THE GMB union has joined care home operators in warning that the sector is facing a fresh financial crisis.

It said there could be a repeat of the kind witnessed in 2011 when Darlington based Southern Cross – then the country’s biggest care home provider – collapsed.

Four Seasons, Bupa and HC-One, now the three largest operators in the care home market, say cuts to public funding for residents whose care is paid for by the state is unsustainable and have warned that homes will close as a result.

About 36 per cent of care home residents are solely funded by their local council.

Southern Cross was forced out of business after an increase in its annual rent bill and a cut in fees paid to care homes by local authorities.

The bulk of the firm’s 200 administrative staff were taken on by HC-One, which was formed in partnership with Nursing Home Properties (NHP) and now runs 208 former Southern Cross homes.

Its chairman Chai Patel said the cuts risked "damaging our health and social care system irreparably".

Ian Smith, chairman of Four Seasons Health Care, which has shut 18 homes in the past 15 months, said: "Unless there is change in the funding regime the shortfall in care homes beds over the next decade will be in tens of thousands at least, based on a combination of beds lost and increasing demand."

Justin Bowden, the GMB’s national officer for social care, said: “Warnings that the entire care sector is in a slow motion collapse are falling on the same deaf ears.

“If we are not prepared to learn the lessons of history, we are destined to repeat them.”

The Department of Health said it had given an extra £1.1bn to councils to help protect social care services and was working with them to help people live independently as long as possible.