THE Government must do more to prevent the care homes sector becoming embroiled in a financial crisis similar to the one that saw Southern Cross fold, senior MPs warned today.

The Public Accounts Committee (PAC) said that neither the Government nor local authorities were doing enough to monitor the finances of providers and has cited Darlington- based Four Seasons Health Care as an example.

Four Seasons, which employs hundreds of people and runs more than 70 care homes in this region alone, denied it is nearly £1bn in debt and that the Government is failing to monitor its finances.

The PAC concluded that “effective oversight” of the market had still not been put in place following the collapse of Southern Cross, another Darlington company, which crashed during the summer.

The demise of Southern Cross, which caused turmoil for more than 30,000 elderly and vulnerable people, has been blamed on its controversial business model of selling its homes and leasing them back from landlords.

The PAC report warned there was no early warning system for when providers were getting into difficulty and no plans for what happened if they failed.

Chairwoman Margaret Hodge warned the Department of Health must “get to grip with the very real risks”

to the social care market to avoid another Southern Cross crisis.

She added: “Local authority budgets are shrinking and large-scale providers are racking up debt – Four Seasons Health Care, for instance, carries nearly £1bn of debt – yet the department is not monitoring their financial health.

“It is deeply worrying that the department has not made clear what will happen when providers fail.

“This is crucial to protect frail and vulnerable users of care and to provide reassurance that the responsibilities of the failed providers will be transferred quickly and with minimum disruption to users.”

Four Seasons Health Care, which employs 200 people in Darlington, welcomed the committee highlighting the issue of care provision, because it was a concern for the sector, but refuted a series of other allegations.

The company said it was operating profitably, with profits consistent at about £100m and its most recent valuation of £950m was “significantly greater” than the company’s debt.

It added that it was not as vulnerable as Southern Cross, because it owned 60 per cent of its facilities, which had less impact on its rent payments, and that it had a higher occupancy rate.

The statement said: “Four Seasons is in good financial health. We have already shared detailed confidential information about our financial health with both the Government and the Association of Directors of Adult Social Services, as a result of which they recognise that we are different to Southern Cross in key respects.

“Furthermore, the various landlords of former Southern Cross homes and their respective teams of advisors who have given us a vote of confidence by choosing us as their preferred operator have all carried out their due diligence during which they have had access to privileged information and they have and satisfied themselves of the long term viability before entering into legal contracts with us.”

Dave Prentis, general secretary of union Unison, said: “Unison has long been warning about the huge dangers lurking in the care sector. We need a radical shake-up to protect elderly people, and the people working to care for them, from a Southern Cross II taking place. It is time for the damaging privatisation experiment to end.”

􀁧 The final care homes run by Southern Cross have now been transferred to new operators.

Care Services Minister Paul Burstow thanked all parties involved for their diligence and hard work in ensuring the transfer caused minimum disruption to residents.

The transfers have been scrutinised and approved by the Care Quality Commission.