Southern Cross Concern

The ongoing concern surrounding the future of Southern Cross care homes continues after the troubled care home operator announced it would close

The decision comes one month into a four month restructuring period that was agreed at crisis talks in June. Last month it emerged that the organisation’s Chief Executive pocketed over £1 million in pay and bonuses in the last two years.

This is an astounding figure that seems difficult to justify when you consider the perilous position the company now finds itself in. 

The company recently announced a half-yearly loss of £311 millionreduced the amount it pays to landlords by 30% in a bid to avoid bankruptcy and announced plans to cut 3,000 jobs.

Figures produced for consultation showed that over a third of these job losses would have come from care staff with other frontline positions including nursing and domestic services also hit. The company has been paying salaries to staff who deliver care services that are many times less than the senior management who have been rewarded handsomely while the company has failed.

There’s something fundamentally wrong about what has happened at Southern Cross and it epitomises the challenge we have in ensuring that older people get high quality dignified care.

That is not to say that there should never be private delivery of care for older people, rather that the business model for such a venture must prioritise the duty of care it has.  In the case of Southern Cross, profit for a small number of people has been put before the company’s responsibility to the people it has been paid to care for.

The pay for those at the top of Southern Cross demonstrates the problem of extremes of pay for staff and calls into question the economic model which companies like Southern Cross follow because of its lack of fairness.   The wider issue of extremes in pay and the inequalities which underpins such companies is examined by the authors of “The Spirit Level”. They compared the economic structures of different countries and came to the conclusion that societies characterised by extremes of wealth and poverty are not just less fair and less equal, but less successful economically. 

The Interim Report of the Commission on High Pay addresses the issue and I think is worth a read.   A couple of their findings stood out for me: 

  • As wages for the majority fail to keep up with price rises, the public is increasingly demanding action to curb excess at the top.  A new ICM poll reveals that 72% of the public think high pay makes Britain appear “grossly unequal” and 73% have no faith in government or business to tackle excessive awards.
  • FTSE 100 chief executives are currently paid 145 times the average wage – or £3.7m.  By 2020 this will increase to 214 times the average.
  • Last year top executives saw their salary increase by 3% while pay for the rest of the workforce rose by only 0.1%.

There are particular issues for women who, although in theory protected by equality legislation, still dominate the part-time, low paid sector which is common in social care.

In Edinburgh, there is a lower proportion of private care than elsewhere in the country because of massive increases in property prices a few years ago.  This increase saw firms pulling out of private care as there were greater profits to be gained by selling off properties for high-end developments leaving the Local Authority to step in to pick up the pieces.

However, there are care homes operated by Southern Cross across the Lothian area and I am supporting my colleagues’ calls for greater clarity from the Scottish Government on how it will deal with this situation.  I will also be keeping a close eye on the work of the Parliament’s Health and Sport Committee which is currently carrying out a short inquiry into regulation of care for older people.