At least 20 councils are planning to hive off their adult social care services to local authority trading companies.
The move is in response to the high costs of keeping services in-house and government pressure on councils to cease providing adult care services other than in exceptional circumstances.
Trading companies represent a half-way house between keeping services in-house or outsourcing them to the independent sector, as they are wholly owned by councils but operate as commercial enterprises.
In adult care, this means they can seek business from self-funders and direct payment users, and also move into other areas such as providing health.
The 20 local authorities are working with auditing giant Ernst & Young UK, whose executive director, John Baker, revealed the plans at a seminar on social care funding reform yesterday.
“Most councils I am working with have reached the conclusion that they can no longer provide any in-house services at all,” he said. “They are looking at outsourcing the vast majority or indeed all of their services. The current configuration is no longer viable or indeed for a lot of local authorities desirable.”
The government has also said that councils should only directly provide care services in exceptional circumstances.
Baker said potential advantages of trading companies included the fact that surpluses from the business were returned to the council and an emphasis on “quality outcomes”.
He said he expected to see more councils make similar plans over the next 12 months.
The first trading company for adult care was set up in Essex in 2009, to provide home and day care, employment support and equipment.
In its first year sickness absence rates dropped from 16% to 4%, among the 850 staff transferred into the company from the council. Staff were transferred on their existing terms and conditions, including their pension.
Essex Cares is wholly owned by the council, and is overseen by a board of 15 councillors with an independent chair, who meet every six weeks.
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