Southern Cross Healthcare to axe 3,000 jobs

The UK's largest care home group today revealed plans to cut 3,000 jobs in the latest blow to staff at the crisis-hit care homes operator. Southern Cross Healthcare, which is responsible for looking after some 31,000 residents, said the move was essential to address "staff effectiveness" across its 750 homes. Southern, which employs 44,000 staff, said the proposals to slash the workforce by nearly 7%, were part of its programme of change launched 18 months ago. Southern Cross recently warned it was in a "critical financial condition" as it unveiled a £311 million loss in the six months to March 31. The company is underpaying its rent by nearly a third until the end of September in a move to buy it time to find a longer-term solution to its woes. As well as uncertainty over the future of the firm, staff and residents have faced speculation that as many as 200 homes could be closed or offloaded to other operators. Paul Kenny, general secretary of the GMB trade union, called for financial backing from the Government to support Southern Cross. He said: "This is the start of a disaster for the residents as well as a kick in the teeth for the staff. "This is the trigger for the Government to step in with immediate financial support to ensure that Southern Cross continues to operate and continues to provide a home for 31,000 elderly and vulnerable residents looked after by 44,000 staff. "The residents, their families and the staff demand immediate action from Government today." A process of consultation has begun on the job cuts as well as the potential implementation of a "standard contract of employment" for new and existing staff. Southern said it was committed to working with the GMB trade union to minimise redundancies and expected the whole process to be completed by October. Home managers, deputy managers and relief managers, activity co-ordinators and administrators will not be affected, the company added. Jamie Buchan, Southern Cross chief executive, said: "We are engaging with colleagues to put in place the best possible staffing model for our future needs, and one which fully embraces the best practice available to us. "In developing this model during a very challenging time for both our company and the industry we are determined that the process we undertake should be exemplary in terms of staff communication." As Southern Cross struggles with rising rent bills, it is also facing declining local authority fees as fewer councils placed residents with the company. Local authority admissions declined by 15% in the first half of its financial year, though there were more NHS referrals and private patients. Councils and the NHS account for 70% of the company's patients. Darlington-based Southern consequently saw revenues drop 3% to £464 million in the first half, as overall occupancy declined by 3% to just under 87%. The company launched its "New Horizons" programme of change 18 months ago, which will look at all aspects of its operations, including quality of care, staff development and costs. Unison criticised private equity takeovers of public services that use "high risk" business models. Former Southern Cross owner Blackstone had a strategy of borrowing heavily to buy up nursing homes before selling them on to landlords. But this tactic stopped working when the financial crisis hit in late 2007 - shortly after Blackstone sold its remaining stake in the business, which had quadrupled in value since it bought the firm in 2004. Dave Prentis, Unison general secretary, said: "This is another nail in the coffin for privatisation. "While big City backers and company bosses have made off with tens of millions of pounds, vulnerable elderly people and care staff are paying the price. "Losing your job in this economic downturn is a tragedy, and for elderly people to have the huge worry of losing their homes is a disgrace." Sources told the Press Association that over 300 nurses and 1,275 care staff are among those set to lose their jobs. It is understood that almost 700 catering posts will also be axed, as well as 440 domestic jobs and 238 maintenance posts. A Department of Health spokesman said: "It is for Southern Cross, its landlords and those with an interest in the business to put in place a plan that stabilises the ownership and operation of the care homes. "That process is happening and we must let it continue. This is a commercial sector problem and we look to the commercial sector to solve it. "Department of Health officials have been in frequent contact with Southern Cross's senior management over the last three months and that will continue. We are monitoring the situation closely."