By Daniel Martin

The Southern Cross care home crisis could be repeated because of ministerial inaction, MPs warned last night.

The sudden collapse of Britain’s biggest residential care operator in the summer caused turmoil for more than 30,000 elderly and vulnerable people.

The company was crippled by having to pay a £250million rent bill as councils sought to cut fees in the wake of the credit crunch.

Labour MP Margaret Hodge said: 'The Department of Health must get to grip with the very real risks to the social care market'

Labour MP Margaret Hodge said: 'The Department of Health must get to grip with the very real risks to the social care market'

Despite the fiasco, the Commons public accounts committee has found that neither Whitehall nor local authorities are monitoring the financial health of care providers.

Other companies are racking up huge debt, including Four Seasons Healthcare, which runs more than 500 homes and carries, according to MPs, nearly £1billion of debt.

There is no early warning system for when providers are getting into difficulty, and no apparent plan for what happens if they fail.

At the same time, care homes face rising costs and reductions in what councils will pay for places. The public purse covers 63 per cent of funding for homes.

From the Mail in June

‘Reducing this funding could destabilise the market or create problems for the NHS with elderly people blocking beds as local authorities no longer fund the social care places,’ the cross-party group of MPs cautioned.

Committee chairman Margaret Hodge said: ‘The Department of Health must get to grip with the very real risks to the social care market, if we are to avoid another Southern Cross.

‘No one, government or local authorities, really knows what is going on locally or whether one provider is becoming too dominant.

‘Effective oversight of the care market, including market share of large providers at the local and regional level, is essential to protect social care users and taxpayers.

‘Local authority budgets are shrinking and large-scale providers are racking up debt – Four Seasons Health Care, for instance, carries nearly £1billion 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.’

From the Mail in July

The MPs also looked at personal care budgets, which are supposed to give older people the power to decide which services they receive.

They found that people were not getting enough support in this area, with many confused about what the money can be spent on.

‘There are wide variations in the information provided by local authorities,’ Mrs Hodge said. ‘People should not be subject to a postcode lottery when deciding on their care. This is important for taxpayers as well as users.’

Ministers announced yesterday that all homes formerly run by Southern Cross in England have been transferred to new operators.

Care services minister Paul Burstow said: ‘I would like to thank all of the organisations which have worked together with the Government to ensure that the transfer has been carried out with the minimal impact on residents and staff.

‘This has involved complex and difficult negotiations, but throughout we have made clear that continuity of care for residents was paramount.

‘Without this huge co-operative effort, the situation could have been very different for the 31,000 residents and 40,000 staff.

'No one has lost their place and everyone has continued to be looked after.’