Select Committee on Health Memoranda

Memorandum by the Department of Health



5.1  Provision through PSS SSAs for year ahead

  Could the Department set out the Standard Spending Assessments (SSAs) for social services in the latest year, by local authority, and SSA sub-block, in cash, per capita, per capita of relevant population and per client? Could the Department also provide a table comparing the change in the total PSS SSA between the last two years for each local authority? Could the Department describe any changes to the SSA formulae introduced in this year and provide details of any plans the Department has to review PSS SSAs further? Could the tables include sub-totals for type of authority and averages (so that individual authorities figures can be seen in context)?


  1.  SSAs for social services for 2001-02, by local authority and SSA sub-block, in cash, per capita and per capita of relevant population are shown in tables 5.1.1, 5.1.2 and 5.1.3. The per capita allocations for each type of authority are, in effect, averages that help to show individual authorities allocations in context.

  2.  Table 5.1.4 compares the change in the total SSA for social services between 1999-2000, 2000-01 and 2001-02 for each local authority. There were three transfers of function resulting from the spending review announced in July 2000. They were:

    ii.  Guardians Ad Litem and Reporting Officers (GALROs): Part 1 of the Criminal Justice and Court Services Bill established the Children and Family Court Advisory Support Service (CAFCASS) as a non departmental public body under the sponsorship of the Lord Chancellor. This was made up by integrating three existing services across England and Wales. These are the children's work of the official solicitor's Department, the family court welfare functions of the probation service and the GALRO services, a function currently funded by social services. The children's SSA was reduced by £22.6 million to account for this transfer;

    iii.  Inspection of Under Eight Services: From 1 September 2001 the Office for Standard Education (OFSTED) took over from social services departments the responsibility for the inspection of Under Eight Care facilities. The children's SSA was reduced by £12.5 million to reflect this change.

  3.  In order to give a true comparison of the increase in funding the 2000-01 SSA figures have been adjusted to take account of these changes. The adjustment is the above three figures added up and deflated by the GDP deflator.

  4.  Existing data sources do not provide information on the total number of clients receiving services, only on numbers in receipt of particular components of care. As some clients will receive more than one component of service (for example home care and meals) it is not possible to aggregate numbers for particular components to derive an estimate of overall numbers of clients. The new Referrals Assessments and Packages of Care (RAP) data collection now being introduced will help plug this gap in the data. RAP will collect data on the number of clients receiving services (provided or commissioned), by primary client type, service type and age group. The first full set of data from the RAP project will be for the financial year 2000-01, and this will be available in October 2001.

Changes to the calculation of SSAs

  5.  There were no changes to the PSS SSA resource allocation formulae for 2001-02. Therefore, the coefficients within the formulae are unchanged. The formulae were, however, updated to take account of the latest data.

Future plans for PSS-SSAs

  6.  The Department for Transport, Local Government and the Regions has been carrying out a review of local government finance. This review is being carried out in partnership with the Local Government Association, and is considering a number of aspects of how local government is financed, including grant distribution. During the period of this review, no changes have been made to the SSA formulae. Where more recent data become available however, they have been incorporated into the SSA calculations.

  7.  The Government has now announced that it plans to issue a White Paper on local government finance in the autumn. It has also announced that the existing PSS SSA formulae will be reviewed with the aim of introducing new and improved formulae for 2003-04. The Department of Health is currently discussing with the LGA a work programme which will enable it to re-examine all the PSS SSA formulae over this time period.

  8.  There is a parallel review of resource allocation for the NHS. Further details are provided in answer to Question 4.5c.

Table 5.1.1


Table 5.1.2


Table 5.1.3


Table 5.1.4


5.2  Comparison of Budgets with SSAs

  Could the Department provide a table comparing PSS SSAs with the corresponding budget for each local authority for the latest two years for which comparable information is available? Could the Department illustrate how the total of PSS SSAs and budgeted expenditure in PSS have compared at the national level over the latest 5 years? Could the Department provide a commentary on any trends shown by these figures?

  1.  Comparisons of 1999-2000 and 2000-01 PSS SSAs with budgeted expenditure for each local council, appear at Table 5.2.1. Budget figures have been provided by local councils but have been adjusted by the Department for Transport, Local Government and the Regions to make them comparable with standard spending assessments. This has meant excluding expenditure supported by special and specific grants, and making some other technical changes. This involves a degree of estimation and allowance should be made for marginal errors when viewing the table. The budget figures for 1999-2000 and 2000-01 are therefore not on the same basis as figures quoted in response to other questions (where such adjustments have not been made).

