Job cuts spark calls to bailout Southern Cross

The Government came under more pressure to bail out Southern Cross Healthcare today as the embattled care home operator revealed plans to cut 3,000 jobs.

The proposed job losses are understood to include more than 300 nurses, while 1,275 care staff, 700 catering posts, 440 domestic jobs and 238 maintenance roles could also go.

Southern Cross, which employs 44,000 staff, said the proposals to slash the workforce by nearly 7%, were part of its business revamp launched 18 months ago.

The company, which is responsible for looking after some 31,000 residents, said the move was essential to address "staff effectiveness" across its 750 homes.

The announcement prompted calls from trade unions for the Government to step in and provide financial support to the company - but the Department of Health warned this was not its problem to solve.

Southern Cross recently warned it was in a "critical financial condition" as it unveiled a £311 million loss in the six months to March 31.

The company is underpaying its rent by nearly a third until the end of September in a move to buy it time to find a longer-term solution to its woes.

As well as uncertainty over the future of the firm, staff and residents have faced speculation that as many as 200 homes could be closed or offloaded to other operators.

Paul Kenny, general secretary of the GMB trade union, called for financial backing from the Government to support Southern Cross.

He said: "This is the start of a disaster for the residents as well as a kick in the teeth for the staff.

"This is the trigger for the Government to step in with immediate financial support to ensure that Southern Cross continues to operate and continues to provide a home for 31,000 elderly and vulnerable residents looked after by 44,000 staff.

"The residents, their families and the staff demand immediate action from Government today."

A process of consultation has begun on the job cuts as well as the potential implementation of a "standard contract of employment" for new and existing staff.

Southern said it was committed to working with the GMB trade union to minimise redundancies and expected the whole process to be completed by October.

Home managers, deputy managers and relief managers, activity co-ordinators and administrators will not be affected, the company added.

Jamie Buchan, Southern Cross chief executive, said: "We are engaging with colleagues to put in place the best possible staffing model for our future needs, and one which fully embraces the best practice available to us.

"In developing this model during a very challenging time for both our company and the industry we are determined that the process we undertake should be exemplary in terms of staff communication."

The company reassured all decisions would be made with "paramount concern" for the welfare of its residents.

As Southern Cross struggles with rising rent bills, it is also facing declining local authority fees as fewer councils placed residents with the company.

Local authority admissions declined by 15% in the first half of its financial year, though there were more NHS referrals and private patients. Councils and the NHS account for 70% of the company's patients.

The Darlington-based firm consequently saw revenues drop 3% to £464 million in the first half, as overall occupancy declined by 3% to just under 87%.

The company launched its "New Horizons" programme of change 18 months ago, which will look at all aspects of its operations, including quality of care, staff development and costs.

Unison, the trade union, echoed the GMB's calls for financial support from the Government.

Dave Prentis, Unison general secretary, said: "The Government must step in to protect residents and staff by getting to grips with Southern Cross."

But a Department of Health spokesman said: "It is for Southern Cross, its landlords and those with an interest in the business to put in place a plan that stabilises the ownership and operation of the care homes.

"That process is happening and we must let it continue. This is a commercial sector problem and we look to the commercial sector to solve it."

The department said it was in regular contact with Southern Cross bosses and was monitoring the situation.