Government 'could end up supporting Southern Cross'

3 Jun 11
The government is likely to have to bail out the care home operator Southern Cross Healthcare, a leading academic has told Public Finance.

By Richard Johnstone | 3 June 2011

The government is likely to have to bail out the care home operator Southern Cross Healthcare, a leading academic has told Public Finance.

Peter Beresford, professor of social policy at Brunel University and a member of the external reference group of the Dilnot Commission on social care funding, said that in his view ‘government will have to find some sort of way, whatever it is, to bail Southern Cross out’.

The care home group, which operates 750 care homes with 31,000 residents, has announced that it will defer paying part of its rents until October. Company chair Christopher Fisher has admitted that the company is in a ‘critical’ financial position.

On Wednesday, the Association of Directors of Adult Social Services confirmed that it had issued guidance to all local authorities in England on the best way to take over homes if needed.

The prime minister's official spokesman has also stated that ‘we will do what we can to ensure there is protection for anyone affected’. Beresford said the likely form of any central government support would be funding councils to deal with any closure of homes.

Social care has been underfunded for a long time and ‘service users are now reaping the whirlwind’, he told PF.

‘I suspect there may be a bail-out of Southern Cross for political reasons. I don’t see what else they could do for the 30,000 people who are physically and sometimes mentally frail.’

He said that the ‘structural mess’ of care homes could be traced back to changes made by the 1980s Thatcher government, which introduced care in the community and the purchasing of services rom a range of providers.

‘How can we think of not just bailing out but restructuring the care that exists,’ he asked. ‘These are the types of questions that the government doesn’t want to hear.’

The financial difficulties at Southern Cross, which last month announced it made a loss of £310.9m for the six months to 31 March, also raises questions about the effectiveness of the Dilnot review, he added.

The Commission on Funding of Care and Support was set up to undertake an independent review of the funding system for care in England, and is due to report in July.

But Beresford said that he was ‘concerned about the lack of leeway [chair Andrew] Dilnot has to offer the different messages that we need to be hearing’ following the Southern Cross difficulties.

These messages include examining the dominance of private sector care homes and whether the distinction between health care and social care should be abolished.

He added: ‘If what was wanted was the Dilnot commission to pass on difficult messages, then it’s difficult to say that’s what we’re going to get. We are being told [its recommendations] have to be in practical parts for ministers to take away.’


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