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Chapter Six Costs and Finance

6.1 This chapter reviews the costs associated with the policy of free personal and nursing care. It examines the charge income raised by local authorities for social care services and also considers the incomes and assets of frail older people and how these may have been affected by the introduction of free personal and nursing care.

6.2 We begin with a discussion of how to define the costs of the policy, both for care home residents and for home care clients. We also discuss Supporting People, which also has had a significant impact on funding flows for older people since 2003. We then consider the information that is available on costs and finance at a local authority level, including findings on some aspects of costs from our survey of local authorities. We examine the financial circumstances of older people in Scotland to gain some understanding of ability to pay among this group of individuals. Finally we consider, from other research, public attitudes towards paying for personal care and some aspects of costs analysis which remain relatively undeveloped.

Defining the costs of the policy

6.3 As a first step to defining the costs of the policy, we review the Community Care and Health (Scotland) Act 2002. This is the legislation which implements free personal and nursing care. Part 1 of Section 1 of the Act makes its purpose clear:

" A local authority are not to charge for social care provided by them (or the provision of which is secured by them) if that social care is - personal care as defined in section 2(28) of the Regulation of Care (Scotland) Act 2001;" Community Care and Health (Scotland) Act 2002

6.4 The intention of the Act is to prevent local authorities from charging for personal care. It follows that the costs associated with the Act are the costs of the income foregone by local authorities through their inability to charge for personal care. We now consider how this principle applies to (1) care home residents and (2) those receiving care at home.

Care home residents

6.5 The notion that clients should not be charged for personal or nursing care was evident in the approach to costings used by the CDG for care home residents. Privately run care homes could not be prevented from charging for personal care. But the intention of the CDG was to compensate self-funding clients (See Appendix 1 for a discussion of the rules regarding self-funding) who would otherwise have paid for these costs.

6.6 The CDG used the same methodology to estimate personal care costs in care homes as had the Royal Commission on Long-Term Care. The costs of nursing care were based on the difference in average weekly charges between nursing and residential homes, as they were then described. Then, using estimates of 'hotel charges' derived from the work of the Royal Commission, estimates of the weekly cost of personal care was derived by subtracting hotel costs from average weekly residential home charges. The final estimates were £65 per week for nursing care and £145 per week for personal care. These figures have remained static since the introduction of the policy in 2002.

6.7 The CDG made one important adjustment to the cost of personal care: it assumed that all those in care homes would receive an Attendance Allowance ( AA) payment of £55 per week from the Department for Work and Pensions ( DWP) and that this could be used to offset the estimated weekly cost to the Scottish Executive of personal care of £145. There were strong grounds to believe that those receiving personal care would also receive AA, since the criteria for eligibility for AA include a need for some form of personal care. However, the CDG, and subsequently the Scottish Executive, incorrectly assumed that DWP would continue to pay AA to those receiving free personal care in a care home when the eligibility rules for AA indicate that it will be withdrawn if a local authority contributes towards the cost of personal care. And though the finance was provided by the Scottish Executive, it was local authorities who made the payments for free personal care to care providers on behalf of the clients. This is because, rather than paying clients directly, the funds are transferred by local authorities direct to care homes on the clients' behalf. The clients themselves have no direct involvement in the payment of free personal and nursing care allowances. And as mentioned above, the Scottish Executive provides local authorities with the funds to make these payments. It does so through the normal mechanism, Grant Aided Expenditure ( GAE). The size of the funding made available by the Executive to local authorities for free personal and nursing care is based on estimates of the number of self-funding residents and of the costs of personal and nursing care. The estimates of these costs for Scotland as a whole were constructed by the CDG. The Scottish Executive now calculates the allocation to individual local authorities based on estimates of the number of self-funding care home residents within the local authority boundary.

Care at home

6.8 The CDG estimated the payments that self funding individuals receiving care at home made to local authorities and private providers for their personal care services. As mentioned in Chapter 4, these costs were estimated to amount to about £20m in the first year of the policy. They were in the same spirit as the payments for care home residents - compensation for personal care costs that they would have otherwise have had to pay.

