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The Scottish executive’s estimated costs of introducing free personal care are seriously flawed and highly under-estimated, according to an economic analysis just published.

In the report written by Dr Jim Cuthbert, a former Scottish Office chief statistician, and his partner, Margaret Cuthbert, an economist and business consultant, the couple claim that the care development group, which formulated the proposals for the executive, did not make sufficient provision for the potential demand for services in their financial estimates of free personal care.

The independent economic analysis, first published last week in the Journal of the Institute of Chartered Finance and Accountancy, claims that 118,000 older people in Scotland will be potential care seekers. This additional demand could swell the costs of implementing the Royal Commission on Long Term Care for the Elderly’s recommendations to £368 million after three years, many times more than estimated by the executive.

The Cuthberts claim that the discrepancy in costs is so huge that "the Scottish executive could well find itself in a position where it is either under pressure to implement the Scottish flexibility on income tax or to re-open with Westminster the whole question of the funding of the Scottish parliament".

The report claims the care development group figures are wrong in underestimating personal care costs by £35 per individual per week, the cost of living costs currently being renegotiated upwards with the private sector, the amount of unmet need and that the withdrawal of attendance allowance by Westminster for those receiving free personal care, which is likely to cost the executive £20 million per year.

With the appointment of Jack McConnell as the new first minister last week, political pundits have questioned whether he will go through with his predecessor’s policy of introducing free personal care given that it was originally rejected by the majority of the ministers including Susan Deacon, minister for health and community care.

A Scottish executive spokesperson refused to respond to the independent challenge to costs, but acknowledged: "Jack McConnell has said he wants to see financial projections to check the means by which this is being financed."

Meanwhile, the proposals to introduce free personal care have been formally supported by the highly influential health committee of the Scottish parliament, but with conditions. Margaret Smith, chairperson of the health committee who led many revolts on behalf of the implementing the royal commission’s recommendations, said: "A definition of free personal care should be laid down explicitly in statute."

If successful, this will allow care of older people and campaigning organisations to try and broaden the definition of personal care used by the royal commission, having criticised it as being too narrow. The health committee is also seeking a definition of principles underlying free personal care, a guarantee of future funding, and claims that any move to block attendance allowance to people in Scotland would be discriminatory given Westminster’s decision to continue that benefit to those in England and Wales in receipt of free nursing care.