New burdens funding failing to reflect reality, says PAC chair

2 Dec 15

The chair of the Public Accounts Committee has warned that the government’s use of the new burdens doctrine, which is intended to ensure councils are not left out of pocket, “fails to reflect reality”.

As the committee published its latest report examining the impact of the Care Act in local government, Meg Hillier said the legislation was intended to improve support from local councils. But she added that councils will struggle to deliver the increased personalisation and support without proper funding, following 37% real-terms cuts in the last parliament.

MPs estimate the legislation will cost local authorities £470m in 2015/16, but ministers have not been sufficiently open and transparent about funding provision, the committee found.

The report concluded that the new burdens doctrine does not guarantee funding for significant new costs in a host of different policy areas. This has created “considerable uncertainty” for councils, as there has not been sufficient clarity from the Department for Communities and Local Government about what is assessed and funded as a new burden and what is not. Areas where the regime is not expected to meet additional costs include the national living wage and changes to employers’ national insurance contributions, according to the report. 

Hillier called on DCLG to take account of all additional cost pressures and demands facing local authorities, not just those it defines as new burdens, to ensure councils have sufficient resources to meet their statutory duties.

This must include monitoring the updated care regime to ensure the pledge to fund all new burdens can be realised, she argued.

“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,” she said.

“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.”

MPs found the Department of Health, which has responsibility for social care, had worked closely with local government in conducting a new burden assessment of the cost of implementing the Care Act. However, difficulties in predicting levels of demand and wide variations in cost estimates mean some councils are likely to face higher-than-expected demand for council services. The committee urged the DoH to be ready to respond quickly to emerging problems in such cases.

DCLG should also ensure all departments that pass responsibilities to local government undertake reviews to ensure that funding is appropriate and to improve estimates in future.

Responding to the report, a Local Government Association spokesperson said councils fully support the Care Act reforms but proper funding is needed to avoid putting further pressures on the adult social care system.

The LGA highlighted that plans to allow councils with social care responsibilities to increase council tax could offset some of the pressures on social care, while moves to increase the Better Care Fund to £1.5bn are also welcome. “However, we are concerned there is no money next year and the full benefit will not be seen until the end of the decade, despite care for the elderly and vulnerable being at breaking point now,” the spokesperson added.

DCLG said the government is committed to updating the new burdens guidance by next spring, and will work with other departments to make sure they are aware of new requirements.

“We are already looking at the possibility of publishing more information on new burdens assessments we undertake, and will be considering with local government, and other departments, what information could usefully be published,” a DCLG spokesperson said. “A tougher system to review assessments after implementation has been set up so that we can share any lessons learned.”

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