news analysis of the Budget and the implications for social care

When the Chancellor opened his budget briefcase there were
cheers from the social care sector as he announced a 6 per cent
real terms growth in spending, writes David
Brown.

But as the collective celebratory hangover begins to lift there
is growing concern about the future of the billions of pounds of
promised extra funding.

The fears started the day after the budget when it became clear
that much of the extra funding will not be ring-fenced and that
some of it may be required to pay penalties for delayed discharges
from hospitals.

On Wednesday last week there had initially been celebrations
across the social care sector as Brown described it as “for too
long, a neglected part of the caring services”.

The effect of his budget on social services is to turn the
current annual 6 per cent cash growth into 6 per cent real growth
between 2003-04 and 2005-06.

This means the Chancellor’s promise of a £3.2billion
increase in social services spending actually equates to about
£360million a year above the level already budgeted for by
most authorities.

Alan Milburn, the Health Secretary, said that councils will need
to use their extra resources to ensure that older people are able
to leave hospital when their treatment ends – or they will face
penalties.

“If councils reduce the current level of bed-blocking so that
older people are able to leave hospital safely when they are well,
they will have freedom to use resources to invest in extra
service,” he explained.

“If bed-blocking goes up councils will incur the cost of keeping
older people in hospital unnecessarily.”

Officials at the Department of Health are currently drawing up
proposals on how to penalise authorities that are not able to find
care home places or fail to provide care at home for clients ready
to be discharged from hospital.

Local authorities will be consulted over the coming months and
the regulations are not expected to come into force next summer at
the earliest.

It is likely be incredibly difficult to devise a scheme that
does not encourage consultants to discharge patients too early,
ensures that clients are found suitable placements and is not seen
as simply circulating public funding.

Potentially the costs of the penalties for local authorities
could be huge.

It has been reported that hospital discharges could land local
authorities with a penalty of up to £150 a day, the
approximate cost of providing a non-acute hospital bed.

Earlier this month the House of Commons’ Public Accounts
Committee calculated that delayed discharges account for two
million hospital bed days each year. Therefore, the theoretical
level of penalties on local authorities could be up to
£300million a year.

Extra funding to reduce the level of delayed discharge is not
exactly new cash for local authorities. In October last year
Milburn allocated £100million for the final six months of
2001/02 and a further £200million for the current financial
year to reduce the problem.

The extra money was intended to end widespread delayed
discharges by 2004 and it already seems to have some success.
Earlier this month the NHS announced that the reduction in the
number of “bedblockers” had exceed its targets, falling from an
average of 6,200 per day in September last year to 4,500 in
March.

Moira Gibb, immediate past president of the Association of
Directors of Social Services, said: “I am optimistic that the new
funding is an opportunity not just to sustain the current capacity
but to build new capacity for the future.

“There is a real realisation in the Government that the NHS Plan
cannot be achieved without additional support for social
services.”

But the Local Government Association has broken its usual
pre-election silence to condemn the proposals’ announcement
without prior consultation and to demanded urgent discussions with
Ministers.

Sir Jeremy Beecham, chairperson of the LGA, said: “The
government rightly acknowledges that the NHS plan will fail if
social care is not properly funded.

“However, levying fines on local councils that together are
contributing over £1billion to support social care, is both
perverse and unhelpful.”

Assuming that the increased spending announced in the budget is
not swallowed up in penalty payments, Milburn has calculated that
social services departments will have the resources to extend
rehabilitation care for older people by a third.

“Councils will be able to increase fees to stabilise the care
home market and secure more home beds,” he said.

“And more investment will mean more old people with the choice
of care in their own homes rather than simply in care homes.”

Sheila Scott, head of the National Care Homes Association, said:
“Although the Secretary of State has made it clear that part of it
should be used to stabilise the care home sector we are concerned
that unless the additional funding is ring-fenced then yet again
the money will not reach the people we are caring for.”

Owners are also concerned that the additional 1 per cent
employees’ national insurance payment announced by the
Chancellor will make it harder to recruit staff, many of whom are
already paid the minimum wage, whilst the employers’matching
contribution could be the straw that breaks the camel’s back
for those homes already on the brink of insolvency.

With local authorities already spending far more than the
government’s standard spending assessment, many social
services directors will be concerned that not all the extra funding
will find its way to their budgets.

The Local Government Association has calculated that the
additional 1 per cent national insurance to be paid by employers
will cost local authorities £300million – coincidently
not far short of the additional funding announced for social
services.

So as the Chancellor puts his red briefcase on top of the
wardrobe for another year, the social care sector is hoping that
last week’s celebrations were not premature.