June 1 (Bloomberg) -- Prime Minister David Cameron gave a guarantee that elderly people in residences run by Southern Cross Healthcare Plc won’t lose their care as Britain’s biggest operator of such homes struggles to reverse losses.
“It may well not be in the interests of the residents to move them, but we have to look at that very carefully,” Cameron’s spokesman, Steve Field, told reporters in London today. “We will do what we need to do to ensure that there is effective protection for anyone affected. We are clear that we are putting the interests of the residents first.”
Darlington, northeast England-based Southern Cross said yesterday it will defer 30 percent of rental payments through September. The company reported a loss of 311 million pounds ($511 million) for the six months ending March 31. Chairman Christopher Fisher said in a May 19 Regulatory News Service statement that Southern Cross is in “critical financial condition.”
A possible failure of the company would put 31,000 residents of its homes at risk. The opposition Labour Party called on the government today to put in place a contingency plan to guard against that eventuality.
“Thousands of very vulnerable people and their families will be worried sick by what’s being reported about Southern Cross,” Labour’s health spokesman, John Healey, said in an e-mailed statement. “Ministers must get a Plan B in place if the company can’t sort out its problems.”
Southern Cross fell 7 percent to 7.25 pence at 1:01 p.m. in London. The shares have declined 62 percent this year.
The chairman of Parliament’s cross-party Health Committee, Stephen Dorrell, said the government needs to make sure there is no interruption in care for residents, though he said the government shouldn’t consider a bailout.
“It doesn’t seem to me that it’s the taxpayers’ job to fund the losses that have been suffered by the people who have invested in Southern Cross; that was their risk and it’s their loss,” Dorrell told BBC News.
To contact the reporter on this story: Kitty Donaldson in London at email@example.com.
To contact the editor responsible for this story: James Hertling at firstname.lastname@example.org.