27 October 2006
Social services departments face an unrealistic funding settlement in next year's Comprehensive Spending Review because the Treasury is basing its calculations on inaccurate and inappropriate data, Public Finance has been told.
Despite local government protests, the Treasury is determined that the starting point for social care's CSR 2007 settlement will be efficiency savings, rather than additional resources, the Department of Health has warned.
Yet the Treasury is basing its assumptions about potential efficiencies on so-called 'PSS EX1' data returns, which social care leaders claim are inaccurate and misleading.
'Historically, they're not worth the paper they're printed on,' David Behan, director-general of social care at the DoH, told last week's National Children and Adult Services Conference.
That meant that discussions around unit costs and potential efficiency savings with the Treasury were made 'incredibly difficult… we just cannot afford to be in that position', he added.
PSS EX1 returns are submitted to the DoH each year by social service departments. They break down the unit costs for both in-house and outsourced residential and day care on a daily or weekly rate.
But Anne Williams, vice-president of the Association of Directors of Social Care, told PF the returns had been given a low priority as they had not been used for funding calculations before. There was great inconsistency in the way different authorities completed the forms and a risk that the Treasury would now ask all social services departments to reduce their unit costs to match the apparent cheapest.
'The concern now is that they give a false impression of unit costs and efficiency across the sector. Some authorities may come out looking incredibly efficient, while others will look as if they have extremely high unit costs.
'But really they might just be coding their data differently. The worry is that that could lead to unrealistic assumptions about where efficiencies can be made,' she said.
The returns also compare in-house and outsourced services. But systemic errors have led to some authorities including extra administrative costs in their reports on in-house expenditure, which might lead to Treasury pressure for more outsourcing of services, added Williams.
In addition to human error, the PSS EX1 format does not distinguish between services with widely divergent costs.
Yet despite this, a Local Government Association source told PF that the Treasury seemed intent on using the PSS EX1s to make inappropriate 'like-for-like' comparisons between authorities.
Authorities that had set their eligibility criteria 'high' to include the most needy would have the higher unit costs, but that did not make them more inefficient.
In 2004/05, English social services departments made approximately £200m in efficiency savings, but a joint LGA and ADSS survey this year found the sector needed an additional £1.7bn just to stand still.
PFoct2006
