Conclusions and recommendations
1. The
Local Government Spending Review settlement is a tough one (though
in line with many others across government) that cannot fail to
pose a challenge for the successful delivery of social care. Although
councils do have the additional revenue stream of council tax,
this will only dampen the cuts to a certain degree, with the Spending
Review itself placing the actual decrease in funding at around
14%, still an enormously challenging figure. It would also be
unwise to regard this level of social care income as 'safe', at
a time when councils will be trying to divide scarce resources
between competing priorities, and when councils' ability to seek
additional revenue from council tax payers will be limited and
could lead to variation. (Paragraph 12)
2. Although we welcome
the Government's identification of additional resources for social
care, through the mechanism of the Personal Social Services Grant,
the fact is that this funding is now part of the general local
authority revenue grant which will reduce from £28 billion
this year to £21.9 billion in 2014-15. Given the pressures
on local authority spending overall, the majority of our witnesses
expressed serious concern that changes in the PSS grant will not
be reflected in changes in actual spending in social care. The
decision to end ring-fencing of PSS grants means that the total
level of social care spending is now at the discretion of local
authorities. Even though this may be welcome in principle it has
the practical effect of introducing an additional element of uncertainty
into the plan for meeting demand for health and social care. (Paragraph
16)
3. We urge the Government
closely to monitor the relationship between the level of PSS grant
and actual social care spending. In the meantime the Government
must shore up the 'positive attitude' to spending of social care
funds by clearly communicating its expectations to local government.
(Paragraph 17)
4. We strongly support
working towards an improved interface between health and social
care, and we recognise the efficiencies and improvements in the
quality of care that could result from this process . The distribution
of this sum for social care from the NHS revenue budget is a key
opportunity to drive positive change in this interface. The Secretary
of State's description of a formal transfer of funds based on
a jointly-agreed spending plan suggests an approach based on the
provision of particular services in isolation. It will be an opportunity
missed if this sum is not distributed with the primary aim of
developing a better overall interaction between health and social
care which could have a much wider impact on efficiency, prevention
and reablement than the more limited funding of certain services.
We expect that the distribution guidelines set out in the Operating
Framework will grasp this opportunity. (Paragraph 20)
5. The evidence submitted
to us, including the evidence submitted by the Government itself,
does not allow us to conclude that the Spending Review settlement,
coupled with the pay freeze, is enough to allow councils to 'sustain'
care levels without restricting eligibility criteria. Our analysis
shows that, depending on spending decisions by individual councils,
the social care sector will need to deliver efficiency gains of
up to 3.5% per annum throughout the Spending Review period to
avoid reducing their levels of care. We intend to monitor the
delivery of these key objectives on a regular basis throughout
the Parliament. (Paragraph 32)
6. Improving the interaction
between health and social care will be very important if the necessary
cost savings on both sides are to be realised. The potential to
make savings in this area has long been acknowledged, but has
not yet been properly realised. We believe that it is mission-critical
to successful delivery of the Nicholson Challenge to achieve a
quantum leap in the efficiency of this interface. (Paragraph 35)
7. We strongly support
the objectives of improved partnership between health and social
care but doubt whether the current institutional or policy structures
are fit for the purpose of achieving them. The examples which
are quoted often involve demonstrating how better developed social
care services will relieve the burden on the healthcare system
as well as improving outcomes and experience for patients. There
is ample evidence to support these objectives, but delivery involves
more than cooperation and improved discharge procedures. It requires
a serious commitment to plan and deliver coherent delivery systems
('pathways of care') which are complicated by institutional differences.
(Paragraph 43)
8. The allocation
of £1 billion to social care through the NHS budget is a
step in the right direction in that it formally recognises the
interaction between health and social care, but we are concerned
that it may be too tightly focused to bring about a genuine wider
improvement in the interface between the two services. In general,
there is a risk of the 'better interface' becoming a by-word for
the health service seeking to achieve its own efficiencies by
asking social care to take on more. The Government must do more
to bring about improved relations and interaction more generally
between the two sectors, as this could ultimately contribute to
broader cooperation, more imaginative efficiencies, and more significant
savings on both sides. It is not enough for the Government to
exhort change in this area: there must be a formal policy infrastructure
that recognises the importance of achieving this. (Paragraph 44)
9. The Department
of Health takes up a significant portion of the Government's total
funding across departments: by 2014-15 the Department of Health
will account for 33% of the total Resource budget and 11% of the
total capital budget. The ability of the NHS to operate within
its settlement is therefore vital to the achievement of the Government's
spending plans. (Paragraph 47)
10. The Government's
commitment to a real terms increase in health funding throughout
the Spending Review period will not be met. This emphasises the
fact that the settlement, although generous when compared to other
departments, represents a substantial challenge to the NHS. (Paragraph
51)
11. The efficiency
challenge for the NHS is not about cuts. It is about doing more
with the same amount of money. The Government needs to ensure
this fact is more clearly communicated both by the NHS itself
and to the wider community. (Paragraph 60)
12. There is an urgent
need for a credible plan to deliver the efficiency gain which
is the central requirement of the Spending Review settlement for
the NHS. Many witnesses have drawn attention to the need for this
plan and have expressed concern that it is not yet available.
We share this concern. (Paragraph 62)
13. The QIPP programme
is the tool available to healthcare to make efficiencies, and
represents a good starting point. However, the scale of the challenge
is so immense that QIPP will need to demonstrate clear savings
early in order to provide the savings programme with the momentum
to proceed at a steady pace towards the £15-20 billion goal.
Close monitoring and consistent reporting of performance against
publicly available norms will be essential if these gains are
to be seen as real improvements rather than accounting changes.
(Paragraph 67)
14. We are concerned
that 40% of the necessary efficiency improvements are to be derived
from tightening the tariff. There is no guarantee that reductions
in the tariff will always result in genuine efficiency gains,
and there is a risk that the quality of services could suffer
if changes are driven by reductions in the cost of the tariff
alone. There should not just be across the board cuts in the tariff.
It needs to be revised to remove perverse incentives and encourage
best practice. (Paragraph 71)
15. We welcome Sir
David's recognition of the need for close financial oversight
during this transition period. We believe there must be more detail
in the Operating Framework and over the coming months on the exact
nature of these controls and, in particular, how they will address
the transitional arrangements from PCTs to commissioning consortia.
(Paragraph 82)
16. Sir David Nicholson
has acknowledged the risks of delivering the efficiencies programme
over the transition period to the new NHS structures, and we are
encouraged by his determination to maintain tight financial controls
during this time. However, we are concerned that there has been
a lack of co-ordination in the period since the White Paper was
published, and the Government has not communicated a clear narrative
to support PCTs and other NHS organisations in implementing the
reforms. (Paragraph 88)
17. The cost of the
White Paper reorganisation emphasises the need to achieve the
higher end of the £15-20 billion of efficiency savings identified
in the Nicholson Challenge. These costs must be clearly identified
and planned for, if the spending challenge is to be achieved.
It is unfortunate that the Government has not yet provided even
a broad estimate of the likely reorganisation costs; and it is
unhelpful for the Government to continue to cite the £1.7
billion figure, as it does not relate to their specific proposals.
The next round of White Paper documents must present a clear assessment
of the likely costs, both direct and indirect, and demonstrate
how they are to be accommodated into wider spending plans. (Paragraph
92)
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