Strenuous efforts are being made in Whitehall ? and the City ? to ensure the survival of the country's biggest provider of residential care
Southern Cross, the troubled social care provider, posted half-yearly results yesterday that have implications far beyond the pockets of its investors, or even the 31,000 residents of its 750 care homes, and the staff who work in them, for whom the future is alarmingly uncertain. Strenuous efforts are being made in Whitehall ? and the City ? to ensure the survival of the country's biggest provider of residential care. If its pre-tax losses of over �300m were to translate into collapse, it would raise fundamental questions about the viability of both private provision and localised commissioning.
Since the 1990s the private sector has come to dominate adult social care: 95,000 council beds have gone, replaced by 110,000 in private care homes. Big businesses like Southern Cross have been outriders of the smaller state and the purchaser-provider split. The results are not all bad: there may be something fundamentally unattractive about services for society's most elderly and vulnerable being described by business analysts as "the dementia offering" or "the private pay market", but what really matters is the quality of care and whether it is efficiently provided. The safeguarding of the former is not perfect, but at least there are clear statutory obligations. In contrast, there are no controls on the way the private sector runs its finances, nor any national failure regime to pick up the pieces. Local authorities choose on price, with no kind of health check on the business itself, and using calculations that are as much about how much and how many places each council can afford in hard-pressed times as they are about what the service costs and who needs it. This year they will pay on average �521 a week for something Southern Cross says is costing it �558. That may be because Southern Cross has made some curious business decisions such as selling off its properties and leasing them back at rents that only made sense during the property boom. The GMB, the union that represents most care workers, reckons that adds �60 per place per week to its costs. That is remarkably close to the difference between viability and failure. Yet in some regions Southern Cross is so dominant in care home provision that its failure would put acute strain on local authorities, which may find themselves required to rediscover management skills they thought they would never need again. If it meant closing homes, then for some residents it could be fatal.
Southern Cross will in the end almost certainly be too big to be allowed to fail. Meanwhile the architects of health service reform should reflect on the perils of private provision, the weaknesses of localism and the indispensability of national frameworks.
Financial crisis Mikel Arteta Poland Women Comedy Economic growth (GDP)
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