“A review of free personal and nursing care”
The next item is a briefing from the Auditor General for Scotland on his report entitled "A review of free personal and nursing care".
Mr Robert Black (Auditor General for Scotland):
As I am sure members of the committee are aware, our report on free personal and nursing care was published at the end of last week, on 1 February. It is a joint report with the Accounts Commission, in recognition of the key role of local government in implementing the policy.
In effect, the report is a post-legislative review of the implementation of a major policy that has been put in place since devolution. To be frank, it contains some quite challenging findings. However, in bringing the report to you, I am the first to acknowledge that we in Audit Scotland have had the benefit of hindsight to inform our analysis. Free personal and nursing care has been and is an important policy for the people of Scotland. As I shall outline, it has in some ways been successful.
Just as our work was beginning, the Scottish Government announced a review of the policy by Lord Sutherland. We have worked closely with Lord Sutherland's team to avoid duplication and have done our best to provide information that will be useful to that team in its work. The Audit Scotland team worked exceptionally hard to produce a complex report much earlier than was originally planned, so that we could inform Lord Sutherland's review. I am most grateful to the team for its efforts, which have allowed me to bring the report to the committee so early.
I will touch on the background to the policy, which is well known to the committee. Free personal and nursing care was implemented in Scotland in July 2002, through the Community Care and Health (Scotland) Act 2002. Under that act, the Scottish Executive provided councils with additional funding to support the removal of charging for nursing care services that are provided in care homes and personal care services for older people that are provided both in care homes and in people's own homes. In the report, we examine the robustness of the financial planning, monitoring and reporting arrangements; the costs and funding allocations to councils; the financial impact of the policy on older people; and the financial implications for councils and the Government.
I will mention a few key points in the report relating to legislation and guidance. The Scottish ministers decided to introduce free personal and nursing care early in 2001. That set the Scottish Executive a challenging timescale—only 18 months—to develop the policy. The deadline was met. A care development group that was established to inform policy decisions carried out detailed work on financial and other implications of the policy, also to extremely tight deadlines. Legislation was enacted in 2002 and the Executive then gave guidance to councils. All councils successfully put in place processes to implement and deliver free personal and nursing care from 1 July 2002. That was a significant achievement, given the tight deadlines.
Other significant developments in health and social care were taking place at the time, so it is difficult to evaluate the impact of the free personal and nursing care policy in isolation from other changes. Those developments included a general shift in the balance of care from residential to home settings; increasing support for vulnerable people; improvements in joint working between health bodies and councils; and improvements in care standards, through the establishment of the Scottish Commission for the Regulation of Care.
The overall aim of the free personal and nursing care policy was clear: to make personal and nursing care free of charge to all older people who were assessed as needing it, in line with free health services. However, the anticipated outcomes were never stated explicitly. For example, there was no description of whether or how free personal care might improve the quality of life of older people. That makes it difficult to evaluate the success of the policy, other than in terms of the financial benefits to some groups of the elderly. Because the legislation established no quality standards, the report is mainly about the financial issues.
There were ambiguities in the legislation and the guidance, which led to councils making different interpretations. As a result, we see variations across Scotland in how the policy has been implemented. There is also an inconsistency between the legislation that the Parliament enacted and the guidance that the Scottish Executive produced on charging for food preparation. Those uncertainties have caused some councils to seek legal advice to clarify their obligations, and it seems that, in some cases, older people are unclear about what free personal care means in practice.
I turn now to the costing of the policy. The financial memorandum to the Community Care and Health (Scotland) Act 2002 is reproduced as an appendix to my report. It did not set out a robust assessment of the financial implications and risks of introducing free personal and nursing care. It acknowledged that additional expenditure would be involved and a broad figure of £125 million per annum was given but, beyond that, the memorandum contained little financial detail. For example, there was not enough in the memorandum about the financial risks associated with the long-term projected growth in the older population and the effects of even small variations in unit costs on the total cost of the policy. Those risks were recognised by the care development group and commented on at the time by the Parliament's Health and Community Care Committee.
