City firms get £2m a month in Southern Cross crisis

My Account
Logout

Create an Evening Standard Account

Use your social network

Save time by using your existing account to sign in to Evening Standard

We'll never share your information or post anything to your account without your permission

Welcome! Sign in here

Use your social network

Save time by using your existing account to sign in to Evening Standard

We'll never share your information or post anything to your account without your permission

Forgot your password ?

Registration

* indicates fields that are mandatory

Email *

Password *

Confirm Password *

First name *

Surname *

Postcode *

Country *

Mobile phone number

Username *

Gender *

Year of birth *

When you sign up...

You will have access to all our online competitions, discounted offers and can post comments on our site.

You will also receive The Weekender newsletter sent every Thursday - it’s full of fantastic offers and ideas for the weekend. You can update your email preferences in your account page when you log in.

Other newsletters and emails

Homes & Property Newsletter - Yes I want to receive the weekly email with all the latest news on property in the capital

Occasionally we would also like to send you relevant emails detailing specific offers either from ourselves or carefully selected partners. If you would prefer not to receive these then please tick the appropriate boxes below. We will never pass on your details.

I do not want to receive additional offers and information from the Evening Standard

I do not want to receive additional offers and information sent by Evening Standard on behalf of carefully selected partners

Terms and Conditions

* I have read, understood and agree to be bound by the terms and conditions of Evening Standard

Registration

Mail Sent for Registration Confirmation.

A confirmation email has been sent. Please activate your account by clicking on the activation link sent in your mail box.

The Evening Standard has learned that Southern Cross is paying a massive £2 million per month to some of the country's biggest banks, accountants and law firms, while at the same time pleading poverty to the taxman and its landlords.

Accountants KPMG, legal giant Clifford Chance and investment bank Greenhill are raking in the lion's share of the restructuring fees.

Questions were raised about a conflict of interest at KPMG because until September the consultancy giant also worked as internal auditor to the Care Quality Commission, the Government's care-home regulator.

PR firm Financial Dynamics - which represents at least four of the UK's biggest elderly care providers - is also earning fees from Southern Cross.

The news comes as the care homes group is reported to be negotiating with the Government to defer VAT payments to help its cash flow.

The firm which looks after 31,000 of the country's elderly, is also still a serious contender for a taxpayer bailout.

Southern Cross landlords might wonder at the amount the firm is paying City advisers while asking them to drop their rent bills by 30%.

The GMB union, representing Southern Cross staff, said it was "shocked" at the huge crisis fees.

The Evening Standard revealed the huge fees as the Government today categorically ruled out a taxpayer-funded rescue of the homes business.

Business secretary Vince Cable declared "There is no way we can bail out the company."

He added: "But what I am doing is that I have asked my officials to look carefully at the business models of companies that do provide public services to ensure they are stable."

Cable told Parliament the Government had been in touch with Southern Cross' banks "to ensure that the process of managing their credit in this
critical period is properly managed".

News of the huge payments being made once again to City firms, even as the company fights for its survival, will reignite the debate over whether public services such as care for elderly patients should be left in the hands of the private sector.