Who´s to Blame for Southern Cross?
This morning I tried to book a room at the Travelodge on Worthing seafront. I could stay in a basic room on Monday night for £57.75. Not bad value.
So, what’s the connection between
Travelodge and Southern Cross?
The press has spent the past few weeks picking over the Southern Cross business model. The idea of selling their homes to landlords and renting them back made the firm profitable and its director’s wealthy in the short term but has now left Southern Cross on the brink of collapse.
The model relied on income increasing each year which it hasn’t for the past few years. Southern Cross is the UK’s largest care provider with around 30,000 residents in its homes and around 70% of those are funded by local authorities.
Here in West Sussex the local authority pays £419 a week for residential care, which is £59.85 a night, or £2.10 more than staying in the Worthing Travelodge.
For that extra £2.10 a week a care home is expected to provide three meals a day, activities, laundry and, most importantly, care.
In West Sussex the rate has been frozen for the past three years but in some areas authorities have actually reduced their rates this year!
Additional taxation such as 2.5% on VAT and 1% on employers National Insurance has hit care providers hard. They are also suffering inflation in fuel and food running at around 6% this year.
Any profitable business that finds itself taxed and regulated more whilst it’s income if frozen or reduced is eventually going to get into trouble.
Unfortunately I do not predict a happy outcome for the residents and their families at Southern Cross. Many care home managers and owners that I speak to now tell me that it costs more to provide care than the local authority pay. They make a loss for every local authority resident they accept and they don’t intend to take any more.
Unless the State pays more, the figures for care no longer add up. Our elderly and vulnerable people deserve rather better than this.
The above is the personal view of Tom Scott.
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