Government aims to avoid Southern Cross repeat with 'tough series of checks' on cares homes' finances
Hundreds of care home providers are struggling with the sector's £5bn debt mountain
In an attempt to forestall a repeat of the Southern Cross fiasco, the government will now force care homes to prove they are financially stable.
The sudden financial collapse of Britain's biggest care home operator in 2011 caused turmoil for its 33,000 elderly and vulnerable residents, and highlighted the sector's precarious financial situation.
Today Norman Lamb, the Liberal Democrat Care and Support Minister, announced that the Care Quality Commission (CQC) will be able to monitor the largest providers' financial health.
There will be, he said, a "tough series of checks" on the companies - including those that provide care in people's own homes - to give "early warnings" if a company is in trouble.
The CQC will have power to require regular financial and relevant performance information from the 50 to 60 largest companies, and providers will also be forced to submit "sustainability plans".
And if a company is in trouble the CQC will have power to commission an independent business review to help the provider to return to financial stability. Officials said if a company is in financial difficulty it can be a predictor of poor care.
Mr Lamb said: "Everyone who receives care and support wants to know they will be protected if the company in charge of their care goes bust.
"The fear and upset that the Southern Cross collapse caused to care home residents and families was unacceptable.
"This early warning system will bring reassurance to people in care and will allow action to be taken to ensure care continues if a provider fails."
David Behan, the CQC's chief executive, said: "These are important measures that provide early warning of potential failures in care homes.
"Set alongside our plans for the appointment of a Chief Inspector of Social Care and Support, tougher registration requirements on social care providers and the introduction of a new ratings system, these new measures will strengthen our oversight to help ensure that risks to people's care are identified and acted upon as early as possible."
Hundreds of care-home providers are on the financial brink as they struggle to service a £5 billion debt mountain built up during the "boom" economy of pre-2008 and maintain services while local authorities - a key source of income for the sector - slash referrals and target publicly funded homes for closure.
According to the Press Association, recent research suggests that the number of care homes going bust climbed by 12 per cent last year.
Data from accountancy firm Wilkins Kennedy said that the number of care home insolvencies rose from 60 in 2011 to 67 in 2012.
- 1 'Kidnapped boy may have been abused and murdered by VIP paedophile ring,' say police
- 3 Girl, 7, gets Tesco to remove 'stupid' sign suggesting superheroes are 'for boys'
- 4 This letter from a reader explains why women can’t play football
Black Friday 2014: Opening times for Asda, John Lewis, GAME, PC World and Argos
Miss Honduras Maria Jose Alvarado's stylist Luis Alfredo Garcia is found stabbed to death
Dr Lam Hoe Yeoh: Voyeur doctor jailed for eight years after using network of hidden cameras to film patients, colleagues and friends on the toilet
'You should come to my house and eat cheeses with me': 4-year-old sends adorable love letter to girl at school
Scientists predict green energy revolution after incredible new graphene discoveries
Ukip says babies born to immigrants in the UK should be classed as migrants – which would include Nigel Farage’s own children
Rochester by-election: Ukip gains second MP as Tory defector Mark Reckless holds seat
'Beast of Bolsover' Dennis Skinner takes Ukip MP Mark Reckless to task moments after he is sworn in
The young are the new poor: Sharp increase in number of under-25s living in poverty, while over-65s are better off than ever
Tamir Rice: 12-year-old boy playing with fake gun dies after being shot by Ohio police
Exclusive: UK approved £7m Israeli arms sales in six months before Gaza conflict
Negotiable: Recruitment Genius: This is an opportunity to join one of the UK's...
Negotiable: Recruitment Genius: An exciting opportunity has arisen in a Winche...
£300 - £400 per day: Argyll Scott International: I am currently recruiting on ...
£16000 - £40000 per annum: Recruitment Genius: A Field Based Sales Surveyor is...