6.9 But in addition to these compensation costs, the CDG also estimated costs associated with substitution away from informal care and with unmet need for home care clients. It made a further allowance of £16m in 2002 to meet these costs. The spending on informal care and unmet need appear to have been included to capture all additional demand that might result from the introduction of the policy. But the Act is specifically intended to prevent local authorities from charging for personal care. Thus the assumption implicit in the CDG costing is that those who switched from informal to formal care or who registered a demand that had previously been unmet would have been able to pay local authorities for that service. There is no evidence to establish whether this assumption is correct because, by definition, free personal care is not a means tested benefit.

6.10 The switch in the balance of care towards more home care and the publicity associated with the provision of free personal care may have generated additional demands from clients who:

• Had previously been cared for informally or who had not been known to social services, and
• Who did not have sufficient income or capital to be charged for the services received from the local authority.

6.11 These individuals would generate additional demand on social services, but under a strict interpretation of the Act, their costs should have been met out of the general local authority social care budget rather than the free personal care budget. To make this allocation mechanism operational would have required means testing each home care client to determine whether they would have paid for personal care charges. The costs of those that were eligible to pay would be allocated to the free personal care budget, while the costs of those ineligible to pay would be allocated to the general social care budget.

6.12 An important principle is at issue here. The free personal and nursing care policy can be conceived as an extension of NHS provision to encompass personal care. Its effect is to make personal and nursing care free at the point of delivery, irrespective of ability to pay. Just as healthcare in the UK is free at the point of delivery and paid for through general taxation, so is personal care in Scotland. The effect of this extension is to transfer spending from private sources to public sources. It does not increase the overall resource cost of care.

6.13 More resources do have to be provided if previously unmet need emerges and results in new demands for services or if there is a reduction in informal caring which also increases demand for service provision. Some of these new clients will be unable to meet their care costs. The Free Personal Care policy prevents local authorities from charging for personal care. This implies that the costs of provision for these new less-affluent clients are not strictly costs that are associated directly with the policy. Rather they are indirect costs that have arisen because the policy and its associated publicity have stimulated additional demand for personal care.

6.14 Other new clients will be able to meet their care costs. They would previously have been charged for personal care by their local authority. Now such care must be provided free. These costs are therefore direct costs of the policy.

6.15 Local authorities have difficulty distinguishing between these groups of clients. Without detailed means tests, it is impossible to determine whether new clients would or would not have been charged for their personal care. But local authorities know that all personal care must be provided free and may not distinguish in their costings those that would have received it free anyway and those that receive it free because of the policy. Clearly difficulties of evaluation at local authority level inevitably have repercussions at the national level when cost estimates are aggregated.

6.16 Following the introduction of free personal and nursing care, each authority was provided with additional GAE allocation for those receiving care at home. This amount was determined by the formula used to allocate GAE health expenditure to local authorities. It thus reflected factors such as age structure, geography and levels of deprivation. This formula does not necessarily map closely to the costs to the local authority of income foregone through being unable to charge for care. It is more likely to favour authorities in deprived areas where the share of the population able to pay for the costs of care is low.

6.17 Thus, one might expect to see relatively more spent on free personal care at home in areas that have high levels of deprivation. Such areas have relatively few self-funding care home residents. In addition, the relevant local authorities receive a generous allocation for free personal care at home due to their level of deprivation. As a result these authorities concentrate more heavily on home care. One further factor that influences local authority outcomes is their previous policies. Different authorities have, for a variety of historical reasons, supported differing numbers of care homes and amounts of other forms of care. This historical evolution of the balance of care need not be related to local levels of deprivation. Figure 6.1 shows that there is a generally negative, though inexact, relationship between the share of the population aged 75+ receiving free personal care in a care home or at home. This is in line with what one might expect with some of the randomness in the relationship being due to these differences in past social care policies.

