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Care homes are closing because their owners are saying that local authorities are not paying enough for residents. But should the private sector be running care for older people, asks Alison Taylor.

In March, Rose Cottle, at 102 older than the Queen Mother, had to take up the cudgels to save her retirement home from the bulldozers and herself and other residents from eviction and possible homelessness. The home's owners claimed to be losing money hand over fist and said they could not remain in business without a significant increase in local authority financial support. Their decision to close and sell to property developers was apparently prompted by having to absorb the extra financial burden of meeting new conditions set by the National Care Standards Commission.

In one respect, this sorry tale exemplifies the grave risks of relying on the private sector to provide care when that sector is, by definition, looking to turn a profit on its business activities. But unless income regularly exceeds outgoings, this is impossible. However, in north Wales at least, the projected costs of meeting NCSC conditions have had a corresponding impact on local authority provisions, with two councils already insisting that closure of some homes for elderly people are inevitable. Plaid Cymru councillor Emlyn Thomas is horrified: "It's well known that when older people are moved out of long-term care into another place they can die from shock."

As a body with the power to set and enforce standards, the NCSC is long overdue. But since its inception it has been blamed for the financial woes of local authorities and private sector organisations perhaps wishing to divest themselves of unprofitable enterprises. Liam Fox, the shadow health secretary, said of Cottle's plight: "It is a dreadful case but not unique. There has to be a change in the system because there is a catastrophe on the way." Arguably, that catastrophe has already arrived: Britain has the world's fourth largest economy but, for the nation's needy, it is a bleak, frightening place where their welfare is sacrificed to the market place. For too long, private enterprise has dictated market place values to successive governments and on to public sector service providers. The outcome is confusion, conflict and enormous wastage.

A civilised state must take upon itself the responsibility for providing and maintaining those services that are too important to be left to the vagaries of market place economics. Aside from health and welfare, these include communications, transport, utilities, defence - in other words, the nation's vital infrastructure. The UK's infrastructure appears to be collapsing about the ears of its citizens, while they suffer one of the world's heaviest burdens of direct and indirect taxation.

Where does all the money go? A few years ago, the government pledged to put the billions raised through tobacco tax directly into the NHS - more than enough to resuscitate the entire system. Was that promise kept? The government has vowed that the welfare state is "safe in its hands"; soon, at the present rate of destruction, the welfare state will have been consigned to history.

Because so many people now live longer, by 2030 the government plans to raise the retirement age to 70 in order to reduce pension demand. Already, some private sector companies have responded by axing their own final salary pension schemes, alarmed by the prospect of funding the extra decade for their workers. Old age looks set to be an even grimmer state than it is at present, with a new army of dispossessed pensioners chasing non-existent jobs. There is another vast army of job-hunters lurking in the shadows: it is now being suggested that less academic children should leave school at 14.

Having turned around the fortunes of the New York subway, American Bob Kiley was brought in to oversee the restructuring of London's public transport system. Much to the government's chagrin, he opposed Labour's public-private partnership initiative to rebuild the Tube. He said it was unworkable, a recipe for disaster and rife with irreconcilable conflicts, for at the heart of the arguments about public or private service provision were the issues of money and profit.

The private sector must make money in order to attract investment otherwise it becomes non-viable. The public sector can afford to sustain loss-making enterprises because its funding does not depend on performance but on compulsory taxation: the matter of cost-effectiveness is entirely separate.

Alison Taylor is a novelist, a former senior child care worker and the winner of the 1996 Community Care Readers' Award.