Watchdog praises Care Act implementation but warns of burden on councils

The Department of Health’s cost estimates and chosen funding mechanisms for implementing the first phase of the Care Act 2014 have put local authorities under increased financial risk given the uncertain level of demand for adult social care, the National Audit Office has said.

In a report the spending watchdog praised the Department of Health for implementing the legislation well. It said the DH had consulted carefully on the Act, in a bid to understand the risks and respond to the sector’s concerns.

There was also found to be wide support for the legislation and 99% of local authorities were confident that they would able to carry out the Act’s reforms from April 2015.

But the NAO warned that “in a challenging financial environment, with pressure on all services, authorities may not have enough resources to respond if demand for care exceeds expectations”.

The Care Act is intended to reduce reliance on formal care, promote people's independence and wellbeing and give people more control of their own care and support.

The watchdog said the legislation would “increase demand for assessments and services at a time when local authority provision has been falling and the number of people in need is rising”.

Its estimates suggest that phase 1 of the Act will cost £2.5bn to carry out from 2013-14 to 2019-20, more than half of which is for carers’ assessments and services.

This is a new entitlement and the largest single cost, the NAO warned, and the Department of Health may have underestimated demand.

“It based its estimate of take-up on the number actually receiving Carer’s Allowance, which it compared with other sources,” the watchdog said.

“The NAO repeated the Department’s calculation concluding that it was as reasonable to assume that those carers who have applied for Carer’s Allowance and are eligible, but do not receive it because they receive other allowances, are as likely to seek an assessment. This equates to a risk of £27m (26%) in extra assessments and services if these people also come forward.”

Amyas Morse, head of the National Audit Office, said: “The first phase of the Department of Health’s new approach to adult social care has been implemented well. But this places new responsibilities on local authorities whose core funding is being significantly reduced. They may not have enough resources to respond if, as could be the case, demand for care exceeds expectation. This could result in their having to delay or reduce services in the short term. This risk to value for money needs to be managed.”

Responding to the report on the Care Act, Cllr Izzi Seccombe, chairman of the Local Government Association's Community Wellbeing Board, said:  "This report supports what councils have long been warning – that there is a real risk that the Care Act could be underfunded leaving councils exposed to additional and unplanned costs. Unless the Government fully funds all new burdens brought in by the Care Act then vital reforms to improve care and support for the elderly and disabled could be jeopardised.

"Councils are implementing the Care Act at a time when rising demand and escalating costs means that the adult social care system is already under immense stress. While councils have long called for a reform of the care system, and have worked hard to be ready for the Care Act with the support of the LGA through the Programme Management Office, many still have serious concerns about there not being enough money in the system to cover these changes.”

Cllr Seccombe added: "While the Government has committed to monitoring additional costs of the first phase of the Care Act, councils still anticipate it could be underfunded by as much as £50 million. If this is the case, it could leave them without the resources they need to care for the most vulnerable in society. It is vital that the Government works with councils to ensure any increased demand or costs experienced from the changes in the Care Act are fully covered and do not impact on other valued council services."

A copy of the full report, Care Act first-phase reforms, can be viewed here.