Figure 6.1 Share of Over 75s Receiving Free Personal Care at Home and Care in Care Home by Local Authority 2004

Notes to Figure
Source: Scottish Executive Statistical Bulletin on Free Personal Care

Supporting People

6.18 Supporting People "is a new integrated policy and funding framework for housing support services introduced from April 2003. The aim is to provide good quality services, focused on the needs of users, to enable vulnerable people to live independently in the community, in all types of accommodation and tenure" (Scottish Executive 2005c) The Scottish Supporting People budget is allocated to different vulnerable groups. In 2004, 30 per cent of the £400m budget was allocated to older people. Thus approximately £120m was added to local authority spending on older people as a result of the introduction of this policy. Supporting People replaced housing benefit and is funded by the UK government. Like other parts of the UK, Scotland receives a specific allocation of funds to implement Supporting People. The Scottish Executive administers these funds, distributing allocations to Scottish local authorities, who are responsible for the provision of services to support the housing needs of vulnerable people. Twenty eight per cent of recipients lived in sheltered accommodation. Supporting People has an explicit objective of helping people so that they do not have to go into residential care.

6.19 Potential overlaps between the Supporting People and free personal care policies are best understood by examining the Housing (Scotland) Act 2001 (Housing Support Services) Regulations 2002. The prescribed housing support services that can be provided under Supporting People include:

"General counselling and support including befriending, advising on food preparation, reminding and non-specialist counselling where this does not overlap with similar services provided as personal care or personal support. Advising and supervising service users on the use of domestic equipment and appliances. Assisting with shopping and errands where this does not overlap with similar services provided as personal care or personal support." (Schedule to the Housing (Scotland) Act 2001 (Housing Support Services) Regulations 2002)

Thus, Supporting People can be used to provide "advice on food preparation", "where this does not overlap with similar services provided as personal care".

6.20 The Scottish Executive Health Department consolidated guidance on free personal care (Scottish Executive Health Department 2003) stated that "food preparation and provision of meals are not included. However assistance with eating, assistance to manage special diets and the assistance with the preparation of specialist meals ( e.g. pureed foods) is included". However, in a letter issued in September 2004 to local authorities, the Executive reversed its stance and conceded that "assistance with the preparation of food should not be charged for" (Scottish Executive Health Department 2004b). The situation is summarised in Table 6.1.

Table 6.1 Policy overlaps in the area of food preparation

6.21 While these functions are perhaps distinct in theory, in practice it seems the boundaries are difficult to define. In particular, it is difficult to believe that the boundaries between advice on food preparation and assistance with food preparation itself can be precisely defined. Faced with uncertainty, other issues may influence the decisions of care managers. For example, given that Supporting People is means-tested, while free personal care is not, judgements may be made in favour of allocating costs to free personal care, particularly where there is sympathy for the client.

6.22 To conclude, the Supporting People programme is providing services to the value of £120m per annum to older people for activities that do not, in theory, overlap with personal care, but which are closely related to personal care. This forms part of the financial background which will complicate any evaluation of free personal and nursing care in Scotland.

Local authority expenditure on free personal care

6.23 Local Authorities were given an additional allocation of £107m (02-03), £143 (03-04) and £147m (04-05) to implement FPNC. This was in addition to the funds they already received for Care Homes and Home Care services. Recent Scottish Executive estimates of the costs of the policy of free personal and nursing care are set out in Table 6.2. Expenditure on FPNC in Care Homes was £54 million (1 July 2002-March 2003) rising to £80m (2003-04) and £84m (2004-05). This is new expenditure as it relates purely to self-funders receiving the £145/£65 payments. Expenditure on providing personal care services at home was £69m (1 July 2002-March 2003) rising to £116m (2003-04) and £136m (2004-05). This is not all new funding as many people received personal care services for free prior to the policy. For home care services, it is not possible to distinguish between funding for those who would previously have received it free compared with those who would previously have had to contribute a proportion of their care costs.

