SCOTLAND’S Social Care minister has insisted that the new National Care Service (NCS) will have a “neutral impact” on councils’ finances.
In a letter to Holyrood’s Public Administration Committee, Kevin Stewart told MSPs the planned reform was still “at a relatively early stage” and that the government was “taking the time to undertake meaningful co-design work” with local authorities and patients and families.
Health Secretary Humza Yousaf introduced the National Care Service (Scotland) Bill in June promising to “end the ‘postcode lottery’ of care.”
The legislation – which is currently making its way through Holyrood – will see the government set up ‘care boards’ directly accountable to the Scottish Ministers who will take on functions and staff that are currently managed and run by local authorities and health boards.
Nicola Sturgeon has described it as the most significant reform to public services since the creation of the NHS.
Criticism of the Bill has been mounting, with MSPs, councils, unions and organisations and carer’s charities urging the government to pause or think again.
Audit Scotland has raised serious concerns about the financial memorandum accompanying the legislation. They warned that ministers had underestimated “the margin of uncertainty” in their cost estimates, which have ranged from £650m to £1.3bn.
According to the public spending watchdog, the potential for additional cost is “significant”
They have warned that pensions, VAT changes, changes to capital investment costs and health board transition costs could lead to the overall budget skyrocketing.
In his letter to the committee, Mr Stewart responded to a series of questions following his appearance in front of him earlier this month.
On tax implications, the minister said external advisors believed the care boards could “potentially fall under Section 33 or Section 41 of the VAT Act 1994”.
If they are the former, that means the boards could recover all VAT costs associated with both taxable business and non-business activities.
If they are Section 41 they can “claim a refund of VAT incurred on some services but not all.”
Currently, the integrated boards responsible for delivering adult community health and social care services, have a “broadly neutral” VAT accounting arrangement with HMRC.
Before that deal was negotiated with the treasury, the VAT cost was estimated to be circa £32m.
However, in his letter, the Minister told the committee: “As this was for adult health and social care functions only, the worst-case VAT cost impact associated with the creation of the NCS would likely be in excess of this estimate.”
Mr Stewart added that “further work will therefore need to be undertaken to refine this estimate.”
He also said ministers were “looking to achieve a fiscally neutral VAT position” with HMRC.
On IT costs, Mr Stewart said the government were looking to create a “nationally consistent integrated and accessible electronic social care and health record.”
While “early discovery work has started” on what is needed for this record, the cost had not been included in the financial memorandum. He said this would “be subject to a formal, dedicated business case.”
The committee also asked Mr Stewart to expand further on his claim that the NCS would mean “no detriment to local government finances.”
In his letter, Mr Stewart said: “We recognise that in establishing a NCS, including any transfer of accountabilities (and associated financial resources from local authorities), we need to take into consideration the impact on local authorities’ ability to resource and deliver other important public services.
“The nature of the impact on local government from the establishment of the NCS will depend on the details of the transfer of functions to Scottish Ministers, and on local decisions about how services are to be provided.
“We will continue to work closely with local government to understand current costs and financial impact of any detailed options being considered following co-design.”
Mr Stewart said the government would publish a Programme Business Case, in early 2023, which would share detail on costs, and “the strategic, economic, and commercial value of this reform, as well as a plan for its effective management.”
He added: “It is important to note, that the NCS Programme is at a relatively early stage in terms of delivery. The Scottish Government is committed to getting this reform right for everyone.
“That means taking the time to undertake meaningful co-design work, with the people who use and deliver health and social care services; the organisations which represent them; and our delivery partners.
“The business case for NCS delivery will have to evolve alongside our understanding of the needs of people receiving and working in social care, which will grow as a result of our evidence gathering and co-design work.
“The Programme Business Case will set out key decision points and how these key decisions will be made in a robust, evidence-based way, is subject to proper scrutiny; and how these decisions will be made in a way which delivers the best value for the people of Scotland.”
He said this could mean “the delivery of more detailed business cases throughout the lifetime of the NCS Programme, to support future decisions.”
Earlier today, Robert Kilgour, the chief executive of Renaissance Care, which operates fifteen care homes throughout Scotland, warned the new NCS “won’t necessarily improve care.”
He told the Press and Journal: “I fear it’s a political marketing exercise. It’s a further land grab for central control.”
The businessman – who also founded the anti-independence Scottish Business UK group – said the SNP government were “not prepared to engage with key stakeholders in a meaningful way.”
He added: “In principle I’m supportive. But you’ve got so many different groups against the way the government is ploughing on.”