More must be done to stop financial collapse of care homes - MP committee

Closer scrutiny of finances needed, Public Accounts Committee warns

The finances of England’s care home companies need to be monitored more closely by the government if another Southern Cross-style collapse is to be avoided in the future, a House of Commons committee has said.

The Public Accounts Committee said that it is “worrying” that the government has insufficient powers and information to identify or prevent providers becoming too dominant.

A similar crisis to the failure of Southern Cross earlier this year could occur again because not enough checks are being carried out on care home groups, the committee said.

Additional reductions in social care budgets could lead to added pressures on operators which are already facing inevitable increases in costs, the committee said. Given the fact that 63% of care home funding comes from the public purse, providers are particularly vulnerable to cuts in local authority funding.

Martin Green, chief executive of the English Community Care Association, which represents independent care home providers, said that “better intelligence” about what is going on in the care market is needed.

Referring to the Southern Cross collapse, he told BBC Radio 4's Today programme: "We have to make sure the system is as robust as possible so that it doesn't happen again."

Ministers said they would be looking to put forward plans in the new year. Trade union leaders said care homes should be brought back into public ownership.

The Public Accounts Committee report is available here.

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