Southern Cross, the nation's biggest private provider of homes for the elderly, is to shed 3,000 staff by October as it struggles to avoid financial collapse.
The company claimed yesterday that ridding itself of about 7 per cent of the 44,000 strong workforce would "improve operational effectiveness". But the announcement provoked outrage from unions and fear from residents and their families that care standards could slip.
Unison, described it as "another nail in the coffin of private provision", and called on the Government to step in to protect the 31,000 elderly residents of Southern Cross's 750 homes. The company has announced its intention to get its remaining staff to sign standard contracts, which unions say will lead to lower pay and worse conditions.
Southern Cross has been warned by the Quality Care Commission about a shortage of permanent managers, a legal requirement for care homes, Channel 4 News reported last night.
Ministers have promised that none of Southern Cross's residents will be rendered homeless or without care if the company collapses. But the Department of Health insisted yesterday that it is up to the commercial sector to work out a way to save the stricken firm.
The jobs to be axed are expected to include over 300 nurses,1,275 care staff, almost 700 catering posts, 440 domestic jobs and 238 maintenance posts.
Southern Cross's financial crisis has raised questions about the role of private companies in social care, especially where private equity firms are involved. Southern Cross was bought by the US private equity group, Blackstone, who floated it on the stock market in 2006 and made a 400 per cent profit in two years. Blackstone has denied responsibility for the company's subsequent troubles.
A statement from Southern Cross yesterday said that senior managers launched a study 18 months ago into company staffing, and that "the proposed reduction in staff numbers will not jeopardise the continuity or quality of care provided to the company's 31,000 residents". The company chairman, Christopher Fisher, added: "Notwithstanding the current financial pressures, Southern Cross is in the process of transforming the quality of its business. There is too much of value within our business for it to be lightly discarded."
But Dave Prentis, general secretary of Unison, accused Southern Cross of treating its staff and residents "disgracefully". He added: "This is another nail in the coffin for privatisation. While big City backers and company bosses have made off with tens of millions of pounds, vulnerable elderly people and care staff are paying the price.
"Losing your job in this economic downturn is a tragedy, and for elderly people to have the huge worry of losing their homes is a disgrace. There is no doubt that job losses on this scale will mean elderly people in Southern Cross homes get a lower standard of care and some homes may be at risk of closure."
A report published yesterday by Unison warned that Southern Cross may not be the only private company in the social care business to get into financial trouble. The collapse of the property market has left many of them unable to borrow on affordable terms.