6.24 The distribution of expenditure within the total has changed somewhat since the initial projections by the CDG. Whereas the CDG costings envisaged an initial investment of around £50m in the training and infrastructure needed to extend care in individuals' homes, it then envisaged a drop in expenditure on this type of care. However, the Care Development Group suggested that there will be ongoing expenditure in free personal care at home and that this will increase by a factor of 3.5 between 2002 and 2022. The overall budget, including this substantial expansion in care at home, is only expected to increase by 80 per cent over the same period. There is a clear need to understand what these additional costs of care at home comprise and whether they are consistent with those envisaged by the CDG. There will be increases in home care because of :

• Changes in balance of care
• Reduction in delayed discharges
• Closure of long-stay geriatric beds
• Supporting People

6.25 Even though they will grow as a result of demographic change, the initial costs of Free Personal Care still amount to only 1/160 of the Scottish Executive budget of over £25bn. Free personal care accounts for less than one tenth of the total resource cost of social care for older people in Scotland, which was estimated to be £1. 4bn in 2004 by the Range and Capacity Review (Scottish Executive, 2004b). Yet some components of these costs of social care have been increasing extremely rapidly in recent years. Table 6.3 shows increases in local authority spending on older people, social work and in total between 1997/98 and 2003/04 with the period split into the pre and post free personal care intervals.

Table 6.2 Estimated Costs of the Free Personal and Nursing Care Policy (£m)

Notes to Table
Source: Scottish Parliament, Audit Committee Report, 2nd Report 2005 ( http://www.scottish.parliament.uk/business/committees/audit/reports-05/aur05-02-02.htm

6.26 Table 6.4 is drawn from the Audit Scotland performance indicators data, but tells a similar story of rapidly increasing expenditure on social work and care for older people. Note that the costs included cover all aspects of care, including hotel and accommodation charges as well as personal and nursing care. Between 2000/01 and 2003/04 social care spending by local authorities on older people increased by 51. 7 per cent. Of this increase, spending on care homes increased by 38 per cent, but expenditure on care at home increased by 66. 6 per cent, illustrating the fundamental change in the balance of care that has occurred in the early part of this decade. In 2000/01 local authority spending on care homes exceeded spending on care at home by £38m. By 2003/04 local authorities were spending £100m more on care at home than on care homes. The overall increase in social care spending on older people over this period was £568m. This is more than four times as large as the additional budget allocated by the CDG for personal and nursing care.

Table 6.3 Annual Rates of Increase in Expenditure in Local Authority Budgets 1997/98 to 2003/04

Notes to Table
Source: Local Authority Financial Statistics

Table 6.4 Gross expenditure by local authorities 2000/01 to 2003/04 (£m)

Notes to Table
Source: Audit Scotland Performance Indicators

6.27 There are a variety of explanations for this very significant increase:

• Supporting People resulted in an increase in local authority spending on older people of around £120m
• Increased salary costs, driven by:
  • difficulty in filling staff vacancies;
  • by a substantial increase in employment;
  • a drive to increase the number of qualified staff.
• The additional costs of compliance with Care Commission regulations
• The costs of free personal and nursing care
• Transfer payments by the NHS to deal with delayed discharges provide additional resources for local authorities to spend.
• Loss of Attendance Allowance by some care home residents.

6.28 Nevertheless, the 17.2 per cent per annum increase in local authority spending on care for older people is difficult to reconcile with known cost increases or the increase in activity between 2000/01 and 2003/04. It represents substantial real growth given that inflation (all items) averaged 2.5 per cent per annum over this period. It is also unsustainable because the real rates of growth in activity are so far in excess of either rates of growth of output in Scotland (2.5 %) or the UK as a whole (3.2%) over the same period. The budget overrun on free personal care is relatively small in comparison with the increases in general spending on social care. Though only partly related to free personal care, there is a pressing need to understand why the social care budget as a whole has increased so dramatically in the first part of this decade.

