Southern Cross Care Homes

Lord Bilimoria Excerpts

Tuesday 12th July 2011 Lords Chamber

[Earl Howe]

My noble friend is quite right to say that it is indeed possible that landlords may not wish to take the properties back, but in that scenario it has been agreed that those landlords will look to partner with a reputable care home operator. So it might well be that a care home will join a consortium run by one of the major care home operators which is now in discussions.

[Lord Bilimoria]

My Lords, the Minister said that Southern Cross’s business model was unique, but surely it is not since so many care homes have been following the Opco/Propco model. Does the Minister therefore agree that it was possibly not just mismanagement that was responsible for this situation, but the fact that the business model which worked in the good times—the previous owners did very well out of it—is not working now? As the noble Baroness, Lady Thornton, said, several care homes are in difficulties. Does the noble Earl think that the cuts that are being made might have a role to play as well? Have the Government made a full analysis of the dire situation in the care home sector?

[Earl Howe]

Clearly, my Lords, before the Government produce a White Paper on social care a thorough analysis will be done, and we have the Law Commission report that will guide us in part. Southern Cross developed a business model that worked during times of increasing prosperity, when property values were buoyant and occupancy levels were similar, but it entered into contracts with its landlords which are proving unsustainable in the present climate. Demand for residential care is reducing generally. Not only are councils purchasing fewer care home places, but people are also opting for greater personalisation and more innovative approaches to providing care services, including being looked after at home. My advice is that the Southern Cross business model is unique. That may be—the noble Lord has considerable knowledge in this area—an overstatement and perhaps there are some care homes which are similarly structured, but it is certainly the largest and most significant model of its kind that we are aware of. From the advice I have received, I do not think we should be unduly concerned that other instances on a par with Southern Cross are likely to occur.