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29.Oct.2010

Local authorities must review their approach to using block contracts in social care and consider the most appropriate contracting method for personal budgets, the Audit Commission has recommended in a report warning that some councils are “lagging behind” in allowing people to take control of their own funding.

In Financial management of personal budgets, which was published yesterday, the watchdog said just six out of 152 councils currently meet the key target, which is that 30% of eligible people should have a personal budget by April 2011. Some councils will need to make “a significant effort” if they are to achieve agreed milestones, it warned.

The report revealed that people with mental healthcare needs are less likely to have personal budgets than other services users, in part because of the problems in disentangling pooled NHS and social care funds. Some councils do not provide any personal budgets at all to people with such needs “despite evidence that mental health service users would be major beneficiaries of the policy”, the Audit Commission said.

The watchdog argued that personal budgets put both block contracts and in-house provision at risk. It suggested that as more people arrange and buy their own services through direct payment, so councils would have to use more “flexible procurement models”, such as framework contracts and outcome-based contracts.

The move towards more flexible contracts is expected to lead to a greater number of contracts, which will itself lead to a greater need for effective governance, the Audit Commission said.

It added that the personal budget system increased the risk of fraud, corruption or other misuse of funds due to the delegation of financial control and service delivery. Accordingly, “councils should develop suitable and proportionate arrangements that tackle the risk of fraud but do not stifle innovation or the spirit of personal budgets and personalisation”.

In relation to commissioning strategies, the Audit Commission recommended that – as well as reviewing contracting arrangements – councils should:

• Collect information to assess demand for services and current provision for both public and privately funded individuals in their communities
• Develop brokerage services to endure personal budgetholders have enough information to identify the service provider or organisation with whom they will spend their budget
• Work with independent and voluntary sector providers to ensure they are aware of the implications of personal budgets and prepare them to respond positively
• Work with the NHS to develop personal budgets for mental health service users.

Andy McKeon, managing director of health at the Audit Commission, said: “The rationale behind personal budgets is not saving money, but empowering service users. Personal budgets mean personal choice. They can improve health, wellbeing and user satisfaction. There may be some savings where councils have ended up with high-cost care packages as a result of poor commissioning. But the growth in personal budgets puts block contracts and in-house service provision at risk, as a result of the freedom to choose from different services and providers.

“Introducing this radical change in the funding of social care is a challenging, and ongoing, process. Our report gives case studies of councils that are rising to that challenge, and making it work for the benefit of their residents.”

The Local Government Association insisted that councils had made “much progress” since the Audit Commission’s research, which was carried out six months ago.

Cllr David Rogers, chairman of the LGA’s community wellbeing board, also claimed the report was “somewhat outdated” due to the recent Health White Paper which “envisions a radical shake-up in care provision”.

Rogers added that, as part of the Health White Paper, the LGA was calling for councils to be handed a greater role in commissioning mental healthcare.

Ed Archer

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28.Oct.2010

The headlines after the Comprehensive Spending Review focused on the depth of cuts to local government and other sectors. Look beyond the figures and you will see nascent plans for a massive shake-up in how public services are procured and delivered, writes Mark Johnson.

Buried in the fine print of the Spending Review published on 20 October is an interesting chapter entitled Sharing Responsibility. It begins: “The Spending Review builds on measures to provide new opportunities, new rights and new resources to enable all parts of society to play a larger role in providing services and strengthening community life.” It goes on to signal a radical shift in thinking towards the method of delivering local services, all in tune with the Big Society agenda and localism. There are four key strands of note:

"The Government believes that while it should continue to fund important services, it does not have to be the default provider.. This stifles competition and innovation and crowds out civil society"

Here we have a clear signal that there will be more contracting out of services. Up to now there have been some ‘no go’ areas in service delivery, such as delivering core teaching services in education or direct delivery of social work and child protection. It seems likely that these final barriers will be dismantled. This will raise complex questions about the ability of authorities to contract out functions for which they hold statutory duties.

"Government will pay and tender for more services by results… The use of simple tariffs and more innovative payment mechanisms will be explored in new areas, including community health services, processing services, prisons and probation and children’s centres"

There is already a precedent for this type of approach in welfare to work contracts and prisoner rehabilitation. My firm is currently advising on the current round of work programme contracts which put 88% of the contract payment at risk on performance. At Peterborough prison, a programme to reduce re-offending has recently been funded by a social impact bond issued by Social Finance which pays a return to investors if the project is successful. For example, a 10% reduction in reoffending leads to a 7.5% return on capital invested.