I acknowledge that the initial cost estimates for the policy, which were based on the care development group's work, were difficult to make because of the tight timescales and the limited information that was available at the time, particularly regarding the cost of personal care delivered at home. Those limitations were acknowledged at the time, but I have to report that, five years on, many remain unresolved. Central Government has not updated the longer-term cost projections since 2001, although it has carried out short-term projections to support the annual allocations to councils.
There is clearly potential for significant increases in demand in future. Numbers in the 75-plus age group are projected to increase by more than 80 per cent by 2030. In my opinion, longer-term cost projections are needed urgently. They should be based on the most recent population projections, together with a detailed analysis of the population's characteristics and, in the light of experience, robust costings of the different types of care packages that are appropriate for the different care settings at home and in residential care.
There has been limited monitoring of the policy's cost. The Audit Committee reported its concerns on that back in 2005. The funding that was provided to cover the additional costs was not ring fenced. Although councils have been required to complete financial returns detailing their additional expenditure on free personal and nursing care, Audit Scotland found that the information was unreliable, so it reviewed the cost data to collect more consistent information from all councils.
The Audit Scotland team went back to every council to ensure that accounting standards had been applied so that information was collected consistently—for example, to ensure that overheads had been included and any obvious errors, of which there were quite a number, were corrected. From that work, we estimate that the total cost of free personal and nursing care in the policy's first four years was about £1.8 billion. We also estimate that councils would have spent about £1.2 billion of that even if the policy had not been introduced, because older people previously were means tested for free care. Those are only our estimates; they are not absolute figures.
We compared the policy's additional costs with the funding that the Scottish Executive provided for the first four years. The report indicates that there was probably a growing shortfall in central funding over those four years—I use the word "probably" because we are not operating with perfectly robust data. Working with the revised data from councils, Audit Scotland estimates that the annual shortfall could be between about £46 million and £63 million, depending on the assumptions used, although we are pretty confident that it is somewhere in that area. That is explained more fully in the main report in exhibits 9a and 9b on pages 26 and 27. The Audit Scotland team can help committee members to understand those numbers more fully if that would be helpful.
As I mentioned a few moments ago, it is likely that demand for free personal and nursing care will continue to grow significantly with the projected increase in the older population. In all probability, that will have significant implications for the future costs of the policy.
I turn to the financial impact on councils. Few councils have set specific budgets for the discrete elements of free personal and nursing care, and the Government has not required councils to do so, which makes it difficult to track the additional and total costs of the policy. Although we estimate that there has been a shortfall in funding for free personal and nursing care, it is significant that 27 councils spent less than their indicative funding allocations for older people's services in 2005-06.
There is evidence that, to manage costs, some councils have been tightening their eligibility criteria and using waiting lists. Some 23 councils have developed eligibility criteria or priority levels for their care services to enable them to manage demand. There is significant variation in how priority levels are defined or applied in Scotland, and those differences in criteria have not been transparent to older people and the public, according to the focus groups and the soundings that we have taken. In 2006-07, 18 councils reported that people were waiting for home care services and 12 councils reported that people were waiting for a place in a care home. As I mentioned briefly, there is a particular lack of clarity about charges for food preparation. Eight councils charge for some aspects of assistance with food preparation and a further 11 have charged at some time but have now stopped.
Continuing with the theme of the financial impact, I turn to the financial impact on older people. The policy has made a difference to the disposable income of some older people who, without it, would have paid for their own care. However, as we say in the report, it is not apparent that the policy has made a difference to older people on lower incomes who would have received free personal and nursing care services in any case under the old policy.
On pages 44 to 49, we attempt to give worked examples of how various factors affect the financial circumstances of older people who live at home or in care homes. It is worth while noting—as we do in exhibit 19 on page 47—that for older people who live in care homes and benefit financially from the policy, the financial difference that it makes is reducing each year because of higher charges and the lack, in the past, of inflationary increases in payments.
As I mentioned, the Government has not made a statement on how the policy contributes to the quality of care. More complex care packages are being put in place for older people who live at home and have complex needs, which should enable them to stay at home for longer. However, the provision of domestic home care services such as household cleaning and shopping is being reduced for many older people who live at home, partly as a result of councils prioritising personal care. That started to happen before the policy of free personal and nursing care was introduced, but, as can be seen in exhibit 21 on page 52, the statistics show that there is a continuing reduction in the provision of domestic home care services.
