Care industry on ‘brink of collapse’ as Southern Cross cuts 3,000 jobs

Southern Cross has announced it is to lose up to 3,000 jobs on the same day a report from Unison warned that other long term care companies may be in the same boat.

It warned that the care crisis was far from over and that as many as 50,000 vulnerable people and their families could be affected.

The announcement from Southern Cross, the country's largest care home operator, is the latest in a series of revelations about the business' financial troubles.

And it appears frontline care staff will be most affected with the company saying ‘home managers, deputy managers and relief managers, activity coordinators and administrators will not be directly affected by the proposed reduction in jobs'.

Its statement continued:" These plans have been developed, consequent on the company's staff effectiveness study which was announced earlier this year.

"The proposed reduction in staff numbers forms part of the ongoing New Horizons programme of change, instigated by senior management 18 months ago to improve operational effectiveness.

"A process of consultation has now begun on the potential implementation of a standard contract of employment for new and existing staff, the introduction of new roles in care, ancillary support and maintenance supervision; and the proposed reductions in staff numbers," it added.

Southern Cross employs 44,000 people and has 31,000 residents.

In reaction, the GMB union which represents many of the affected staff, has called on the government to intervene financially.

Paul Kenny, general secretary of the GMB, 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.

"The residents, their families and the staff demand immediate action from government today," he added.

Earlier, Unison unveiled its report examining the running and funding of the care industry and warned that other providers may also be at risk of a similar fate.

It found that the second largest care provider, Four Season, is also in severe financial difficulties and noted that others may follow.

If both Southern Cross and Four Seasons were to collapse, around 1,150 nursing and residential care homes would be at risk of closure, affecting nearly 50,000 vulnerable people and their families and hitting over 60,000 staff.

Unison blamed private equity firms for much of the problem, called the privatisation of the care industry an experiment that had gone seriously wrong and feared taxpayers would be left picking up the bill if the businesses failed.

"The quality and continuity of care has fallen dramatically since privatisation, as inexperienced companies bid to run these services," it said.

"The cost and risk has also risen, as companies borrow too heavily, with their financial performance too weak to repay borrowings on agreed terms.

"Local authorities may be forced to take over failing companies to protect residents, but at a huge and unplanned cost to the taxpayer," it added.

Dave Prentis, general secretary of Unison, concluded: "We have already seen the huge impact of the Southern Cross collapse, but the care crisis is far from over.

"Our report exposes the risk of other care homes collapsing because of the behaviour of wheeler-dealer private equity firms. The home and day care market is worth about £4bn a year, making it attractive to private companies eager to make profits.

"But the looming catastrophe in the sector shows that gambling with people's care is irresponsible and too risky."