Scotland’s new local government funding reforms

A year in power and one thing the Scottish National Party cannot be accused of is resting on its laurels. Chief among the changes it has pushed through the Scottish Parliament is a major drive to revamp the funding and management of social services.

Gone is the practice of central government handing down diktats to local authorities that cash be spent to meet ministerial objectives, rather than local priorities. Instead, a new spirit of co-operation is in the air, as the SNP seeks to ensure that resources invested deliver improvements in services.

The SNP and local councils have agreed a concordat that sets out the principles underpinning this new working relationship.

One of the central planks of the policy is a reduction in the red tape around funding, allowing councils to move money from one spending priority to another.

In 2007-8, £2.7bn was ring-fenced for specific services in Scotland. In 2008-9, this will drop to £500m and by 2010-11, it will be just £300m.

Each council will be expected to achieve annual efficiency savings of 2%, but can keep the money saved to invest in local services. To monitor progress, all 32 councils must sign a single outcome agreement with the Scottish government. Each agreement takes account of local priorities and is underpinned by national indicators.

And from now on, councils have to submit only one annual report detailing their achievements and objectives, rather than a constant stream of paperwork to prove they are meeting their targets.

Other key initiatives include prioritising dementia in Scotland’s healthcare strategy, greater use of community sentences for drug and alcohol offences rather than prison, and an independent review, unveiled last month, outlining how to strengthen the policy of free personal care for older people.

About 50,000 people in Scotland benefit from FPC, first announced in 2002 under the Community Care and Health (Scotland) Act, and pressures on funding are certain to grow as the population ages further.

But has this quiet revolution north of the border really made a difference to those at the front line of social care services, or their users?

Bernadette Docherty (pictured right), president of the Association of Directors of Social Work, says the policy has been received positively, but it is too soon to say for certain that it will result in better care.

“The changes have been very well received,” she says. “The nature of the relationship between national government and local government has changed – it’s now much more of a partnership approach.

“We are developing policy together, rather than just having it handed down to us with a set of instructions.”

Docherty says it is too early to say there have been tangible improvements – nor is the strategy without risks. “We need to make sure we can safeguard the most vulnerable groups of people,” she says.

“Scrapping much of the ring-fencing of funds has a lot of support, but the caveat is: will it lead to fewer resources for vulnerable groups? That’s something we will be monitoring very carefully.”

Docherty believes the potential to reinvest 2% savings at a local level could make a significant difference.

“We face a big challenge with Scotland’s ageing population and the issue of long-term funding of care,” she says.

Ronnie McCall, spokesperson for the Convention of Scottish Local Authorities, says that of all the new SNP policies, the scrapping of ring-fencing will, arguably, have the greatest impact at local level.

“From a local government point of view, we are very happy about it,” he says. “It allows us much greater flexibility in terms of what the money is spent on.

“Not every local area has exactly the same problems. In the past, you would have ring-fenced money that had to be put into something that was already perfectly well funded. For example, urban areas might have different priorities to rural areas.

“Some councils might do quite well in funding for elderly or personal care, but have high levels of deprivation and poverty. Doing away with ring-fencing allows them to move money to poorly funded services.”

McCall concedes there is a danger that some peripheral services could suffer as previously ring-fenced cash is sucked into other areas. But he believes the benefits will outweigh the risks.

“I really don’t think local government is going to deprive any services they know they need to fund,” he says. “It would be very silly to let that happen.”

The beauty of the concordat, says the SNP member, is that it gives each council a chance to argue its case at national level. “It’s not just about what local government can deliver. It’s also about what national government can deliver to us as well.

“It gives us a stronger voice when we feel something should be a joint priority and we need more help.”

Progress on establishing single outcome agreements is mixed at this early stage, but all 32 councils are expected to have them in place during 2008-9.

According to McCall, some councils are much further ahead than others partly because the concept was piloted in a handful of local authorities, giving them a head start.

While local priorities will differ widely, the common factor is that they all target areas genuinely in need of improvement, rather than spend cash on flagship services that are already at a high standard.

“You choose your own local priorities,” says McCall, “but it’s not about picking safe options. If your area already has high educational attainment, for example, then you are not going to pick schools as a priority.”

As part of the single outcome agreement, the Scottish government is at liberty to reject proposed targets if it feels they are not ambitious enough. In Scotland’s new spirit of co-operation, this would probably take the form of gentle negotiation rather than confrontation, says McCall.

“It’s a brand new way of working and a lot of the outcomes agreed will not just cover one year but maybe three, four or five. We will all look for gradual improvements.

“In the old days, councils were much more interested in proving how they spent the money, rather than achieving things. This is a much better way of doing things.”

Ruth Stark (pictured right), professional officer (Scotland) at the British Association of Social Workers, says many councils will have been too busy grappling with overspends from the previous financial year to have sat down and formulated spending priorities for the next.

She believes councils must transmit to front-line care workers the potential benefits of the latest upheaval in funding if staff morale is not to suffer.

Stark points to previous reports that have identified Edinburgh, for example, as an area dogged by poor morale and bad spending decisions.

“If we are to have yet another change in social work funding, it requires management to explain these changes to front-line staff, if morale is not to go down,” she says.

But Stark shares the widespread enthusiasm over Scotland’s new way of working, not least because it means staff will have a say in what local priorities should be.

But real success will come only if councils are brave enough to take tough decisions that might alienate the masses but truly benefit those most in need, she says.

“The Highland area always spends a lot of money on roads because it has a huge network to maintain. So will it carry on spending on roads, or will it divert it to spending on children in care?

“Aberdeen, too, has a huge problem with the number of children in residential care. It is 50% higher than any other region in Scotland and nobody knows why.

“So, in principle, an end to ring-fencing is good. It just depends how much local councils are truly committed to social justice.”

Further information

Scottish government concordat

£34.7bn for local government in Scotland

This article appeared in the 15 May issue under the headline “Scotland’s quiet revolution”