Health CommitteeWritten evidence from the Local Government Group (PE 24)
About the Local Government Group (LG Group)
1. The 422 authorities that make up the LG Group cover every part of England and Wales. Together they represent over 50 million people. They include county councils, metropolitan district councils, English unitary authorities, London boroughs, shire district councils and Welsh unitary authorities, along with fire authorities, police authorities, national park authorities and passenger transport authorities. The LG Group is made up of six organisations.
2. Local Government Association (LGA) is the voice of the local government sector. We work with and on behalf of our membership to deliver our shared vision of an independent and confident local government sector, where local priorities drive public service improvement and every councillor acts as a champion for the people they represent.
3. Local Government Improvement and Development (LGID) supports improvement and innovation in local government, focusing on the issues that are important to councils and using tried and tested ways of working. We work with councils in developing good practice, supporting them in their partnerships.
4. Local Government Employers (LGE) works with local authorities, regional employers and other bodies to lead and create solutions on pay, pensions and the employment contract.
5. Local Government Regulation (LGR) is the local government central body responsible for overseeing local authority regulatory and related services in the UK.
6. Local Partnerships is a joint venture between LGA and Partnerships UK, whose objective is to enhance the quality of people’s lives by giving trusted, professional support to local public bodies to improve their ability to source and deliver high quality, cost-effective public services and infrastructure.
7. Leadership Centre for Local Government aims to give senior political and managerial leaders the opportunities to shift their thinking on leadership to help them transform their communities to the meet the challenges of today, tomorrow and into the future.
8. Together, our shared ambition is to make an outstanding contribution to the success of local government. We work with and on behalf of councils to:
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Introduction
9. The LG Group is pleased to submit a written response to the Health Select Committee’s inquiry on public expenditure and looks forward to giving oral evidence on 13 September.
10. Anticipating a number of questions covering a range of different topics during our oral evidence session this written evidence does not strictly follow the Committee’s questions. Instead it offers an overall commentary on the developments with current health reforms and a similarly broad commentary on the challenges facing adult social care.
11. Many of the Committee’s questions focus on the “on the ground” experience of, for example, integration and use of resources. We believe our colleagues in the Association of Directors of Adult Social Services are best placed to answer these questions in more practical detail, leaving our response to focus on the more strategic questions surrounding the funding and efficiency agendas.
The LG Group Response—Commentary on Health
12. The Health and Social Care Bill represents a major restructuring, not just of health care services, but also of councils’ responsibilities in relation to health improvement and the coordination of health and social care.
13. The Bill presents an opportunity to truly join up the commissioning and delivery of health and social care provision through Joint Strategic Needs Assessments and Health and Wellbeing Boards. In order for this to become a reality these boards need teeth so that they can drive forward action at a local level and address health inequalities. They therefore need to have equal status and power as GP commissioning consortia, the NHS Commissioning Board and Public Health England.
14. While GPs may be best placed to commission services for patients they have contact with, we are concerned about the commissioning of so-called “Cinderella Services” such as health and wellbeing services for homeless people, dementia, carers or people with learning disabilities. Councils have a strong track record in commissioning the complex mix of services that are necessary to support vulnerable people and improve their health outcomes. GPs should work with councils to ensure these groups are adequately provided for.
15. We believe that there is a risk – in clustering PCTs – of disrupting existing local relationships and planning arrangements, such as on free nursing care, continuing healthcare and NHS passported money for carers. On the final point we know from evidence collated by the Princess Royal Trust for Carers that the money for carers is not getting through to the intended beneficiaries.
16. We welcome the focus on securing better health outcomes, in particular in reducing health inequalities by use of incentives to reward progress. However, the proposed “payment by results” system could fail to take into account the fact that there are multiple influences on the health choices and outcomes that individuals make and create perverse incentives. Financial rewards need to be balanced with resources to support communities that have the least assets and the greatest challenges in relation to health improvement.
17. The LG Group strongly supports integrated commissioning of health and social care services. We are concerned, however, that – as currently worded – the Health and Social Care Bill does not make it clear that GPs are responsible for commissioning services for everyone in an area. We believe that if this is not explicit, it will allow for gaps and may unfairly affect vulnerable groups.