Local authority expenditure - survey findings

6.29 Our survey of Scottish local authorities sought to broadly assess the costs to, and incomes generated by, local authorities in the provision of personal and non-personal domiciliary care services. We asked for estimates of the numbers of clients receiving personal care and other non-personal domiciliary care services, together with the volumes, unit costs to the authority and unit charges to clients of different services for the years 2001/02 and 2004/05. Of the 19 authorities who responded to our survey, only one was able to provide estimates broken down into personal and non-personal domiciliary care for the year 2001/02, with a further 9 authorities providing partial figures that included the numbers of clients receiving each service. For 2004/05 only one authority provided all the data requested, with a further 12 authorities providing partial data that included the numbers of clients receiving the different services.

6.30 Sixteen authorities provided data on the numbers of clients in their area receiving personal care and/or other non-personal domiciliary care services in each of the two years. There was a mean increase across all respondent Scottish local authorities of 25. 1% on 2001/02 client numbers. In 14 cases the total number of clients had increased between 2001/02 and 2004/05. The lowest was a 1.9% increase on 2001/02 client numbers, the highest a 135.8% increase on 2001/02. Two authorities noted reductions in the total numbers of clients of 22.5% and 8.7% on 2001/02 figures respectively.

6.31 Comparative figures on the numbers of clients receiving personal care in each year were available for 10 authorities. In all but one case the proportion of clients receiving personal care services rose - in the most extreme case from 1.7% of clients in 2001/02 to 68. 4% of total home care clients in 2004/05. In both authorities whose overall numbers of home care clients fell between 2001/02 and 2004/5 the proportion of clients receiving personal care services rose, from 60.8% to 78.6% in the authority with an overall reduction of 8.6% in client numbers and from 17.3% to 79.2% in the authority with an overall reduction of 22.5% in client numbers.

6.32 Table 6.5 summarises the ranges and means of average hourly cost and charging data obtained. The figures given should however be treated with considerable caution, as the sample is small. It also seems likely that different authorities have used different methods to calculate costs per hour and in some instances figures provided per hour of service provision may be the charge to clients rather than the average charge per hour which would take into account those clients who did not pay for services.

Table 6.5 Average hourly costs to Scottish local authorities and charges to clients for the provision of home care services in 2001/02 and 2004/05

Notes to Table
n=number of authorities who supplied data for each item
*this charge appears because the authority concerned was unable to disaggregate older people from the whole population receiving personal care at home

6.33 For 2001/02, where data on both had been provided the average charge to clients for all home care services was invariably less than the cost to the authority but the difference between the two figures varied from authority to authority, with a minimum difference of £0. 56 per hour, a maximum of £8.65 per hour and a mean difference of £3.86 per hour (n = 8 authorities). For 2004/05, 7 authorities provided both figures. In five cases the cost per hour to the authority exceeded the charge per hour of provision to clients, but in two authorities it was suggested that the hourly charge to clients exceeded the cost to the authority by £1.72 and £0.13 per hour respectively. In the other five authorities the minimum difference was £0.67, the maximum £10.75 and the mean difference between average local authority costs and client charges £7.21 per hour. This suggests widespread variation across local authorities in the rate of charging for similar services although as previously suggested differences may in part be due to local authorities having taken different approaches to the calculation of hourly costs and charges.

Incomes and assets of older people

6.34 In this section, we look at the assets and incomes of older people in Scotland. Part of the purpose is to determine how income and assets influence type of care provision. We also examine the incomes of those receiving care at home to determine if they are more or less affluent than others over aged 65+.

6.35 Figure 6.2 shows the distribution of benefit unit income by type of care received in 2000/01. The weekly income of those receiving care does not differ substantially from that of the population as a whole over 65. This may be the result of their having lower pension income than their peers, but this being compensated by disability-related state benefits.

