Page last updated at 13:13 GMT, Thursday, 16 June 2011 14:13 UK

Minister welcomes agreement on Southern Cross

Care services minister Paul Burstow has welcomed an agreement that gives care homes provider Southern Cross four months to find a solution to its financial difficulties.

Responding to an urgent question on 16 June 2011 from Labour backbencher Nick Smith, Mr Burstow said the move was a "welcome development" which would reassure the 31,000 residents of the firm's homes.

He insisted that the welfare of the residents was the government's "paramount" concern.

But he added: "This is a commercial sector problem and we look to the commercial sector to solve it. All of the business interests involved fully understand their responsibilities."

Mr Smith accused ministers of being "too slow to get a grip" on the crisis.

"Residents and their relatives need peace of mind, they need it now," he added, telling MPs that the company "appears to be hanging by a thread".

Shadow health minister Emily Thornberry lambasted the "lack of leadership and information" from the minister.

She said although there now appeared to be a period of "relative stability", "great uncertainty" remained for residents and employees.

Labour's Michael Meacher said: "The business model deployed at Southern Cross, selling off 750 freehold properties at colossal profit and then leasing them back, with the state paying the fees in order to meet those rents, with the rental income then being siphoned offshore by their landlords into tax havens, leaving the homes grossly under-funded for many years and failing basic CQC standards in 164 homes.

"Is that not a national disgrace?" he asked.

Mr Burstow conceded that the government needed to "draw lessons" from the fiasco.

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