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Sledgehead

What Was Really Behind The Deaths At Orchid View?

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So the Care Quality Commission have made 34 recommendations to avoid future neglect and premature death in our elderly care homes. The relatives want a full enquiry to determine what really went wrong.

As in so many cases, if you are looking to blame somebody at the coal face, you are looking in the wrong place. The seeds that led to the shameful neglect and premature deaths were sown far away from the individual homes. In truth, Orchid Views failings were not about staff training, but property, leverage and financial mismanagement.

Just take a look at this Guardian article written at the time of the collapse. In that article we find that Orchid View's owner, Southern Cross, hit a massive speed bump when it's property sale and lease-back activities found themselves unable to meet a 43 million mortgage payment on property they were unable to sell and lease back. that was just the start.

Austerity cuts meant LA resident numbers and fees fell, whilst rents Southern Cross had to pay kept rising - unsurprising considering what the new owners were paying for the Southern Cross properties they were picking up. Things came to a head when Southern Cross management demanded a 30% reduction in rents. The alternative for the landlords was to stand in line for payments as the company put itself into admin. Within days Southern Cross decided that the latter option was in fact preferable.

And while all this property and leverage garbage was being played out, management was looking elsewhere for something to balance the books. Cue cuts in staffing numbers and staff quality. the results were predictable.

The lesson to be learnt is simple: we can not fund our retirement and elderly care with property, simply because the price of that care will start with the cost of care home property. Add to that care costs and there will always be a deficit. Attempts to financially engineer our way around this truth will always end badly. Whilst Southern Cross's sale and lease-back wheeze worked, they were flying high. When it failed, residents and staff suffered, and ultimately people died.

But don't expect this conclusion to be amongst the 34 drawn up by the CQC. Here's my 35th suggestion: limit property leverage.

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  • 406 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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