  2.  The money provided to local councils by Government is not hypothecated. Local councils decide how precisely to deploy these resources in the light of local circumstances and priorities. Councils are free to spend more or less than the amount of the SSA for any particular service.

  3.  Table 5.2.1 shows that taken together, councils budget to spent about 10.9 per cent more on social services than the total of PSS SSAs in 1999-2000 and 8.9 per cent more the following year. The table shows a wide variation between councils in 2000-01, ranging from a few planning to spend over 30 per cent more than PSS SSA to those spending below SSA. The figures show marked differences in the levels of expenditure between similar and neighbouring councils. Generally, however, unitary councils tend to exceed their SSAs for social services by a higher average amount than the other classes of council. Metropolitan districts and Inner London authorities tend to exceed their PSS SSAs by the lowest amounts.

  4.  Figure 5.2.1 compares PSS SSAs and budgeted expenditure at the national level over the latest five years. The gap between expenditure and SSA has remained at about the same level over the five years period.

Table 5.2.1 (Summary table)



  1.  Authorities which budget to spend less than their PSS SSAs appear with a negative sign.

  2.  Expenditure by shire districts has been added to the parent county, eg 1999-2000 budget figures for Bedfordshire £55.511 million consisting of parent county expenditure figure of £55.386 million plus £0.125 million for districts.

Table 5.2.2

Local Authorities that Spend Below PSS SSA

5.3  Variations between authorities in unit costs

  Could the Department set out in a table how the unit costs of the main social services for children and adults have changed over time? Could the Department quantify the degree of variation in these unit costs between authorities? Could the Department provide a commentary on these figures?

  1.  The unit cost figures in table 5.3.1 show in cash and real terms (deflated by GDP at 1999-2000 prices) the increases in selected unit costs for personal social services from 1995-96 to 1999-2000. The unit costs cover residential and nursing care for older people who are financially supported by the local authorities, hourly costs for home support services, and costs for placements of children looked after with foster parents or in local authority maintained children's homes.

  2.  The real terms weekly unit cost for supporting older people in nursing homes rose each year between 1995-96 and 1999-2000, apart from a slight fall in 1998-99. The real terms unit cost of supporting older people in local authority staffed residential care homes increased each year between 1995-96 and 1999-2000, apart from a minor decrease in 1996-97. The real terms unit cost of supporting older people in independent residential care homes increased slightly between 1995-96 and 1999-2000 but with a large decrease in 1997-98 followed by a large increase in 1998-99 (the latter may reflect the inclusion of placements in other local authorities). Costs in the independent sector (private and voluntary residential homes and nursing homes) represent the costs to local authorities in purchasing care, whereas the costs for local authority homes represent the full cost of running such homes, which are declining in number as homes are transferred out of local authority control.

  3.  The rise in unit costs of residential care for older people may have been associated with better or more intensive services (more space, higher staff/resident ratios) and changes in cost or efficiency. There has over the same period been an increase in dependency (measured by age) with the over 85s accounting for 53 per cent of long stay supported residents in homes for older people in 1995-96 and 55 per cent of long stay supported residents aged 65 or over in 1999-2000.

  4.  In 1999-2000 the majority (75 per cent) of elderly long stay supported residents were accommodated in independent sector (private and voluntary) residential care homes for older people, the proportion increasing from 58 per cent in 1995-96.

  5.  The real terms hourly unit cost for home help/care has risen from £9.1 to £10.0 over the past four years. There has been an increase in home help/care provision over the same period, with an increase from 2.5 million contact hours reported in 1995-96 to 2.8 million contact hours in 1999-2000.

  6.  Real terms unit costs for placing a looked after child in local authority maintained homes increased gradually over the two years up to 1997-98, the last year for which this information is available. The real terms cost per week for placing children with foster parents has risen from £180 to £221 over the four years to 1999-2000. The placements of children looked after have changed over this period, with the total number of children being looked after gradually increasing, there has been little change in the proportion of children being fostered and a reduction in the proportion placed in children's homes.