18. It is widely acknowledged by both local government and the NHS that the move towards coterminosity between social care authorities and PCTs has been a key driver of greater partnership working and integration and should, as far as possible, be preserved.
The LG Group Response—Commentary on Adult Social Care
The local government funding picture
19. The 2010 Spending Review in October last year set out real terms reductions of 28% in local government budgets over the next four years, which compared with overall cuts of 8.3% across all departmental budgets. The December local government finance settlement included a two-year settlement for 2011-12 and 2012-13. The settlement saw central government Formula Grant funding for councils fall by 12.1% in 2011-12.
20. It is no exaggeration to say that local government has been handed one of the toughest settlements across the public sector. Alongside the significant cut to Formula Grant cost pressures continue to mount in various areas. Adult social care is one such area and we estimate that demographic pressures for this service will cost local authorities in the region of 4% per annum. This estimate is comparable with research carried out for the previous government’s 2009 Green Paper, Shaping the Future of Care Together.
21. As a result we estimate that local government faces a funding gap in the order of £6.5 billion in 2011-12. This gap reflects the difference between what local authorities across England would need to spend to maintain frontline services in their current form, and the income they will be able to raise from grants, fees and charges, business rates and council tax.
22. It has been suggested that councils should be more efficient in the management of their internal affairs before they are required to consider changes and reductions to frontline services. A common suggestion is that if councils cut chief executive pay, joined back office services, and eliminated so-called “non-jobs” then they could protect frontline services.
23. The Prime Minister has acknowledged that “local government is officially the most efficient part of the public sector” and that “councils achieve well in excess of the sector’s spending review targets, beating central government savings by a country mile” (Rt Hon David Cameron MP, Cutting the Cost of Politics, speech, 2009).
24. Councils made savings of more than £3 billion between 2005 and 2008 and a further £1.7 billion in 2008-09. In 2009-10 councils made efficiency savings of more than £4.8 million every day. Councils know that it is likely that more efficiency savings can be made, and the LG Group is investing heavily in a national productivity programme. But efficiency savings are not a quick, short-term fix and what has to be saved over the next few years goes far beyond what can be achieved by conventional efficiency savings.
25. The very clear reality is that councils have had to face extremely tough choices about which services they can keep on running. Councils also continue to show that they are doing everything they can to minimise the effect of these cuts, and building on their record of delivering new and better ways of doing things in order to keep public services running.
26. As we have long argued, these difficult decisions are best made at the local level. Councils – working with their local partners – have a thorough and expert knowledge of their communities needs and continue to strive to ensure that scarce resources are targeted where they are needed most.
The adult social care funding picture
27. The government did respond positively to some of the central arguments made by local government in the run up to the Spending Review. There is new adult social care funding of £530 million in 2011-12, rising to £1 billion in 2013-14, and a further £1 billion funding for joint working with the NHS. These monies constitute the “extra £2 billion” that government argues social care has received.
28. This additional money is certainly welcome but its impact would only be truly felt if we were in a settled state. The picture presented above makes clear that we are not. Given the expected rise in the annual cost of adult social care we therefore anticipate a multi-billion pound shortfall by 2014-15 and have concerns about this funding gap being met. Without significant real terms increases in funding it is likely that there will be considerable pressure on councils’ ability to maintain care services on current eligibility criteria in the coming years.
29. We will shortly be conducting our own analysis of the amount needed between now and the likely implementation of any funding reform post-Dilnot to cope with demand and changing levels of service. This will be done alongside an analysis of the proposed costs of Dilnot’s model. We would be happy to share this work with the Committee.
30. The transfer of learning disability funding from health to social care is being achieved through the introduction of a specific grant called the Learning Disability and Health Reform Grant. It amounts to £1.325 billion in 2011-12, rising to £1.357 in 2012-13. This is in the range that we were expecting, which is welcome since this is one of the fastest growing pressures on local authority budgets.
