Councils must review use of block contracts in social care, says Audit Commission

Local authorities must review their approach to using block contracts in social care and consider the most appropriate contracting method for personal budgets, the Audit Commission has recommended in a report warning that some councils are “lagging behind” in allowing people to take control of their own funding.

In Financial management of personal budgets, which was published yesterday, the watchdog said just six out of 152 councils currently meet the key target, which is that 30% of eligible people should have a personal budget by April 2011. Some councils will need to make “a significant effort” if they are to achieve agreed milestones, it warned.

The report revealed that people with mental healthcare needs are less likely to have personal budgets than other services users, in part because of the problems in disentangling pooled NHS and social care funds. Some councils do not provide any personal budgets at all to people with such needs “despite evidence that mental health service users would be major beneficiaries of the policy”, the Audit Commission said.

The watchdog argued that personal budgets put both block contracts and in-house provision at risk. It suggested that as more people arrange and buy their own services through direct payment, so councils would have to use more “flexible procurement models”, such as framework contracts and outcome-based contracts.

The move towards more flexible contracts is expected to lead to a greater number of contracts, which will itself lead to a greater need for effective governance, the Audit Commission said.

It added that the personal budget system increased the risk of fraud, corruption or other misuse of funds due to the delegation of financial control and service delivery. Accordingly, “councils should develop suitable and proportionate arrangements that tackle the risk of fraud but do not stifle innovation or the spirit of personal budgets and personalisation”.

In relation to commissioning strategies, the Audit Commission recommended that – as well as reviewing contracting arrangements – councils should:

• Collect information to assess demand for services and current provision for both public and privately funded individuals in their communities
• Develop brokerage services to endure personal budgetholders have enough information to identify the service provider or organisation with whom they will spend their budget
• Work with independent and voluntary sector providers to ensure they are aware of the implications of personal budgets and prepare them to respond positively
• Work with the NHS to develop personal budgets for mental health service users.

Andy McKeon, managing director of health at the Audit Commission, said: “The rationale behind personal budgets is not saving money, but empowering service users. Personal budgets mean personal choice. They can improve health, wellbeing and user satisfaction. There may be some savings where councils have ended up with high-cost care packages as a result of poor commissioning. But the growth in personal budgets puts block contracts and in-house service provision at risk, as a result of the freedom to choose from different services and providers.

“Introducing this radical change in the funding of social care is a challenging, and ongoing, process. Our report gives case studies of councils that are rising to that challenge, and making it work for the benefit of their residents.”

The Local Government Association insisted that councils had made “much progress” since the Audit Commission’s research, which was carried out six months ago.

Cllr David Rogers, chairman of the LGA’s community wellbeing board, also claimed the report was “somewhat outdated” due to the recent Health White Paper which “envisions a radical shake-up in care provision”.

Rogers added that, as part of the Health White Paper, the LGA was calling for councils to be handed a greater role in commissioning mental healthcare.

Ed Archer