Care home companies would have to open up their books to inspectors to ensure they were financially sound, under government plans for new regulation.

The measure is included in plans being put out to consultation after the collapse of Southern Cross last year.

The country’s biggest provider had thousands of elderly residents at more than 750 care homes across the UK.

Care Minister Norman Lamb said its demise showed the need for “greater oversight of providers’ finances”.

Rent bill

There had been concerns about Southern Cross’s business model for years and it struggled to balance the books as local authorities reduced the amounts they were spending on social care.