Finance Committee, 06 Mar 2001

Meeting date: Tuesday, March 6, 2001

Official Report 232KB pdf

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Regulation of Care (Scotland) Bill

We move to item 6 on the agenda, on the Regulation of Care (Scotland) Bill, which will have its stage 1 debate on Wednesday this week. Because we are considering the bill, we have taken the precaution of inviting Liz Lewis and Kit Wyeth from the Scottish Executive health department to appear. I see that Neil Rennick has also joined us. I thank the witnesses for assisting the committee today.

Members have a copy of the financial memorandum, which starts on page 28 of the explanatory notes. It is quite comprehensive. On several occasions, the committee has said that financial memorandums were not as specific as they might be. My impression is that this memorandum is more specific and provides considerable detail, which we welcome.

Do members have any points to put to the witnesses?

The witnesses will know about some of the Health and Community Care Committee's discussions.

May I stop you for a second? I understand that we are the sixth committee to consider the bill, so I do not want to rehearse arguments.

I will concentrate entirely on finance. The financial issue concerns the self-financing of the proposed commission for the regulation of care. Do the witnesses have any further comments on the fact that the public pound will be moved from the Scottish Executive, to the local authority, to the provider and back to the care commission? The way in which the system is being established makes it appear that that process will have to be administered every step of the way. Shuffling the public pound through the system will create an administrative cost and burden. I have an instinctive feeling that that is a waste. It will create a number of jobs—which may be welcome—but seems to be rather a bureaucratic procedure.

That was my first main question; my others are on slightly separate matters.

Under the current system, each local authority and health board charges fees for the regulation of care. Because we are moving to a national system, the arrangements will come together in an integrated way. There will be a slight, but not massive, reduction in costs, simply because of the economies of scale in bringing the system together.

Ministers are keen in principle for the cost of regulation to be explicit and transparent, and for the providers and the regulators to have an interest in ensuring that the system works cost-effectively and that fees are proportionate to the benefit for society that comes out of the system. They feel that having explicit, self-financing fees for the cost of regulation is the way to achieve that.

That is the general policy. That cuts across other policies—for example in child care. Ministers have said that they plan to continue with a major subsidy for early education and child care, so that the costs to providers—which tend to be passed on to parents, as the main purchasers of child care—would not be too high. In cases where local authorities or the private sector are the main purchasers, ministers feel that there should be full cost recovery. The cost of that to local authorities will, of course, be taken into account in the grant-aided expenditure settlements in 2004-05 and beyond.

It appears that, although the increases in costs to the provider will, initially, be limited to about 10 per cent per annum, there have been indications that the full costs will be substantially greater beyond 2004-05. Various figures have been bandied about on the matter, but the suggestion is that the costs to the provider will rise enormously. That must form part of the background to the Scottish Executive's providing the money at some point to those who ultimately provide the service.

The financial memorandum sets out our views as to what the cost increases beyond 2004-05 would have to be, and on what full self-financing would mean. As for the cost increases for a care-home place, we do not yet have the full cost of what the Scottish commission for the regulation of care will cost, as we do not yet have the staff or buildings in place. We must go for a range, rather than for a precise figure.

We suggest that a care-home place would cost between £120 and £180 per annum to regulate. The current figure is £65. The total cost of providing a care-home place is about £13,000 per annum—or, in some cases, up to £17,000. The increase in the cost of regulation is much less than 1 per cent of the total cost of providing that care-home place. It is a major increase in itself; I am not suggesting that moving from £65 to £120 is not a major increase. However, in the overall context of providing a care-home place, it is not significant.

I should declare that I have a directorship in a nursing home company, although it operates in England, not Scotland, and will not be affected by the bill. However, given some previous circumstances, tenuous connections might be of some importance.

Don't you love the tabloid press, Richard?

I love it.

I wish to repeat the convener's point. Given our constant carping about the state of financial memorandums, the one that is attached to this bill is much more substantial than those that we have received before. That is extremely welcome and thanks go to those who have been engaged in the lengthy process of putting it together.

Inevitably, however, a question is begged. One point that the committee made early in the process is that the overall net cost of the bill to the public sector is not clear from the financial memorandum—especially given that so much of the bill relates to transferring of responsibility for regulation. I am not suggesting, however, that that should delay anything.

My second point flows from that. What is the total cost—not the net cost—of the introduction of the bill to each part of the public sector? Is it feasible to find out that information?

I do not want to suggest that I can produce precise figures on that immediately, but I could give an indication. The regulation of the work force will be the responsibility of the proposed Scottish social services council. Education and training functions are met by the public purse through the Central Council for Education and Training in Social Work and that will continue. The registration of the work force, which is the new element, will be paid for entirely through fees that are paid by the registrants. As the financial memorandum says, we estimate that the fees will be about £20 a year. Those proposals have no net cost to the public purse, but it is clear that the existing grant to the CCETSW, which is already a call on central Government resources, will continue.

A large proportion of care services are regulated already by local authorities and health boards, but regulation of care services will become the responsibility of the proposed Scottish commission for the regulation of care. We believe that the bill will buy an integrated, consistent, independent and better system that will be no more costly than the current system. As members will appreciate, there is an extension of regulation to other services that are not currently regulated, such as home care services in particular. Regulation of those services will be fully self-financing, as the private sector and voluntary sector agencies that provide home-care service will meet the full cost of regulation. The same applies to those elements of independent health care that are not currently regulated.

