Hansard

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.