The beleaguered care home provider Southern Cross today announced it is to shut down as its shares were suspended at 6.25p by the Financial Services Authority.
The beleaguered care home provider Southern Cross today announced it is to shut down as its shares were suspended at 6.25p by the Financial Services Authority. The company, which owns around 750 homes across the country, will hand over control to landlords after it became unable to pay its rents, despite the company’s financial restructuring in March.
David Cameron’s public sector “revolution”, announced today, intends to give private companies the right to run schools, hospitals and nearly all other public services. The news of Southern Cross’s demise, the behaviour of some of its directors and its inability to continue providing care for elderly people should be of concern to the prime minister.
Shadow health secretary, John Healey MP, said in a statement today:
“This announcement is what those living in Southern Cross owned homes have feared for weeks. While the company offers reassurances, residents and their families must now hear from Ministers what action they are taking to guarantee nobody ends up on the street or is left with inadequate care provision.”
In June, the Financial Times reported that the company’s directors had made £35m after selling their entire shares in the Southern Cross. In December, the company’s former chairman, William Colvin, and three executive directors sold all of their stakes in the company for 550p a share.
Last month, the GMB union reported that one of Southern Cross’s landlords, Loyds Property Investments, which owns 49 of its properties, is linked to offshore tax avoidance. Its parent company, Loyd’s & Associates Inc, is registered in the British Virgin Islands. The union found that Loyds, which is in administration, has links to Israel, the Channel Islands and Switzerland. Its website boasts that the company’s current portfolio in the UK is worth an estimated £285m.
Today, 31,000 elderly residents of Southern Cross care homes are awaiting the news of whether they will have to find somewhere else to live. It is thought that while 250 of the homes will be run by other companies immediately, the future of the remaining 500 is yet to be decided. The 44,000 staff that work in the care homes too will be experiencing an uncertain period as the company searches for new landlords to takeover its operations.
Christopher Fisher, Southern Cross’s chairman, said the company appreciated the loyalty of its staff:
“We anticipate that the period of uncertainty which we have been experiencing will now draw to a close. We regret the loss of value which shareholders have experienced.”
As Laura Bradley wrote on Left Foot Forward last week, the Dilnot report on social care for older people outlines some important changes to the status quo. The news of potential job losses and vulnerable people being forced out of their accommodation shows all too well the risk of private companies, even those that have public money put into them.
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