Southern Cross Care Homes

Debate between Earl Howe and Lord Bishop of Manchester

Tuesday 12th July 2011 Lords Chamber

[Earl Howe]

My Lords, my advice is that Southern Cross is not insolvent in either sense of the word. Its assets, I am told, exceed its liabilities, and it is able to meet its commitments as they fall due, thanks to the agreement reached between the company, its landlords and its bankers. The process announced on 15 June is the key to this: the company’s restructuring committee is developing a plan to stabilise the ownership and operation of Southern Cross care homes. We expect, as I have said, that there will be an orderly process of reassigning homes to landlords and new operators. That process will take place between now and October, during which time continuity of care will be maintained. Nothing that I have said changes the outlook for the medium term, and I believe that we can say, and that the company can say, that insolvency is not an issue at present.

[The Lord Bishop of Manchester]

My Lords, for all the assurances that the Minister has given, and for all his obvious sensitivity to the issues that many residents face, the truth remains that a lot of people in these care homes feel themselves at present to be in an extremely vulnerable position. In these circumstances, does he feel that the level of salary and bonuses that some directors have is appropriate, and would he like to comment, in the light of what he said earlier about financial implications, on whether or not that is an area that in future he would feel needs to be examined more carefully?

[Earl Howe]

I am grateful to the right reverend Prelate. I do not think any of us feels comfortable if the directors of struggling companies take substantial bonuses. I have to say that I do not have a briefing on whether the directors of Southern Cross have taken substantial bonuses in recent months, but I shall make it my business to try to ascertain that. But of course the right reverend Prelate is right to say that we must be clear that the stability of care homes, looking after frail, vulnerable, elderly people, should not be put at risk by mismanagement. I am afraid that Southern Cross has been a story of mismanagement since it was established in its present form.