HUNDREDS of elderly people and dementia patients in York, North and East Yorkshire are facing an uncertain future as care home business Southern Cross reduced payments to its landlords.

The debt-laden care home group told landlords on Tuesday that it would be paying 30 per cent less on its monthly rent bills from June 1 to September 30 while it agreed a restructuring plan.

Southern Cross has two care homes in York: Amarna House Care Home in Rosetta Way, Acomb, and Amelia House, in Coningham Avenue, Rawcliffe, which between them house 161 residents.

The business cares for about 450 elderly residents, including dementia patients, across York and North and East Yorkshire, with two care homes in Harrogate, two in Beverley, and other homes in Leeming Bar, Thirsk, Goole and Bridlington.

Local authorities have a duty of care to help rehouse patients if a private sector provider is no longer able.

But Coun Tracey Simpson-Laing, City of York Council’s executive member for health, housing and adult social care services, said York did not have 160 care home places to take all the residents if Southern Cross could not reach an agreement.

She said she hoped Southern Cross would have time to refinance their budgets and put the minds of residents’ families and friends at rest, and said it was time for the Government to look at better funding for elderly care.

She said: “I’m extremely concerned for the families and if people do have concerns, they should contact Southern Cross or the council for advice.”

Southern Cross’ business model was based on selling care homes and renting them back, relying on fees from local authorities. As public spending cuts hit, the company announced a loss and said it was struggling to meet debt repayments.

The GMB union, which has around 12,000 members in the business, which employs 44,000 people, called for the Government to bail the company out.

General secretary Paul Kenny said: “The 750-plus care homes run by Southern Cross 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 business said it was confident that “a critical mass” of landlords would support its lower payments over the summer and that it would give further information on its restructuring proposals in July.

Christopher Fisher, chairman of Southern Cross, said: “We are in dialogue with the Department of Health, our lenders and landlords and they continue to support the process. Those landlords that do not want to take part in the longer term restructuring will be able to review other options but it is in everyone’s interests if this is as part of a larger, managed and orderly process.”