Losses more than double at struggling Southern Cross Healthcare

Southern Cross Healthcare, Britain's biggest provider of care homes, today said losses had more than doubled in the past year, highlighting its perilous financial position.

The operator of 752 care homes in the UK has been struck by a combination of rising rental costs and falling payments from councils and primary care trusts.

The Comprehensive Spending Review has made its position even more precarious as council budgets have been cut by 26% with no protection for funding social care.

It went £47.4 million into the red in the 12 months to September 30 against a £19.8 million pre-tax loss the year before.

Southern — which is holding talks with potential takeover suitors — said forthcoming negotiations with councils over fees are "critical".

Jamie Buchan, Southern Cross chief executive, said: "Given the cost pressures facing our industry... it is clear that no local authority can justify reductions in fee levels at this time."