Thousands face uncertain future as care home chain is broken up
Tuesday 12 July 2011
Hundreds of Southern Cross care homes could be returned to companies registered overseas in tax havens where little information about their finances or their directors is publicly available.
Southern Cross, which runs 752 care homes in the UK, caused huge anxiety for its elderly residents and their relatives when it announced its closure yesterday after months of speculation about its financial woes.
Analysis by the GMB union revealed the names of 80 landlords who own 615 of the homes, many of which are subsidiaries of larger companies registered overseas. This makes it much harder to obtain financial information about the companies as rules governing accountability and transparency, especially in "tax havens" such as Jersey, Cayman Islands and British Virgin Islands are significantly more lax.
In addition, the GMB was unable to trace more than 120 landlords, which mean thousands of people are living in care homes where the identities of the owners and directors are unknown.
In the absence of full company accounts and other relevant information, such as the names of directors, it is "nigh on impossible" to assess whether they are suitable to run care homes funded in large part by public money, according to Andrew Craven, GMB statistician and researcher.
The findings come as Southern Cross tried to reassure 31,000 elderly residents and their families that their care would continue uninterrupted.
The shadow care service minister, Emily Thornberry, yesterday wrote to Health Minister Paul Burstow demanding he reassure people about the future of the homes.
Ms Thornberry said: "It's all very well for the chair of Southern Cross to say a deal has been agreed to ensure continuity of care, but it remains unclear that Ministers actually know who all the relevant landlords are.
"To avoid any further confusion the Government should publish a full list of these landlords and... confirm how it will guarantee that all homes are run to a sufficiently high standard."
About 100,000 care home beds are provided by private companies, and to a lesser extent, charities. Landlords identified by the GMB include Libra Careco, the largest provider with more than 200 homes, which is registered in the Cayman Islands. Its parent company, NHP, is part-owned by the Qatar Investment Authority – the chief executive of which is a Qatari royal.
The parent company of Four Seasons Health Care, which owns 400 homes, including 38 run by Southern Cross, is based in Guernsey. RBS, the state-owned bank, became its biggest shareholder earlier this year in exchange for writing off a £300m debt.
A Department of Health spokesperson said: "Whatever the outcome, no one will find themselves homeless or without care. We will not let that happen. Today's announcement does not change the position of residents. The Care Quality Commission will continue to monitor the services provided... We have been in constant contact over the course of discussions and remain ready to talk to all parties."
No longer taking care of business
Q Why is Southern Cross closing? It bought care homes, sold them on, and then rented them back, but can no longer afford to pay its rents. The terms and conditions of its contracts meant the margins were too tight, relying on high occupancy rates to stay in the black. Resident numbers have dropped since councils increased eligibility criteria to save money. Also, it is widely accepted that councils do not pay enough to cover all the costs.
Q Will homes close? Not immediately, as the majority are likely to be run by the landlords, at least in the short term. But the owners may soon rent out or sell some homes, which could lead to some day-to-day changes for residents. Some will likely eventually close. Staff may leave because of the uncertainty.
Q What happens then? Councils would be bound to find an alternative place for the 80 per cent of residents they put in the home, but not for self-payers.
Q Will other care homes go under? Probably. Many are under pressure which is being made worse by cuts to council budgets, and little is known about the financial health of many of the companies involved in social care in the UK.
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