The Accounts Commission and Scottish Government are condoning local council waste and largesse

The Accounts Commission and Scottish Government are condoning local council waste and largesse

by Robert Kilgour
article from Wednesday 20, February, 2019

OVER 150 DAYS ON from revealing results of a series of Freedom of Information (FOI) requests aimed at obtaining a detailed breakdown of all 32 Scottish local councils’ wasteful spending on building and running their own elderly care homes, the response has been epitomised by inaction.

After obtaining the results from the FOI trawl in September, I called upon Scottish local councils to be “open and honest” about the costs of building and running their own care homes – in comparison to the funding they provide to independent sector operators. I then called on the Accounts Commission, the public spending watchdog for local government in Scotland, to carry out an investigation into the situation.

I also insisted that as a matter of urgency the Scottish Government should establish a cost of care review of the NHS, Local Authorities, the voluntary and independent sectors to establish a level playing field for elderly care provision by benchmarking current costs across all sectors.

Neither of these things have happened, and to my knowledge no moves are being made towards either initiatives happening in the near future – and that is unacceptable.

Local councils need to address growing inequalities in funding between local authority and independent homes. What is taking place is a blatant misuse of public money, with tens of millions of pounds wasted every year, and still nothing is being done about it.

Last year I made FOI requests to every Scottish local authority for a detailed breakdown of their care home operations, including:

  • How many care homes they currently own, lease or hold under other tenancy agreement.
  • Total costs of purchasing, land acquisition, building or renovating these homes – and borrowings required for these.
  • Total weekly costs per resident for each care home.
  • The average annual salary of managers, deputy managers and assistant managers for each care home.
  • Details of any care homes that they have plans to buy, develop or build in the future. 

I then made all the responses publicly available on a website www.scottishcare.info. The information on the website is intended to be a useful contribution to the debate for journalists, politicians and care home operators to access and use.

The responses show there is no level playing field when it comes to funding elderly care in Scotland. How can local councils expect independent care homes to operate when they are given far lower funding than councils spend on their own homes?

I wanted to highlight the double standards in operation and, having done so, expected the Accounts Commission and Scottish Government to act on what is a blatant waste of public money. Sadly, over five months on from being given the required information, they have done absolutely nothing towards rectifying the situation.

In the aftermath of receiving the local council responses I posed four questions:

1) Why should certain local authorities get away with spending lots more of taxpayers’ money running their own care homes? Here are some examples from the FOI responses:

  • East Lothian Council at Crookston care home in Tranent - £1055 per week per resident for residential care
  • Fife Council - an average cost across their seven care homes of £947 per week per resident
  • West Dunbartonshire Council from £896 to £969 per week per resident
  • North Ayrshire Council from £1,533 to £1,767 per week per resident
  • Orkney Council from £1,039 to £1,230 per week per resident
  • Perth and Kinross Council from £920 to £1,825 per week per resident
  • South Lanarkshire Council from £919 to £1,572 per week per resident
  • South Ayrshire Council - £1,379 per week per resident
  • Shetland Council from £1,338 to £1,789 per week per resident

All of these are far more than they pay the independent sector per resident per week – which is £594 for residential care, and even much higher than the £690 paid for full nursing care.

2) Why should certain local authorities get away with spending lots more of taxpayers’ money building their own care homes? Further examples from the FOI responses included:

  • East Lothian Council at Crookston in Tranent - £175k (in 2015) per bed plus land costs
  • West Dunbartonshire Council at Crosslet House in Dumbarton - £157k (in 2017) per bed plus land costs
  • Aberdeenshire Council at Bennachie View in Inverurie - £193k (in 2015) per bed plus land costs; and at Edenholme in Stonehaven - £130k (in 2012) per bed plus land costs
  • City of Edinburgh Council at Drumbrae in Edinburgh - £135k (in 2013) per bed plus land costs

All of these are much more than the current independent sector spend - circa £90k per bed plus land costs.

3) What are council care homes now valued at compared to what they cost to build with taxpayers’ money? 

I personally know of two - Ostlers House in Kirkcaldy in Fife and Crookston in Tranent in East Lothian that have been valued by professional surveyors at a lot less – millions of pounds less - than they cost the two councils to build. Many more will see the same waste of money. I’d like to understand why some authorities feel the need to own and operate their own care homes at a very expensive cost to the taxpayer as opposed to other councils who don’t feel the need.

4) Why are some local councils charging higher fee rates to private funders than they are paying to the independent sector? Examples from the FOI responses:

  • Fife £954 for residential care per week per resident
  • Argyll and Bute £1,244 for residential care per week per resident
  • Western Isles £1,028 for residential care per week per resident
  • Midlothian £915 for residential care and £1,010 for nursing care per week per resident
  • Perth and Kinross - £904 for residential care per week per resident
  • Shetland - £1,198 for residential care per week per resident

These local councils seem to be subsidising their care home costs with charging self funding residents higher fees. Reassurance is needed that elderly people are being offered real choice as to which care home they wish to enter, rather than being pushed towards going into local authority homes.

Despite clear underfunding there is nevertheless a high level of quality in the independent sector, but if properly funded the quality would be even greater. Independent care home companies are having to pay the Scottish Carers Living Wage, which I’m happy to do as care workers fully deserve it, but they are expected to do this with substantially lower funding than Council care homes currently receive. They also have to deal with other issues like the Apprenticeship Levy and uncertainty over Brexit that could result in the loss of experienced EU-born staff. At the same time, they are expected to continue to invest in improved facilities. It’s simply not sustainable. 

It need not be like that, and to help I have suggested a four-point solution to the care of the elderly crisis in Scotland:

  • Although Scottish Care, COSLA and the Integration Joint Boards (IJBs) have been developing a benchmarked Care Home Cost Model for the voluntary and independent sectors over the last 18 months, the Scottish Government should also urgently establish a cost review for the NHS, Local Authorities and voluntary sectors to establish a level playing field for elderly care provision by benchmarking current costs across all sectors.
  • This would allow for all future elderly care costs to be properly monitored to avoid waste and would also enable better planning, targeting and taxpayer value for all future expenditure.
  • The Independent sector should be allowed and encouraged to become more involved in all 31 Health and Social Care Partnerships as was originally planned.
  • The Scottish Government should appoint a Bed Blocking Czar with a detailed brief and powers to act.

If the present situation is allowed to continue, the result will be the closure of more independent care homes, leading to bed blocking as elderly people have to be cared for in hospitals – resulting in more cancelled operations amongst the public.

Robert Kilgour is a Scottish serial entrepreneur, investor and property developer who founded Four Seasons Health Care in 1988, opening its first care home in May 1989 in Fife. He left the company in early 2000 when it was operating 101 care homes and employing around 6,500 staff, the UK’s fifth largest care home operator. He founded and is CEO of Dow Investments Plc, now celebrating its 30th year. In 2004 he founded, and is Executive Chairman of Renaissance Care, which currently operates fourteen care homes throughout Scotland with 950 staff. Robert is a co-founder and Director of video and security systems specialists, NW Security Group (16 staff) and is also a founder shareholder and Chairman of Kingdom FM Radio (13 staff), the local radio franchisee for Fife. He holds several other non-executive directorships.

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