In conclusion, I encourage the Scottish Government and councils to take action to address the ambiguities around the free personal and nursing care policy and to agree a national eligibility framework so that there is transparency about what is available under the policy, and so that the public can understand what the policy is doing. In addition, as I mentioned earlier, more work is needed soon to develop long-term cost projections. Finally, I encourage the Scottish Government to consider carefully how to monitor the performance of the free personal and nursing care policy and how to report to Parliament on the expenditure on this major policy initiative and the results that are delivered.
As ever, my colleagues from Audit Scotland and I are happy to answer any questions, particularly in relation to the technical analysis—I look to the Audit Scotland team to help your understanding of that.
Thank you, Mr Black. The report and your comments this morning make a powerful contribution to what is probably one of the most significant debates facing the Parliament both now and in future years.
I am aware that this is not the end of the debate, because the work that Lord Sutherland is undertaking to review the policy will probably throw up more questions. We may need to return to the issue.
I whole-heartedly endorse a couple of points that you made. You spoke about taking action to tackle ambiguities. Such action is long overdue. Ministers in the previous Administration attempted to address the issue and current ministers are attempting to do so. It is a disgrace that eight councils in Scotland are still charging for food preparation. Leaving aside whether you agree with the policy of free personal care, if there is such a policy it should be applied and implemented consistently—something needs to be done about that.
I was intrigued by your comment towards the end of your remarks that it was not apparent that the policy has made a difference to older people on lower incomes. As with so many of the policies that we are pursuing in this Parliament, many people throughout Scotland are benefiting, but people on lower incomes are not benefiting. We should seriously reflect on that. I thank you for drawing it to our attention.
I will ask about your comments that longer-term cost projections are urgently needed. From the work that you have done so far, do you think that, if those projections are not delivered, there could be implications for the whole of the Government's budget?
In relation to free personal care in particular, in the short term—I am thinking about the period since the policy was introduced—it is reasonable to conclude that increases in the elderly population have not contributed a huge amount to the likely resource shortfalls, but it is also true to say that there is a significant challenge in the longer term.
Since the legislation was enacted, we have seen the recent projections from the General Register Office for Scotland for the elderly population. I am sure that I speak for everyone in the room when I say that I am delighted that people's lifespan has been increasing markedly. For that reason, as I said, there will be something like an 80 per cent increase in the oldest group in the population, which is the group that will be dependent on the whole package of care services. It is not for me to second-guess the budget planning of the Parliament or the Scottish Government, but it is right that I draw your attention to the fact that, on the basis of current evidence, significant issues will require to be addressed at some stage.
The report is important and helpful. Free personal care was a flagship policy of the previous Executive, but it was supported by all the parties—there are no party political points to make on the issue.
I was struck by the comments in your report about the long-term cost predictions. I find it staggering that there has not been a long-term cost projection since 2001, which is seven years ago. There is widespread concern that a rapidly ageing population—as you said, that is not necessarily a bad thing; it is good that people are living longer—will add substantially to the cost burden. Is it responsible of Government to pursue the policy without taking a view on the long-term costs? Should we urgently look for long-term cost projections to be produced, so that we can address where the policy is going?
Just before you answer that, to be fair, Murdo, like your earlier comments, that challenge should apply not just to the Government but to the Parliament. We are all in this together.
I am not really in a position to answer the first part of the question. On the second part, I strongly encourage the Government to examine the long-term financial implications. Indeed, the Government has asked Lord Sutherland to examine the forward policy and come up with an analysis and findings within a couple of months. To help Lord Sutherland, we were particularly concerned to use Audit Scotland's capacity to give a good baseline assessment of what is going on now and what has happened in the past five years. I look forward, as I am sure everyone does, to Lord Sutherland's report.
Is Lord Sutherland examining long-term costs? Has he engaged with Audit Scotland on that aspect?
He is certainly examining the financial implications, but in a wider context than free personal care. He is attempting to locate the free personal and nursing care issue within the context of long-term support and care for older people.
Your report mentions that 27 councils are spending less on older people's services in general. That implies that they are spending more on free personal care, although we do not have a handle on how much more as there is no requirement to account for the spending because of the lack of ring fencing. However, irrespective of whether or not there is ring fencing, I would have thought that the councils could provide figures for what they are spending. I presume that an essential part of Lord Sutherland's investigation will be to get information from the councils about what they are actually spending. Could you clarify that please?