31. Our estimate is that local government in England will see a decline in its funding for services other than schools and children’s services over the next four years. The funding reduction is estimated to be about 16% in real terms. Currently, spend on adult social care absorbs almost one-quarter of this funding. This is the backdrop against which questions about the adequacy of funding for social care have to be answered.
32. In March 2011 the Local Government Association’s Analysis and Research Team conducted Council Budgets, Spending and Saving Survey 2011. This was sent to Directors of Finance (or equivalent) in all local authorities in England in membership of the LGA. Against the backdrop of a severe finance settlement (as outlined above), and with councils finalising their budgets for 2011-12, the survey was conducted in order to establish as complete an evidence base as possible of the factual context in which budget decisions were being made.
33. The survey revealed that councils have cut senior management costs while trying to protect the services that the most vulnerable rely on, with nine out of 10 councils having already reduced the cost of senior officers, and eight out of 10 cutting middle-management costs.
34. In terms of adult social care the survey showed that more than half of councils were seeking to protect the service (57%). With regard to eligibility the survey showed that 61% of authorities currently offered services at “substantial” and above, and a further one in five offered services at “moderate” and above. 79% of councils had decided not to change the lowest eligibility band at which they offered services in 2011-12. The majority of the small number of councils who had changed their lowest band had moved to “substantial”, with the main factors influencing their decision being demand for/volume of care home placements, and demand for/volume of domiciliary care.
35. The ADASS budget survey (May 2011) provides further valuable information on the state of adult social care funding, post Spending Review. This reveals that councils are reducing their budgets for adult social care by £991 million, representing a 6.1% reduction against a 10% reduction in overall spending by councils. This breaks down as “efficiency” (£681 million), “income” (£84 million), and “service reduction” (£226 million).
36. The survey also indicates demographic cost pressures across all groups totalling £425 million. 17% of councils are not funding these pressures, 42% of councils are partially funding them, and 41% of councils are funding them in full.
37. In respect of fees (to the independent sector) the survey reveals that 61% of councils have frozen their fees and 18% have reduced them. 18% report an increase in fees with 3% still awaiting final decisions. The fact that well over three quarters of councils have frozen or reduced their fees is evidence of the difficulty councils face in keeping pace with inflation and fee increases. This certainly poses questions about the stability of the market and the recent case of Southern Cross (though not solely an issue of fees) is an indicator of the type of issue the sector may continue to face over the coming months.
38. In terms of the NHS transfer the survey reveals that 99% (£646.9 million) of the total allocation was identified. 24% was being deployed to avoid cuts to services, 10% was being used to cover the costs of demography, and 9% was being spent on additional services. At the time of the survey, councils were still planning the use of the remaining funding (57%). Where those decisions are still to be made our anecdotal evidence is that this illustrates the, at times, difficult discussions on whether the money should be used as a substitute for services, for expanding existing services, or for meeting NHS demand for 100% additionality.
Dilnot and the future of adult social care funding
39. In the long term, the proposals of the Commission on Funding of Care and Support will be vital in putting in place a sustainable and affordable approach to managing future adult social care demand.
40. The Dilnot report must not be seen as an end in itself and should instead be viewed as part of a wider reform movement, which includes: the Law Commission’s recommendations for developing a simpler legal framework for care and support; political vision for reform; and developing cross-party consensus on the best way forward.
41. In today’s financial environment, and being acutely aware of the demographic shifts we are seeing, we believe a shared responsibility between the individual and the state for increasing available funding is a viable approach. We are pleased to see the Commission recommend that a safety net should continue to exist for those who would not be able to afford the individual contribution; reform must work for everyone.
42. Local government, and the LG Group, is ready to play its part in helping to realise an adult social care system that is fit for purpose. We are clear that any future system must involve a strong role for councils – not just their adult social care departments, but their other linked services (such as housing, transport and leisure), and those of their partners (such as health).
43. If we are to meet the needs of our ageing population we must act now. This issue will not disappear and whatever the solution there will inevitably be some unpopular choices. That must not detract us from the bigger prize, however, and it is incumbent upon all of us to urgently tackle this significant policy question. Any delay in designing a solution will only put further strain on an already stretched system.
September 2011