And they do so best when they're protected from the "dead hand" of state interference. The markets, and the entrepreneurs who play the markets, will act in their own best interests, according to the theory.
Obviously, market forces would encourage a company like Castlebeck, worth hundreds of millions of euro, to maintain top standards. That would be in its long-term interests. True -- but, like the banks, it also had short-term interests. And those required a return on investment. An investment fund doesn't see patients, it sees returns.
Denis Brosnan said he was "shocked and appalled at what happened". His son Paul resigned as chairman of Castlebeck. Winterbourne was closed down. Further inquiries led to the closure of two other Castlebeck homes, Arden Vale and Rose Villa.
Over a year ago, the magazine Management Today said: "It's hard to imagine that the same people who piled into the sector in the boom years will be the right owners in an age of austerity -- particularly in a business where cutting costs without compromising care is incredibly difficult."
Recently, it was reported that Lydian wants to sell Castlebeck.