When we last reported on this issue to the previous Audit Committee a couple of years ago, it expressed concern that many councils relied disproportionately on estimates rather than on hard numbers. Unfortunately, we are still finding that the numbers are not very good, and Audit Scotland had to put in quite a lot of effort to get consistent numbers so that we could make some estimates. Hopefully that will be helpful to Lord Sutherland, because he does not have Audit Scotland's capacity to go around every individual council and do that sort of exercise.
The implication of what you say is concerning. Could it be that the local authorities do not know how much they are spending on this type of care?
There is a doubt about the hard auditable numbers.
Once again, Audit Scotland has performed a great service in shedding light on this important issue. It is a salutary lesson to all political decision-makers, and it has implications for the past, the present, and the future. The policy was universally welcomed, but hindsight has shown that the resources allocated never quite matched the task set. That was exacerbated by ambiguities and inconsistencies in the legislation and guidance. In other words, the political will was not matched by the resources and the machinery to deliver it. The lesson for everyone in Parliament should be that early planning and decisions are crucial in delivering policy goals. To my mind, that is obvious and essential good financial government, and it applies to us all. Audit Scotland has given good service to the Parliament through its report, and we all have a duty to look at, listen to and learn from it.
What is the balance between the number of people who are receiving free personal care in their homes and those who are receiving it in institutions? I do not know whether that information is in exhibit 1.
You are right, Lord Foulkes; the information is in exhibit 1. The numbers in the text just above the exhibit give the basic figures.
So, according to those figures, the number of people who receive free personal care at home has gone up from 27,337 to 41,386, and the number of people who receive it in care homes has reduced slightly, going down from 24,569 to 22,234. Is that right?
The latter two figures refer to the numbers of people who are fully publicly funded. The figures above that bullet point, on page 6 of the report, refer to those in care homes who contribute to their own accommodation and living costs but receive free personal care.
That number has increased.
It has gone up.
Right. It was never part of your remit to consider the quality of care in some of the private care homes—that is a separate issue.
Absolutely. There are two issues there. First, as I indicated in my opening remarks, the policy has never been stated in terms of what it was designed to do for the quality of care, so we had nothing to go back to on which to base an assessment. Secondly, as you will be well aware, it is the care commission's responsibility to look at the standards of care in care homes and it does its own analysis of that.
The summary at the beginning of the report says:
"The UK government and the Welsh Assembly decided to implement free nursing care only in England and Wales on the grounds of cost"—
wait a minute, I do not understand that. Should that read, "decided not to implement free nursing care"?
Barbara Hurst (Audit Scotland):
The Government in England has not implemented—
Personal care?
Yes.
Right. I have it.
Free personal care has not been implemented in England and Wales because of the affordability issue. I understand that Wales looked into it and, although it decided on affordability grounds not to implement the policy, it has subsequently introduced a more heavily subsidised approach for means testing.
Is there any indication why there is not a huge demand for free personal care in England or Wales?
It is such a complex area of interrelated services that it is difficult to isolate views about one element of a care package. It could be that what we need to do is look at health provision for older people alongside personal care—in our terms—and also at what domestic services are available. The differences in England and Wales are an interesting example of policy divergence across the UK. However, because we have not had time to ascertain what is happening across the UK, it is not yet easy to contrast the outcomes and decide whether they are better in any one place.
That would be an interesting study. My impression is that we have got on to the hook of saying that everything is so much better in Scotland because we have this magical thing called free personal care. The implication is that the provisions in England are not as good. However, what Barbara Hurst has just indicated is that, by combining a range of services, including home helps, district nurses and, particularly, free personal care for those in need—the convener referred to that at the start of the discussion—the provision in England and Wales is different but not necessarily worse for the individual than the provision in Scotland. Is there any way in which Audit Scotland, together with the National Audit Office, could do a comparative study of provisions north and south of the border for elderly people in need?