  7.  There is substantial variation between local authorities in these unit costs, as figures 1-6 below demonstrate. Such wide variability of individual authority figures points to issues of data quality and there is a risk that misreporting of data by local authorities has had an effect. In examining unit costs it is likely that extreme high or low values are the result of misreporting of expenditure data by local authorities. It is however notable that even if the more extreme figures are discounted significant variation remains. The Department is of the view that the information provided by local authorities should be used in monitoring social services, which should act as an incentive for authorities to improve their management information generally.

  8.  Figures 1-5 show the unit cost values calculated using expenditure data for 1999-2000. Figure 6 gives unit costs based on 1997-98 expenditure and activity data, as the expenditure data for children looked after in LA maintained children's homes is no longer available. Where a local authority has reported activity but no expenditure (an implied zero unit cost) they have been excluded from the charts. Local authorities formed on 1 April 1997 are excluded from figure 6 since there is no activity data available for 31 March 1997 for these authorities (activity at 31 March 1997 and 31 March 1998 is averaged—see footnote 6 to table 5.3.1).

  9.  Figure 1 shows the weekly unit cost of supporting older people in nursing homes in 1999-2000. The average weekly unit cost for England was £319 in 1999-2000 ranging from under £200 a week in eleven authorities (four authorities—Bournemouth, Hillingdon, Lambeth and Southampton—recorded no such expenditure; seven—Coventry, East Riding of Yorkshire, Hartlepool, Knowsley, North Tyneside, Redcar and Cleveland and Rochdale—recorded costs of between £136 and £198) to more than £500 a week in four authorities (Barking and Dagenham, Bexley, City of London and Hackney). The middle 50 per cent of the authorities had a unit cost between £298 and £378.

  10.  The average weekly cost for supporting a resident aged 65 or over in local authority residential homes in 1999-2000 is shown in figure 2. The average for England was £356, with the middle 50 per cent of authorities having a unit cost between £305 and £454. Four authorities recorded a unit cost of under £200 (three authorities—Bedfordshire, Bromley and Somerset—recorded no such expenditure; one—Hertfordshire—recorded a cost of £117). Fifteen per cent of authorities (22) had a unit cost greater than £500 per week, including 6 reporting a cost of over £700 (Barking and Dagenham, Hackney, Haringey, Isles of Scilly, Lewisham and Wandsworth).

  11.  The weekly cost for a supported resident aged 65 or over in independent (private or voluntary) residential homes during 1999-2000 for individual authorities is shown in figure 3. For individual authorities this unit cost varied from under £200 (including 7 authorities—Barnsley, Coventry, Islington, Knowsley, Leeds, Newcastle Upon Tyne and Wakefield—reporting costs between £104 and £118) to over £500 in one authority (Lambeth). The average for England was £254, with the middle 50 per cent of authorities having a unit cost between £230 and £298.

  12.  Figure 4 shows the hourly cost of home help/care for individual authorities in 1999-2000. The hourly cost varied from less than £6 to more than £15, with over two thirds of authorities having a unit cost of between £8 and £12 per hour. The average hourly unit cost for England was £10. The middle 50 per cent of authorities had a unit cost between £8.81 and £11.58.

  13.  Figure 5 shows the variation in weekly unit costs between authorities for placing a looked after child with foster parents. The unit cost for the middle 50 per cent of authorities was between £173 and £259, with an average unit cost for England in 1999-2000 of £221.

  14.  The average weekly cost of supporting a looked after child in a local authority maintained children's home in 1997-98 in England was £1,325. This unit cost ranged from less than £400 per week to over £5,000. The middle 50 per cent of authorities had unit costs between £979 and £1,822 per week.

  15.  Variations between authorities in unit costs are to be expected as the demand for services varies, prices will be affected by regional wage rates (for example higher prices in the South East), and supply factors such as the number of residential care homes will have a bearing. Variations between authorities in dependency of clients may also be relevant.

  16.  The Performance Assessment Framework for Personal Social Services introduced in 1999 consists of 50 indicators, 11 of which relate to cost and efficiency. These are:

  17.  Indicators B8 and B12 have been made Best Value Performance Indicators. Councils are required to set annual targets for improvement for these indicators consistent with achieving the current top quartile for their family group (Inner London Boroughs, Outer London Boroughs, Metropolitan Boroughs, Unitaries, County Councils (Shires)) over five years.

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