Southern Cross deeper into red

Britain’s biggest care homes group has signalled it would get tough in negotiations over fees with cash-strapped councils as it reported a more than doubling in annual losses.

Southern Cross Healthcare, which operates 752 care homes across the UK and employs 43,000 people, slumped into the red by £47.4 million in the year to September 30 against £19.8 million in pre-tax losses the year before.

The group has suffered as councils and primary care trusts, which pay for more than 70% of its customers, have demanded rate reductions while rents have risen.

Its outlook since the Government’s spending review has worsened, with council budgets cut by 26% and no protection for social care funding.

But Southern – which is holding ongoing talks with potential takeover suitors – said forthcoming negotiations with councils over fees would be “critical”.

Jamie Buchan, Southern Cross chief executive, said: “Given the cost pressures facing our industry, including the reasonable expectations of the people who work within it and the increasing acuity of residents placed in its care, it is very clear that no local authority can justify reductions in fee levels at this time.”