I suggest that it would be appropriate to wait until we have the report from Lord Sutherland. He chaired the UK royal commission on long-term care and is highly experienced in and knowledgeable about the area. It is possible—I do not know this for a fact—that he will set the Scottish policy direction in the context of what is happening in the rest of the United Kingdom. Wanless and others have also done quite a lot of work on social care in England and are coming out with some challenging messages.
Once we see what is in Lord Sutherland's report and the Parliament has had an opportunity to consider what it would like to do to inform its future policy direction, I would be willing for Audit Scotland to play a part by providing analytical support.
Last week or the week before—I cannot remember which—there was a report in England on services for older people there. It came up with similar messages to what we found: pressure on some of the domestic services and real pressure in terms of eligibility for services. Many local authorities in England have four categories of eligibility and provide services for people in only the top two tiers of those categories.
Similar issues are being wrestled with throughout the UK. There are slightly different approaches to dealing with them.
I will go back to a different aspect of the report. Exhibit 2 on page 3 shows the percentages of older people in the different council areas receiving free personal care. There is a wide variation in those figures. In the lowest percentage area—Argyll and Bute—the figure is below 7 per cent, if I understand the table correctly. The figure in Glasgow, which is the highest, is nearly 13 per cent. It is also interesting to consider life expectancy in those areas. I think that the life expectancy in Glasgow is the lowest in Scotland. By contrast, East Dunbartonshire, which I believe has the highest life expectancy, has a low take-up. That seems completely counterintuitive, because one would expect that, in areas with a higher life expectancy, many older people over 80 or 90 would make more demands on free personal care. Do you have any explanation for the wide variations in those figures and why areas with lower life expectancy appear to have a much greater demand for free personal care than those that have higher life expectancy?
We have not analysed the figures at the level of the individual councils, but the factors will include the health of the older population, the individual councils' different approaches towards eligibility criteria and priority thresholds and, I guess, variations in the extent to which older people get community support from family and friends.
I guess that that is one of the instances in which the numbers that we provide do not furnish the answers but provoke the questions. We come up against that remarkably often in our work. Questions arise from those figures. There are certainly questions about some councils spending less than the grant-aided expenditure indicative amount. Everyone recognises that the GAE indicative amount is not a mandatory requirement for spend on care services, but it is reasonable to ask the local authorities that are spending less than GAE why that is the case. It is also reasonable to ask councils such as Argyll and Bute Council and Stirling Council why their penetration into the client group seems to be so much lower than elsewhere.
You have partly answered some of my questions. Page 32 of your report says:
"Twenty-seven councils spent less than their Grant Aided Expenditure".
Therefore, only five councils spent the allocated amount or, in the case of Shetland Islands Council, spent twice that amount. You mentioned that the grant-aided expenditure is not ring fenced. Is any previous underspend taken into account in the formula for determining the amount of grant that a council gets? Caroline Gardner is shaking her head, so that is fine.
I also wonder about the complexity of the GAE formula, which takes into account demographics, deprivation and health indicators. Is the formula correct?
The GAE formulas are jointly determined by the Scottish Government and COSLA on behalf of local government, so both sides have signed up to them. The principal objective of the GAE system is to provide local authorities with resources that allow an equivalent level of service throughout Scotland. I am remembering way back to the days when I was an adviser to the policy committee of the old Convention of Scottish Local Authorities and we used to struggle with the numbers. I am glad that I have left those days behind me.
Although it was always difficult to get absolute agreement on the numbers, it is fair to say that the GAE numbers provide a reasonable general indication of the level of spend that is appropriate to achieve a degree of equality throughout Scotland. Further than that, your question would have to be addressed to the Government and to COSLA.
Do you know how often the formula is reviewed in different council areas?
It is kept under review. We certainly know that, among a number of councils that have comparatively more people who pay for their own care, there are concerns that there will be an adverse financial consequence for the councils. Clearly, free personal care requires them to put more resources into the pot, so to speak. However, we have not analysed the matter at that level of detail.
Do you know how often the review takes place? Is it an annual review?
I do not know. Caroline Gardner might be able to help.
Caroline Gardner (Audit Scotland):
In general, small adjustments are made to the formula year on year to reflect changes. There have been no significant changes for a while.
As there are no further questions, I thank Mr Black for an enlightening report and contribution. We will consider what to do, but I suspect that we have not heard the last of the matter and that we will return to it.