Figure 6.2 Probability of receiving different types of care by benefit unit income 2001/02

Notes to Figure
Source: Family Resources Survey

6.36 A clearer differentiation between the circumstances of people receiving care is possible by tabulating the type of care received against the financial assets held by the benefit unit (household). This is shown in Figure 6.3. It suggests that better off clients are more likely to buy care from a domestic help, whereas poorer clients make more use of informal care networks. It is also clear that those receiving care, with the exception of those purchasing domestic care, have fewer financial assets than the average for the population aged 65+. Thus, whereas disability-related state benefits may raise the income of those receiving care to around the average for all pensioners, their financial assets tend to be smaller. This may reflect the impact of disability on the ability to accumulate assets. It may also reflect age in that those receiving care are typically older than the average pensioner and will therefore have had more time to reduce any assets that they accumulated prior to retirement.

Figure 6.3 Type of care received by financial assets of care receiver (Scotland 2001/02)

Notes to Figure
Source: Family Resources Survey

6.37 As a result of the introduction of free personal care, one might expect that local authorities would experience an increase in the share of relatively affluent clients who would previously have paid for their care. Figure 6.4 shows the proportion of clients receiving local authority care at different levels of income in 2001/02 compared with 2003/04. This figure shows that, far from concentrating on more affluent clients, there was a greater chance that local authority clients had relatively low income after the introduction of free personal care. Two possible explanations are:

• Local authorities completely withdrew from provision of domestic care after the introduction of free personal care and allowed more affluent clients to make their own arrangements to buy domestic care
• The expansion of home care has been to the benefit of all clients, not just those who would otherwise have paid for their care. If there has been a greater level of unmet need among those of low income, it is possible that local authority helpers might be involved more heavily with low income clients.

6.38 This finding certainly calls into question the widespread assumption that Free Personal Care is a regressive policy that mainly benefits more affluent clients. Since its introduction, local authorities instead appear to have concentrated their care provision on poorer clients.

Figure 6.4 Probability of receiving local authority help by income of benefit unit

Notes to Figure
Source: Family Resources Survey

Other aspects of costs

6.39 So far, this chapter has discussed central issues in calculating the costs of the free personal and nursing care policy and related policies for older people. In focusing now on other relevant literature, we consider briefly public attitudes towards paying for the policy, and some aspects of costs analysis which remain relatively underdeveloped.

6.40 Curtice and Petch's (2002) analysis of data from the Scottish Social Attitudes Survey suggests substantial support both for care in the community and for government funding of care for older people, and a willingness (in 2001) to pay higher taxes to support this (Curtice and Petch 2002: 44). Dewar, O'May and Walker's (2001, 2003a, 2003b) work for the Implementation Group indicated substantial support for the policy of free personal and nursing care.

6.41 There are some areas of costing work which have been relatively neglected, and their impact on the overall costs (especially the public costs) of long term care is not well understood. They include costs of assessments, innovations which may change the delivery of care and cooperation between public, private and voluntary sector service providers.

6.42 It is unusual for the costs of assessments to be investigated, as researchers tend to focus particularly on care packages and services received. Bell and Bowes (2006) found some qualitative evidence that numbers of assessments had risen following the introduction of free personal care and we have discussed quantitative evidence in Chapter 4. One motive for the increase in assessments, was the need by local authorities to control costs by ensuring that people did not continue to receive a service that was no longer needed. The impact of assessment procedures and their effect on costs is difficult to ascertain. However, Flood et al. (2005) conducted a randomised controlled trial and costs analysis in the Cambridgeshire area aimed at identifying the relative cost effectiveness of occupational therapist led and social worker led assessments of older people. They found no significant differences in terms of the care packages which were decided following assessment. Findings such as these can support moves towards joint working and the relaxing of formerly rather rigid professional boundaries, and may enable inter-professional working.

6.43 We have suggested that the costs of care are likely to change with changes in models of care and modes of service delivery. In considering the future, it will be important to try and examine the potential impact of innovations of this kind. This is a neglected area of work, though there are a few studies which might inform efforts to project change forward. For example, Lansley, McCreadie and Tinker (2004) examined the impact of housing adaptations for the costs of care. They demonstrated that adaptations which made housing more disability-friendly could in some circumstances significantly reduce the costs of formal care services, as there would be less need for these. Their study also emphasizes the need to explore how introducing new services which appear expensive in the first instance may be offset in the longer term by decreased lifetime costs of care.