In broad terms, we estimate that there will be no overall increase in funding. The proposed Scottish commission for the regulation of care will do some work for central Government as part of the follow-up to Sir Stewart Sutherland's report, which identified the need for an independent body to examine trends. That work will have to be paid for; the commission will receive a grant from central Government for it. The financial memorandum estimates that that work might cost about £1 million a year. That is a new benefit to the system and will involve new public expenditure. Apart from that expenditure, we do not estimate that net public expenditure will be increased.

Pardon me, but from what you said a moment ago about economies of scale, I thought that you anticipated a saving.

As Andrew Wilson will appreciate, the purpose of the commission is not to make savings—its purpose is to provide better services for the users of care services. By establishing a national organisation to deal with those matters, we hope that there will be economies of scale. We estimate that the number of staff who are employed will not have to increase much, despite the fact that the Scottish commission for the regulation of care will regulate other services that are not currently regulated.

I want to sound a cautionary note. The General Teaching Council for Scotland was mentioned as a parallel example with fees of about £20 to £25. However, the levels of governance have increased in the General Medical Council, and I expect those levels also to increase in relation to the regulation of care. The GMC's fees have increased from £125 or £135 or so to £180 this year. Substantially higher fees are imposed if increased levels of clinical governance are required. It seems to me that the likelihood that fees will be kept to around £20 is quite small, if responsibility is transferred from the CCETSW to the proposed Scottish social services council. Have you considered what additional governance will be required to ensure that individuals in the work force perform appropriately? Have you taken into account the process of revalidation as opposed to the simple process of initial registration?

That area is developing, and the proposed Scottish social services council will want to consider how it deals with such matters. Before that council is established, those of us at the centre cannot be absolutely clear how everything is to be done, nor can we make financial calculations

The CCETSW has about 15 members of staff in Scotland. We estimate that the proposed Scottish social services council will need about 30 members of staff. Therefore, the costs will not be huge. We can examine the education and training functions fairly easily, because that is the work that the CCETSW currently undertakes. We are studying registration throughout the UK, because it is happening in the other parts of the UK. Together we are considering the best way to proceed.

We are reasonably confident that the fees will not need to be anything like the fees that Dr Simpson quotes for the General Medical Council, and that the level of about £20 per annum that we are quoting will be sufficient to provide for the 30 staff, who will be sufficient to provide the system that we have in mind.

If the provisions apply to all staff in adult care establishments, they will cover a group of lower-paid workers, some of whom are paid very low wages indeed. Will adequate income be provided through the system to allow proper registration? I know that the cost will not be charged on the Government and that its effect for the financial memorandum is neutral, but I have serious concerns. The initial pay of some employees is about the level of the minimum wage. At such rates of pay, a charge of £20—or perhaps much more—becomes significant.

As I said, we do not expect the charge to be significantly more than £20. The figure of £20 was picked not just because it is the figure that the General Teaching Council uses. It was calculated according to the funds that will be needed to run the council. We also expect that, in some cases, employers might help individuals with fees, if being registered with the council is a requirement of a job.

As we made clear, employers and providers of care services may take into account the costs to them of the new system in setting the fees that they want local authorities to pay for purchasing the services. That will also be taken into account in setting grant-aided expenditure.

I know that there are considerable difficulties with that argument, but we feel that it is important for the status of the social work and social care professions, including the low-paid workers, to have a professional body, as teachers, nurses and others do. That will raise the status, professionalism and value that society places on such workers. Therefore, the body would be well worth the £20 per annum that we say it will cost.

I agree with the last part of that answer.

As a slight aside, I will ask about the Central Council for Education and Training in Social Work and the Training Organisation for Personal Social Services, which will be subsumed in the proposed Scottish social services council. The names of the bodies will cease to be used and all staff will transfer.

Yes.

The answer to my question might impact on what Richard Simpson said. Will that transfer have any implications for matters such as staff conditions or pension arrangements?

We have said that all staff will transfer on the existing terms and conditions and that those terms and conditions will run—if the staff wish them to—for at least two years after the transfer. The proposed council and commission will have to employ new staff, so a new set of standard terms and conditions will have to be drawn up for them. The suggestion is that the existing staff would transfer to those new terms and conditions after about two years. All that must be negotiated with the unions that represent the staff. On 19 March, the first transitions working group, on which Unison and other unions are represented, will meet to discuss that.

I am sorry to prolong the questions, because the financial memorandum is well laid out and clear, but I have a slight concern about the purchase of specialist local advice. At the moment, health boards and local authorities have localised services. The possibility of purchasing pharmacists' advice from the health board exists, but is part of the pharmacist's job. Under the new set-up—even with the increase from 300 to 310 staff that you propose—there will still be a need to purchase specialist advice. Do the costings allow for that?

Yes. We assume that one or two pharmacists and other specialists will be based in the headquarters of the new body and that they will provide central advice for the commission. It is also likely that there will be arrangements whereby the commission can buy in temporary advice locally from the health board, as happens at the moment. We envisage that system continuing. The commission will continue to need specialist advice, particularly for independent health care, which is becoming more important. A separate division in the commission will deal with that.

There are no further questions, so I thank the witnesses for appearing. Does the committee agree formally that a financial resolution is required for the Regulation of Care (Scotland) Bill?

Members indicated agreement.

As agreed, the committee will move into private session for items 7 and 8.

Meeting continued in private until 10:48.