Cambridgeshire County Council has cancelled a £64 million, 15-year block contract with HC-One.

The move follows HC-One’s decision to close The Elms care home in Whittlesey after it was rated Inadequate by the CQC.

The ‘block contract’ arrangement involved a guaranteed payment in exchange for an agreed number of 99 beds across the company’s care homes.

Cambridgeshire County Council said the cancellation meant it will no longer refer new residents to HC-One’s homes.

Existing residents at HC-One’s remaining three Cambridgeshire care homes – The Red House in Ramsey, The Cambridge in Chesterton and The Gables in Whittlesey – will be given the option of staying if they wish.

The council has said it has offered to buy the affected homes from HC-One, adding this offer remained on the table.

Cambridgeshire County councillor Richard Howitt, chair of the adults and health committee, said: “Our action reflects how deeply disappointed we are by the poor performance of HC-One regarding The Elms. We worked with the provider over a sustained period to improve the quality of care at The Elms.

“We acted quickly in calling in the regulator and now we are acting quickly to ensure the provider does not continue to benefit from a substantial sum of public money, which we believe can be better spent elsewhere.

“We have many other brilliant providers offering excellent care, so it is right that HC-One is held to account regarding its poor performance. It is the duty of the council to act.”

A spokesperson for HC-One said: “HC-One continues to work under contract with Cambridgeshire County Council, and residents whose care is currently paid for by the council will continue to be supported at The Red House, The Gables, and The Cambridge care homes. This situation has also been outlined to residents in a letter sent by the council last week.

“We have historically held a separate contract with the council where a set number of rooms in our homes were reserved exclusively for the council to use. This contract has now ended, reflecting that we are currently unable to accept new residents into our homes.

“Delivering the right quality of care for our residents is our ultimate priority and we will continue to work closely with the council and the CQC to ensure ongoing service improvements are made and sustained.”

HC-One said new home managers, regional directors and regional quality improvement leaders had been appointed to support its homes across the county.

The spokesperson added: “We believe the situation in our homes today is better than when the CQC visited for their inspections, and our detailed action plans are driving improvements. We accept that standards are still not where they need to be, and we apologise for this. As we continue to engage with the council over the coming weeks and months, we will always have the best interests of our residents and colleagues at the forefront of our mind.”

HC-One said it had been clear to the council that it would consider any offer to buy the two care homes it had made the difficult decision to close – The Elms and Manor House.

The spokesperson said it had received no offer from the council for the homes.