Shropshire care home not under closure threat, says owner

Meadowbrook Care Home in Gobowen, near Oswestry, is run by the troubled care giant Four Seasons.

But company spokesman Bob Mitchell today said none of its homes was at risk of closure, and that there would be no impact on the services they provide.

The home provides residential care for up to 79 people with special nursing needs, including those living with dementia and associated illnesses.

It was described as "requiring improvement" in a Care Quality Commission report which was published in February.

Four Seasons, which is owned by private equity group Terra Firma, has 470 homes across the UK. Four Seasons has until December to make a £26 million interest payment to creditors who could otherwise put it into administration.

Mr Mitchell said it was a difficult time for the care industry, but said the company was not looking at closing any of its care homes.

"The group has got sufficient medium-term financial flexibility, and we are carrying out a review to further enhance financial liquidity," he said.

"There is no scenario we can envisage that would have an impact on any of our care homes."

Mr Mitchell said the care industry as a whole, both residential and providers of care in the home, were struggling due to a combination of government cuts to social care budgets, and the increase in the minimum wage announced in the last Budget.

He said the industry would be waiting to here from the Chancellor in his Autumn Statement about whether more money would be made available to the sector to cope with rising costs.

Meadowbrook was found to be "requiring improvement" in all four categories it was assessed during an unannounced visit by inspectors last year.

The home was described as being "not safe" and inspectors said there were not enough staff on duty.

Fears that care industry faces funding crisis:

Four years ago the collapse of Britain's largest care home provider sent shock waves throughout the industry.

For the company's 31,000 residents, including those living at its seven homes in Shropshire, it meant months of uncertainty until the company's rivals stepped in to take them over.

But if anybody thought that the rescue of Southern Cross's 750 care homes marked the end of a crisis in the industry, they could be in for an unpleasant surprise.

The problems faced by Southern Cross were quite specific: high rents for its properties and a mountain of debt left by its then owners.

But mounting pressures on the sector – fuelled by a combination of cuts to council budgets and Chancellor George Osborne's new living wage – have led to fears that the industry could be facing a crisis which will dwarf that engulfing the steel industry.

Four Seasons, which owns Meadowbrook Care Home at Gobowen, near Oswestry, is the latest company to hit financial difficulties.

The company, which has more than 22,000 beds spread across 470 homes, is battling with debts totalling £500 million.

The company has been told to find £26 million to pay for an interest payment next month, otherwise it runs the risk of being plunged into administration.

Bob Mitchell, spokesman for Four Seasons, says there is no risk to any of the company's care homes.

"The group has got sufficient medium-term financial flexibility, and we are carrying out a review to further enhance financial liquidity," Mr Mitchell says.

However, he says declining incomes from local authorities and increased wage costs are making it increasingly difficult for any companies which operate in the care industry.

"It is the whole industry, not just care homes but domiciliary care as well," he says.

"The amount that local authorities are paying care home providers has declined, in real terms, by five per cent over the past five years.

"The care industry is not like shops or other industries where you can say we will put up the prices to pay for the living wage, or reduce your workforce."

Despite Mr Mitchell's assurance, the GMB union is fearful for the future of Four Seasons.

The union's senior officer Amanda Gearing says: "Over the weekend, it has become apparent that Four Seasons is in financial crisis.

"As previously happened with Southern Cross, this could lead to care homes closing or changing hands and the GMB is calling for government intervention to bring stability back to the sector."

She says some Southern Cross homes have changed hands three times since the company's collapse in 2011, and a number of them have seen redundancies.

"Provider after provider has failed to deliver a quality care service on a shoestring budget," she says.

"Both our members working in care and those ordinary people with relatives relying on support from the care sector are all asking, when will this stop?

"The government need to consider practical steps, such as bringing these providers into public ownership, to ensure continuity of provision for those in care."

Ms Gearing adds: "If we can do it for the banks, surely we can do it for the care sector."

The union's branch secretary for the care sector Rachel Pincher is critical of the role of private companies, saying they are motivated by profit.

She says: "The truth is that there are real, vulnerable and fragile people relying on these services – and once again they will be worried about their homes and what will happen to them."

Mr Mitchell says he will be waiting with bated breath to see what announcements the Chancellor makes in his Autumn Statement later this month.

"We need to know whether there is going to be an increase in social care funding or not," he says.

Meanwhile, Chai Patel, chairman of HC-One, which rescued almost 250 care homes from Southern Cross following the 2011 crash, sounds a dark warning.

He says that the industry faces a "perfect storm" and needs significant help.

He says industry research, which has been presented to the Government, shows that half of the country's care homes are at risk of collapse.

"We reckon that 50 per cent of homes are non-viable, if you allow for capital expenditure and the rent on property," he says.

"Once the living wage comes in, 50 per cent of beds will go bust."