The costs of not focusing on care
Nick Kempe - 28 October 2022
The National Care Service – the costs of not focusing on care
When Rishi Sunak, as chancellor, announced an increase in National Insurance to fund social care the Scottish Government, were presented with an opportunity. Normally, any improvement to public services has to be funded by savings elsewhere, which makes financing reform challenging, but here was money on a plate. In Caring for All Common Weal briefly explained how that money, an estimated £1.3bn, could be used to get a new National Care Service (NCS) off to a flying start. Our suggested priorities were to fund wage increases for social care staff and, related to that, to phase out the private sector and stop profiteering from care, which would release more money to pay staff properly.
The Tories, of course, then backtracked and are now flip-flopping to such an extent that it is impossible for anyone to predict what might happen. However, had Scotland a properly costed plan for a new NCS at this point it could have been used to pile the political pressure on Rishi Sunak to honour the commitments he made as chancellor.
In June the Scottish Government published a financial memorandum to accompany the NCS Bill. This was not fit for purpose but has received very little publicity until this week when it was subject to a scathing attack by an SNP MSP on the Scottish Parliament’s finance committee, Michelle Thomson https://www.heraldscotland.com/news/homenews/23076280.national-care-service-snps-michelle-thomson-no-confidence-cost-plan/ an attack which was partially endorsed by the SNP Convener of the Committee Kenneth Gibson.
There are two major problems with the financial memorandum (Social Work Scotland has produced three excellent critiques https://socialworkscotland.org/consultations/national-care-service-scotland-bill/). First, it explicitly excludes the costs of most future care reforms, whether these are those that the Scottish Government has committed to funding, like the abolition of care charges, those that it hasn’t, like investment in preventive services, or those that fall somewhere in-between, like the commitment to pay staff fairly. Second, the set-up and estimated running costs for the National Care Service are not properly explained and appear eyewatering. In short, MSPs are now concerned that they are being asked to invest large amounts of money in new structures for what appears very little. And at a time when public finances are in meltdown.
The financial memorandum estimates the net additional running costs of a centralised NCS to be between £83-144m. This would expand the Scottish Civil Service by between 440 and 660 staff at a cost, as Social Work Scotland has explained, of £80 – 107k per person. This should not be a surprise but appears a direct consequence of the Scottish Government outsourcing responsibility for the design of the NCS to KPMG, which knows little about care but charges large sums of money for its advice. The extent of their influence over government was illustrated this summer when Jenny Stewart, former partner of KPMG, was appointed a non-executive director of the Scottish Civil Service https://www.gov.scot/about/how-government-is-run/civil-service/jenny-stewart/.
The estimated additional costs for running the new care boards, unelected and under ministerial control, is even higher- between £142m and £376m. The variation will apparently depend on the number of the care boards and how many local authority staff are transferred. It is almost certainly an underestimate.
This week Common Weal received a response to a Freedom of Information request asking for the advice the Scottish Government had received from Anderson Brown LLP on the VAT implications of its proposals (local authorities are exempt from VAT whereas central government is not). The Scottish Government refused to disclose the costs on the grounds that it is still formulating policy.
There are many other costs associated with the creation of the new care boards which are not properly considered in the financial memorandum. They include: TUPE, the costs of preserving the pay, terms and conditions of staff currently employed by local authorities, including their pensions; asset transfers, e.g the buildings and IT to be used by the NCS and how to “dis-integrate” these from other local authority systems and assets; asset liabilities, for example, the cost of the debt or repairs that might be required to buildings that transfer to the NCS.
Trying to sort all these issues out will be incredibly expensive – KPMG and other management consultancies will be licking their lips – and consume the efforts of boards and managers when what they should really be doing is focussing on how care can be improved. As this unravels, it is predictable that the Scottish Government will be forced to drop plans to transfer Children’s and Justice Services to the NCS at a later date leaving Scotland with half a national care service.
The obvious solution is for the Scottish Government to drop its plan for a centralised top-down NCS Service under the control of Scottish Ministers and instead design the NCS around current structures to minimise disruption. That would allow whatever money is now available to be invested in care and for stakeholders to focus on what really matters.
In Caring for All, Common Weal argued that local authorities should be the building blocks for a new not for profit National Care Service but reformed so that the design and control of care services is devolved to local communities and those who use services, their carers and staff are empowered and represented at all levels in the system. Instead of leaving it to KPMG, local authorities could now be taking up the challenge of designing and costing an NCS in partnership with stakeholders and from the bottom up. An acknowledgement of past mistakes coupled with some practical costed plans might help persuade MSPs that radical changes to the draft National Care Service Bill are not just required but feasible and would deliver better outcome for far less administrative cost.