3rd June 2011
"Either as taxpayers through the state or as individuals with assets. Many old people live alone in houses that are too big for them. I know: I'm one of them. Across the country, this amounts to great unused wealth. The myth persists that we have the right to hold on to those assets even in our hour of need, in order to pass them on untouched to the next generation. Yet at the same time, the next generation is going to have to pay for our social care from their own income. We are going to have to find a way of resolving this paradox."
This view might not be popular with everyone. She also slates private equity firm Blackstone for saddling the firm with property debts when it owned the company
The GMB union has also been quick to blame private equity for the firm's failure, claiming Blackstone stripped out at least a £1bn and used controversial sale and leaseback arrangements.
Rival care home operator Bupa has also hit out at the way in which Southern Cross operated. It said: "Those companies most under scrutiny are struggling because their business models relied on rising property values and a booming economy. Both assumptions have proven to be misplaced."
However Bupa is also critical of the fact that many local councils are trying to cut the fees they pay to care homes by 20 per cent.
This week, saw Saga Chief Executive Ros Altmann warn on Channel Four news that care home company ownership structures need regulation.
Some of that debate is going to be about how to fund care on an individual basis. This doesn't mean you would be proofed against company failures such as Southern Cross. But it could see you have some financial control over your care.
We are currently awaiting a report on care from Andrew Dilnott, formerly the head of the Institute for Fiscal Studies and other experts. Here is the link to the website.
It reports next month, but the failure of Southern Cross may cast a long shadow.
Clearly given the difficult economic situation, more responsibility will fall on individuals to provide for themselves. If you want to investigate how to do something about this which may give you advice on potential investment strategies to help you pay for care, here is a link to the Association of Independent Care Advisers and the website of Age UK.
To see what advisers are saying about the current situation here is a link to the website of IFA Informed Choice which comments on the matter.
Here website Moneywise talks to adviser Philip Spiers of First Stop on the issue.
"Philip Spiers is acting chief executive of First Stop care advice service. He says it is unlikely there will be many closures but if there are residents will be cared for.
"Local authorities have a duty to make sure the residents are accommodated, whether they are self-funded residents or local authority funded."
Where will residents go if the care homes are closed?
"If any care homes are closed, residents will have a choice as to where they will go next," says Spiers. "Obviously the new home would have to meet the resident's specific care needs and not cost more than the local authority was willing to pay."
What if the new home costs more than the local authority is willing to pay?
"A third party, such as a relative, will be asked to help fund the cost of the care."
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