31,000 Elderly Homeless?

Monday 14th March 2011

31,000 elderly residents in Southern Cross care homes face being made homeless as GMB calls for QIAia to clear up the financial mess caused by sky high rents

These 750 UK Care homes are not factories that are failing from lack of demand but are an essential part of every community which now face ruin due to the combination of privatisation and private equity.

31,000 elderly residents in 750 UK care homes, run by Southern Cross, across Britain face the prospect of being made homeless as the company struggles to pay sky high rents on the freeholds of the buildings used as the care homes. This morning (Monday 14th March 2011) Southern Cross issued a profits warning and the share price has now lost 97% of the price it was floated for in 2006.

Earlier this month GMB staged another demonstration against the Qatari Investment Authority (QIA), which owns Harrods the total lack of action by the QIA on the sky high rents charged for care homes for the elderly owned by the QIA in Britain and the continuing tax avoidance on the income from these rents as the funds are channeled to off-shore tax havens.

Overcharging on rent amounts to £60 per week per care home bed. The public funds involved was intended to be used to pay for the care of the elderly in Southern Cross care homes. Instead these funds are being used to pay the interest on £1,100m bonds raised by the QIA when they bought the care home builidngs from a private equity company in 2006. Taxes on this income are avoided as the funds are funnelled via companies in the Isle of Man and the Caymen Islands. See notes to editors for details.

At the demonstration outside Harrods GMB protesters were dressed in Bedouin attire and had oil drums and placards with slogans calling for QIA to stop ignoring the issue.

GMB has 10,000 members working for Southern Cross care homes for the Uk’s elderly. These members are paid the National Minimum Wage (NMW) and the majority have had their pay frozen. A list of all 750 Southern Cross care homes is available at http://www.gmb.org.uk/ at the foot of this release in the Newsroom.

Paul Kenny GMB General Secretary said:

“It is time for the QIA to clear up the financial mess that it and the private equity industry created at Southern Cross and which now threatens to make 31,000 vulnerable elderly UK residents homeless.

These 750 UK Care homes are not factories that are failing from lack of demand but are an essential part of every community which now face ruin due to the combination of privatisation and private equity.

The boast of the private sector is that it can run services better than the public sector can. This is yet another case of where the private sector has already made huge profits from the public funds and now expects the tax payer to pay to clear up the mess now that it is all going wrong. For over a year GMB has been calling on the QIA to step in, pay down the borrowing on the homes and reduce the rents. The QIA has ignored GMB’s demand.

The QIA raised £1,110 million in bonds to buy 300 care homes from the private equity company Blackstones in 2006. Rents are being overcharged to the tune of £60 per week per care home bed. Most of this is public money. It is needed to care for the elderly in the homes. It is being used instead to pay interest on these enormous and expensive bonds which was never the intended purpose. To add insult to injury these funds are being funnelled to off-shore tax havens and no tax is being paid in the UK on this income.

The elderly residents in the care homes are being made to pay for the syphoning off of these funds intended for their care. Staff turnover in the care homes is very high because of the low pay to the workers the majority of which have had their pay frozen. This lack of continuity of care staff has an adverse effect on the care the elderly receive. They now face the prospect of losing their homes.”


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