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02.12.15

Care Act cost burden heaping pressures on councils – PAC

As well as placing extra cost burdens on councils, the government’s role in implementing the first phase of the Care Act has left local authorities in the dark as a result of uncertain demand and continuing budget reductions, the Public Accounts Committee (PAC) has found.

The committee expressed concern that the ‘new burdens doctrine’ – the government’s commitment to assess and fund additional costs stemming from new powers and duties – does not actually guarantee cash for new expenses.

It found that the government “has not been sufficiently open and transparent” in classifying these new burdens – even when they arise from government policy – resulting in even more uncertainty for councils that have already seen their budgets severely reduced by around 37% since 2010-11.

Leaving these new pressures unfunded will make it even harder for councils to meet their statutory duties, and will increase the strain on council tax, which could already see a 2% locally as a new method of funding social care.

Whitehall response times when struggling councils run into difficulties while implementing the Act, introduced last year, have also been the subject of concern.

The PAC’s report, following its inquiry, concluded that the Act is a new area of work for councils and will add significant costs to local bills. Because of this, it stated, the government must ensure cash is monitored as it is transferred down to ensure carers do not lose out.

Meg Hillier MP, PAC chair, said: “Local government is taking on more and more responsibilities from central government, but the money does not always follow. The concept of ‘new burdens’ is simple enough, yet the government’s definition of these burdens fails to reflect reality.

“If new costs to councils are not adequately funded, then services will suffer. There is also a real danger of cost-shunting – in this instance, costs of providing care falling on other public services, carers or the people being cared for.

“This is an issue of concern to the committee across public services and we will continue to monitor how the government funds local government.”

The committee did recognise that the Department of Health has taken a collaborative approach to the first phase of the Act by working with councils to plan implementation, but this has not always been met with the necessary money to fund the transition.

Whitehall’s decision to delay the implementation of the Act’s second phase will also force people to pay more for their care for longer ahead of the cap in 2020.

However, the committee said it was a positive step that the government decided against clawing back on the £146m of funding it provided to councils during 2015-16 to prepare for phase two.

The PAC’s report comes some months after similar findings from the National Audit Office, which warned the health department in June that it could have underestimated the cost to councils in introducing the first phase of the Act.

At the time, Cllr Izzi Seccombe, chair of the LGA’s community wellbeing board, said that councils had long called for a reform of the care system – but as a result of rising demand and escalating costs, many still had serious concerns about funding holes to cover these changes.

Today, after the committee published its report, an LGA spokesperson stood by the organisation’s previous opinion, claiming that insufficient funding was piling further pressure on the “already chronically underfunded” social care sector.

Despite recent changes to how social care cash can be raised, such as through a council tax precept and access to the Better Care Fund, the LGA said councils are concerned “there is no money next year” – with full benefits only expected until the end of the decade, despite the sector being at breaking point presently.

“We are also disappointed that the government did not announced in the Spending Review any plan to reinvest the £6bn saved from the delay to phase two of the Care Act back into our care and support system,” the LGA spokesperson added.

“This was the sole basis for calling for a delay, and is money that should be used to support our collapsing social care system or vital services for our elderly and vulnerable will remain increasingly at risk.”

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