Monday 4 July 2022

Money is like water on a carpet

 Money is like water on a carpet. It gets everywhere, as long as people let it. For a long time money, in the form of profit seeking, was kept out of systems that were hard or impossible to run competitively. But since the 1980s, when monetary policy began to win the battle for top people’s hearts and minds, money has sneaked – or been openly invited in – to almost every sphere of public life. They would privatise the air you breathe, if they could (it has been suggested).

For a while I’ve been watching one of the more recent manifestations of this phenomenon, the fact that big money, I mean really huge, vast, global money has embedded itself into the UK children’s care sector (where forced competitive tendering was introduced in the 1980s). Many, many homes for deprived children or difficult children are now run by investment funds and the like. The dogma of privatisation has soaked right through into the responsibilities of local authorities, and money is being allowed to run riot. It shows in the number of children’s home rated poorly by Ofsted, and also in other figures:

June 28th 2022 Serious incidents more common in for-profit children’s homes in England: Privately run homes have more police callouts and staff complaints than council ones, data shows (Private providers say that is because they deal with more difficult children. I have no evidence as to whether that is true, but if they do then they should have better systems to cope with the difficulties.)

April 18th 2022 English councils pay £1m per child for places in private children’s homes: Private providers accused of making ‘obscene’ profits out of some of society’s most vulnerable children

March 10th 2022 UK has ‘sleepwalked’ into dysfunctional children’s social care market, says regulator: CMA finds local authorities are being forced to pay excessive fees for substandard privately run services

October 22nd 2021 Private children’s home providers charging councils too much, report says: Market in England is broken and failing too many children, says chair of independent review

Huge fees are now being paid by local authorities for poor standards of care in essential services. Why and how did we get to this point? Money does not care. That is one of the key issues with using the market to solve any social issue. Funds have invested in children’s homes because they see an opportunity for profit. They get a decent profit because they do nto care about the morality of charging hard pressed public authorities through the nose, and neither do they care about the outcome for the children they make themselves responsible for. This should not be surprising. The only responsibility of fund managers is to make a profit for their funds.

The only way to make funds do a good job of running a children’s home is to have contracts with penalise them heavily for getting things wrong, and a regulator that has and is prepared to use robust tools for enforcement. (There is one, and only one, effective way to regulate funds that run children’s home – by fining them heavily so that they lose the one thing they care about – profit.)

We are in this situation because, for forty years, those in charge of this country have worked on the unsupported assumptions that the market works better than other forms of provision, and that the market only needs to be lightly regulated in order to keep it efficient. Those assumptions have been made in other countries too, but in the UK we have raised it to an art form. There are examples in almost every sphere – sewage in our bathing water, with a regulator that is just beginning to wake up, having previously done hardly anything to ensure the investment that the firms promised they would make, or to prevent profit extraction from customers who have quite literally nowhere else to turn. (see Filth for a local example); crushing costs of energy, with an energy regulator that has done hardly anything to ensure the companies pass profits back to consumers rather than to shareholders and overpaid executives. Childcare is just a more extreme form of this behaviour.

The mantra that regulation is bad still holds sway. That is despite the disaster of 2008 which demonstrated with the utmost clarity what happens when you under regulate. Over regulation is indeed a bad idea; under regulation is just as bad. But that is still what we are told – markets work, entrepreneurs need to be free to make bold decisions, (global Britain ha ha) blah, blah, blah.

It might make sense to have commercial companies running some of our systems, like parts of the NHS under contract, but only under strict regulatory control. (And regulation actually costs money – a lot of it. One of the most fundamental misconceptions about the market mantra is that regulation can be done on the cheap.) But in some fields it makes no sense. Childcare is one of them, but we are still stuck with a system in which all the key decision makers maintain their cruelly compromised faith in the effectiveness of the market, and their fealty to money.

In my view there is a deep connection between the obeisance that has been paid to money since the 1980s and the current political crises working their way out in the UK and the USA. The overwhelming temper of market decisions is that money and the market must rule. No space is left for humanity, for caring about anything. Forty years of reducing caring about anything to second class status in any high level decision making has seen both the USA in 2016 and the UK in 2019 elect leaders who quite literally cared for nothing beside themselves. It didn’t have to be like this but the tendency was always there and the tendency in the end won.

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