Theodore Dalrymple, ex-prison doctor, explains that it is due to a misapplication of the writings of people like Foucault - who suggested that lunatic asylums were an expression of the medical "will to power", and of R.D. Laing - who thought that the mad were sane and vice versa.
Such ideas became a kind of official dogma in Britain. This, combined with a wish to reduce the costs of treatment, has led to a dehumanising debacle in which doctors, nurses and prison officers regularly lie and perjure themselves, refusing to deal with the truth about the mad, who are then often treated with appalling barbarity. Dalrymple refers to the gradual "erosion of common humanity," because this evil is not willed by the mostly well-meaning people who commit it, but is the result of laziness, or ambition, or daily routine.
More on Foucault and his misunderestimated insights here.
Link to Dalrymple's article:City Journal Summer 2005 In the Asylum by Theodore Dalrymple