NAO: care reforms ramp up councils’ finance risk

11 Jun 15

Government reforms to the care system have exposed local authorities to increased financial risk due to uncertainty over the level of demand for services, auditors have concluded.

In an examination of the first stage of the Care Act, the National Audit Office said the Department of Health may have underestimated the demand for assessments and services for carers introduced as part of the reforms by as much as £27m.

Under the legislation, a new national minimum eligibility threshold to qualify for care has been set for all local authorities, based on substantial need, while requirements to increase the personalisation of support have also been introduced.

In addition, councils are required to assess the needs of carers, regardless of how much care they provide, and meet carers’ needs on a similar basis to those they care for.

To calculate the cost of this new provision, the Department of Health used the number of people in receipt of the Carers Allowance benefit as a proxy for likely demand. This led to an allocation of £104.6m being made as part of the £470m provided for the reform package.

However, the auditors stated this could underestimate the demand for assessments and services for carers. Although calculating demand was complex, the NAO highlighted some people may have applied for the Carer’s Allowance but not then receive it due to receipt of other allowances. These carers were also likely to seek an assessment for support, creating a £27m financial risk of additional assessments and services if these people also come forward.

In addition, there was likely to be demand from current self-funders for care for assessment ahead of the introduction of the £72,000 lifetime cap on care costs from next April as part of the second phase of reforms.

However, the report also concluded that the DoH had implemented the legislation well overall, and nearly all of the 152 councils responsible for social care (99%) were confident that they could carry out the provisions.

“The first phase of the Department of Health’s new approach to adult social care has been implemented well,” auditor general Amyas Morse said.

“But this places new responsibilities on local authorities whose core funding is being significantly reduced. They may not have enough resources to respond if, as could be the case, demand for care exceeds expectation.

This could result in their having to delay or reduce services in the short term. This risk to value for money needs to be managed.”

Responding to the report, a DoH spokeswoman said: “We are pleased the NAO has confirmed that we are implementing the Care Act well and that 99% of local authorities were confident about bringing in our changes. We will continue to work with local authorities to ensure our improvements to care are funded.”

Izzi Seccombe, the chair of the LGA’s community wellbeing board, said the report reiterated council warning about the funding of the Care Act.

“Unless the government fully funds all new burdens brought in by the Care Act then vital reforms to improve care and support for the elderly and disabled could be jeopardised,” she added.

“While the government has committed to monitoring additional costs of the first phase of the Care Act, councils still anticipate it could be underfunded by as much as £50m. If this is the case, it could leave them without the resources they need to care for the most vulnerable in society.”

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