GMB fears care homes rescue could be storing up future problems

One of Britain’s biggest unions believes that the rescue of 30 threatened care homes in the region may simply be storing up future problems.

When Southern Cross, the UK’s largest home care operator, went bust earlier this year there were fears that thousands of its 31,000 residents could find themselves on the streets.

Thankfully, that has proven not to be the case with the company transferring its 750 plus homes in the UK to over 30 existing operators. One of these is Four Seasons Health Care Group that by being registered in Jersey does not post accounts.

On October 31^st its subsidiary company Four Seasons Healthcare assumed control of the final wave of 139 homes being transferred to it. Of these 22 are in the North West with a further eight across Yorkshire and Humberside. The moves brought the total number of homes under the care of the company to over 500.

Four Seasons homes are rated highly by the Care Quality Commission; the body that oversees standards in care homes, with 88% rated as good or excellent. Nevertheless the company has experienced financial difficulties in recent times.

In 2009 its creditors agreed to write off half of the group’s £1.6 billion debt. Previous owners Qatari Investment Authority, a private equity company walked away having lost their entire investment and ownership was transferred to its creditors, the main one being the Royal Bank of Scotland who took a 40% share. The maturity – repayment - of the remaining debt of £780 million is set for September 2012.

The GMB, Britain’s third biggest union after Unite and Unison, is worried that Four Seasons may not be able to pay it especially as in 2010 the subsidiary company itself posted a £12.1 pre-tax loss. They’ve suggested that ‘If Southern Cross was the original motion picture, Four Seasons are the sequel, and they’re coming soon to a town near you’ whilst also querying why just over a quarter of the £31,800 income earned per occupied bed in 2010 was spent on rents and interest payments.

In response a Four Seasons spokesperson accused the union of “singling us out for attack after we had declined voluntarily to give them collective bargaining rights or deduct union subscriptions from staff pay.” He denied GMB claims that  Four Seasons was anti-union and pointed to the single agreement the group has covering one of its homes.

The spokesperson said “we are well able to manage our debt and are very confident we will be able to refinance it before it becomes due next year. The company has recently been valued at £950 million, much greater than our debt. Southern Cross was a private sector problem that has been resolved by the private sector, thus saving a massive burden falling on local authorities or the public purse. We’ve taken on operating homes that were marked for closure, will be investing in them and working with 7,300 transferred staff to improve the quality of care in homes.”

None of which has reassured Jon Smith, GMB organiser in Yorkshire and North Derbyshire who said, “that for nearly two years we warned that Southern Cross’s business model was fundamentally flawed. We feel the same model is being adopted by Four Seasons and that concerns us greatly.”

Also worried that Four Seasons could prove to be short-term custodians of the three care homes they taken control of in his Blackley and Broughton constituency is Graham Stringer, MP. He said; “I was appalled by the financial arrangements around these care homes and I think it brings into question whether or not care homes providing a public service for vulnerable people should ever be in the private sector.”

Asked to provide an alternative to the transfer of Southern Cross homes  Smith said “they could have been brought under direct local authority control or transferred to not for profit providers. 80% of funds for these homes comes anyway from the taxpayer via local authorities and the NHS and such a move would cut out the costly middle men.”