6.44 Woolham's (2006) evaluation of a smart technology initiative for people with dementia in Northhampton found that it was both effective and reduced costs compared with conventional services. In Scotland, Bowes and McColgan (2003) found that South Ayrshire's "Home Comforts" smart technology initiative was cost effective for a small sample of users of community care services. Barlow (2005) however cautions that the quality and variability of data about these systems do not as yet permit confident assessments of their real costs.

6.45 Potential changes in models of care may involve new patterns of cross-sectoral working. The costs of services across sectors can vary considerably - for example, the Care Commission's (2004) report on care homes reports that care home costs for the private sector seem to be lower than for local authorities, and attribute this difference to staff employment practices. There is also evidence of marked variation in practice in Scotland. For example, examining contracting out services to voluntary sector bodies by Scottish Health Boards, Coid, Crombie and Murray (2000) found large variations in the extent to which this occurred. The lowest number of financial commitments to the voluntary sector was zero, and the largest, 43, with the sums involved ranging form zero to almost £750,000. There has been little research on such sectoral differences, nor on the impact on the costs to the public purse of cross-sectoral collaborations.

6.46 The impact of quality improvements in services, including the operation of Care Standards has yet to be fully understood. All the innovations discussed in Chapter 4 have the potential to affect costs, whether up or down, and modelling their impact presents significant challenges for service planners.

Conclusion

6.47 This chapter has described how the Care Development Group costed free personal care, identifying some problematic areas. The costs of personal and nursing care in care homes were fixed in 2002 and have not altered since. For care at home, there are in theory no limits to the costs of personal care. The implementation of Free Personal Care was complicated by Supporting People, and the boundaries between different categories of support, particularly for food preparation, may not be clear in practice.

6.48 Spending on free personal care exceeded the CDG's predictions However, the amounts are modest, compared with overall spending increases on older people's services and social work in general. Our survey of local authorities apparently confirmed increased demand, though the data were limited.

6.49 The incomes of households in which at least one person is receiving services are similar to those of the general population aged 65 and over, but their assets are below average. Since 2002, local authorities appear to have focused services on poorer clients.

6.50 Neglected areas in studies of costs include assessments, the impact of changing models of care, technology, cross-sectoral working and quality improvement.

Gaps and weakness in the data on costs and finance

6.51 Lack of clarity over what comprise the costs of free personal and nursing care leading to:

• Uncertainty over how to project future costs.
• Lack of clarity among local authorities about what they should be recording.
• Data from a number of different sources on the costs of care, including Audit Scotland, local authority financial statements and the Scottish Executive.

6.52 Difficulty in reconciling data from different sources.

6.53 In particular, difficulty in explaining why local authority social care budgets have been increasing at an extremely rapid rate since 2001. There have been a number of factors that may contribute to this explanation, such as additional money transferred from the Department of Work and Pensions for preserved rights clients and residential allowance (2002-03 onwards). Additional money has also been spent on care home fees and on Supporting People programmes, but the relative amounts are not well understood.

6.54 Little information which would allow linkage of costs to outcomes so that one could develop some framework for measuring productivity in this sector.

Suggestions for improvement

6.55 It is essential that there is a clear and unambiguous definition of what the costs of the policy of free personal and nursing care comprise. There is a particular difficulty in understanding these costs in relation to home care which is now substantially larger, in expenditure terms, than the care home sector.

6.56 Push forward the initiative for ensuring that local authorities have a common framework for recording social care data

6.57 There is a need for research to investigate the increase in expenditure of over £0.5bn in social care expenditure between 2000 and 2004 and how far it relates to the various policy initiatives that we have already described, including free personal and nursing care.

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