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.
VARIATION BETWEEN
AUTHORITIES
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 averagedsee
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 authoritiesBournemouth,
Hillingdon, Lambeth and Southamptonrecorded no such expenditure;
sevenCoventry, East Riding of Yorkshire, Hartlepool, Knowsley,
North Tyneside, Redcar and Cleveland and Rochdalerecorded
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 authoritiesBedfordshire,
Bromley and Somersetrecorded no such expenditure; oneHertfordshirerecorded
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 authoritiesBarnsley, Coventry,
Islington, Knowsley, Leeds, Newcastle Upon Tyne and Wakefieldreporting
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.