Southern Cross

Tuesday 19th July 2011 Written Statements

[The Minister of State, Department of Health (Paul Burstow)]

I wish to update the House further on the situation regarding Southern Cross Healthcare.

As I have always made clear to the House, the Government’s overriding concern is the welfare and safety of the 31,000 residents in Southern Cross’s care. We expect all parties to work together to secure a consensual, solvent restructuring of the business that meets their collective responsibility to secure the welfare and care of residents. I am pleased to see that Southern Cross, its landlords and lenders continue to share that view.

Officials continue to maintain close contact with Southern Cross’s senior management, landlords and lenders. Government continue to be actively involved in discussions with all parties. When I last updated the House on 12 July, Southern Cross had the previous day announced their expectation that the end of the restructuring process would see the operation of all the company’s care homes being transferred to the landlords and alternative providers of care. This represents a step in the ongoing process, agreed between the company, its landlords and lenders on 15 June, for a consensual, solvent restructuring. Discussions to resolve the remaining steps continue.

I appreciate that residents, families and staff are anxious to know what will happen next. Let me repeat the assurances I have given to the House previously: whatever the outcome, no one—state-supported or self-funded—will find themselves homeless or without care. We have made clear to all parties involved in the restructuring discussions that they have a collective responsibility to ensure a way forward that covers all homes and assures continuity of care. In addition, we will continue to work with the Association of Directors of Adult Social Services, the Local Government Association, the Care Quality Commission and others to ensure that they are ready to respond to any potential disruption to the continuity of care and to ensure that all residents are protected.

The announcement made on the 11 July by Southern Cross has no immediate effect on the provision of care or the operation of care homes. Southern Cross remains in operation, and will continue to operate all its care homes until transfers to new operators have taken place. I understand that this process is expected to be completed by the end of October or earlier. That does not mean however that it should take that long to make clear what each landlords plan is and how homes will be run by new operators.

Each of Southern Cross’s landlords is settling its arrangements regarding which care home operators to work with. This is a key part of the ongoing discussions. The Government are strongly urging all parties to set out their plans as swiftly as possible so as to offer reassurance to residents and families. As these arrangements are finalised, we understand that updates will be issued. NHP the biggest of the landlords, owning 249 Southern Cross homes, announced its plans on 18 July to contract with an alternative provider of care and to transfer Southern Cross care home staff. The Department is being kept up-to-date on developments.

I want to make it absolutely clear that no transfer of homes will take place without new operators having been approved and registered by the Care Quality Commission. Alternative operators will need to be reputable and experienced care providers that can satisfy the CQC that they are capable of delivering high-quality care and of meeting all regulatory standards. A number of landlords which will take over the running of Southern Cross homes are already registered with CQC as care providers in their own right and there are established processes to allow these providers to extend their current registration to include additional homes.

For providers not currently registered with CQC, it will require a new application, which will be subject to full scrutiny and a determination of fitness to provide the service. CQC is committed to ensuring continuity of care, but it will not lower the regulatory bar or reduce the rigour of the registration. CQC’s principal concern is the safety of service users and it will not compromise on the standards required. I have been assured that CQC will ensure that resources will be made available to handle any registration work that is needed and they have been working with Southern Cross for some time to prepare for this.

The transfer of care homes to alternative operators will be a managed process that ensures continuity of services. The company has withdrawn its statutory redundancy notice and given an undertaking to care home staff that they will transfer to new operators on their current terms. All parties involved in the negotiations have given a clear commitment that the continuity of care will be paramount throughout the process.



For the future, I would like to assure the House that the Government will be considering what measures may need to be put in place to prevent similar situations from arising again. Options for financial regulation or other measures will be considered as part of the development of the forthcoming White Paper on social care. The Department of Health is already working with the Department of Business, Innovation and Skills to consider ways to ensure a diverse and dynamic social care market, but with the right safeguards for stability and continuity of care. I will update the House as this work develops.

With the forthcoming recess, I appreciate that hon. Members will want to be informed of developments. I undertake to write to hon. Members to keep them informed as the matter progresses.