One of the frequent criticisms of PFI financing was that it failed to transfer real operating risk to service providers. Providers often refused to take on demand and operating risks, believing that the scope of contracts did not give them sufficient influence over outcomes. The new approach should do just that, but it remains to be seen what kind of appetite there will be for this new class of investment amongst project funders.

"Government will look at setting proportions of appropriate services across the public sector that should be delivered by independent providers, such as the voluntary and community sectors and social and private enterprises".

This approach will be explored first in adult social care, early years, community health services, youth services, court and tribunal services, and early interventions for the neediest families. Conservative MP Chris White intends to table a private members bill, the Public Services (Social Enterprise and Social Value) Bill on 19 November which will oblige public authorities to take into account ‘social value’ in their procurement policies.

Social clauses in procurement have been a hot chestnut for some time. A strict quota system could be at odds with EU law. To be compatible with EU procurement rules, social clauses must be used with care. Case law of the European Court established that selection criteria involving social considerations may be used to determine the most economically advantageous tender only where they provide an economic advantage for the contracting authority which is linked to the product or service which is the subject matter of the contract.

Likewise, it is possible for contracting authorities to lay down special conditions relating to the performance of a contract, provided that these are compatible with EU law (for example, must not discriminate directly or indirectly against national or non-national bidders), they are clearly indicated in the contract notice or tender documents, and only where they are relevant to the performance of the individual contract in question. They should be capable of being met by whoever wins the tender from the time at which the contract starts and they must not be a disguised form of selection or award criteria.

“Government will extend specific rights to communities, citizens and employees to run and own services. These include giving communities due notice and the right to buy or run public assets and services that might otherwise close or face significant reductions; Government will also develop a new right for public sector workers to form employee-owned cooperatives and mutuals to take over the services they deliver which is being taken forward across departments; and giving parents, teachers or community groups the right to bid to start new schools” (through the Free Schools initiative).

These have become known as the ‘right to bid’ and the ‘right to request’ respectively. The right to request has been available to frontline staff in NHS primary care for the past two years, and the right to bid is building on the previous administration’s programme of community asset transfers.

From my firm’s work with the right to request in health, we have found that take up from front-line staff to create new mutuals and social enterprises has been limited. Practical issues have presented obstacles, such as lack of senior leadership for the initiative, a shortage of working capital to launch aspiring new enterprises, and opposition from unions who label it as a form of privatisation amid fears that employee terms and conditions will be weakened. It will be interesting to see if local government can crack these issues against the backdrop of the now pressing economic imperative. In relation to start-up funding, the CSR announced a Transition Fund of £100m to provide short term support for third sector organisations wishing to provide public services and in the longer term the new Big Society Bank will be established, funded from dormant bank accounts.

We are promised a White Paper in January 2011 setting out more detail on these initiatives, but reading the runes, it does seem that we are entering a new frontier in public service delivery and an ever-shrinking role for the state. This has major implications for local authority service commissioners and procurement teams and is likely to throw up a host of complex legal issues around procurement, local authority powers and state aid, just for starters.

Mark Johnson is managing director of specialist public services law firm TPP Law. Mark will be speaking on this topic at this year’s ACSeS conference on 17 November.

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27.Oct.2010

The Care Quality Commission has vowed to use its regulatory powers to secure improved mental health services for patients subject to the Mental Health Act, after its research found “too much poor and unacceptable practice” and even potential breaches of human rights.

In its first annual report on use of the Act, the CQC said it had concerns about how some care providers – in both the NHS and private sector – were adhering to the principles of the Act and its Code of Practice.

The watchdog outlined three priority areas for improvement. These were:

• involving patients in decisions about their care and treatment
• assessing and recording patients’ consent to treatment
• minimising restrictions on patients and avoiding ‘blanket’ security measures.

CQC chief executive Cynthia Bower acknowledged that staff and managers who work in mental health services do not always get the recognition they deserve. “Many of the men, women and children who come under their care may owe their very survival to their dedication and compassion, both on the hospital ward and out in the community,” she said.

However, Bower added that the CQC had found “too much poor and unacceptable practice and this must be tackled. Our top priority is to protect the interests of patients, and we will use our powers to ensure that care providers address these issues and make real improvements.”

She said the CQC’s predecessor, the former Mental Health Act Commission, had driven significant improvements in mental health services but did not have the regulatory powers available to its successor.

The CQC has so far placed conditions on four trusts providing mental health services. In three cases, this was because patients were not being cared for in accordance with their rights. Bower said the trusts has all made improvements but warned that the watchdog would continue to monitor their performance.

Bower said that involving people in the decisions that are made about their care was a key factor in helping their recovery.

In relation to the assessment and recording of patients’ capacity to consent to their treatment, she said: “When our Mental Health Act Commissioners visit patients on the wards, they often find that what patients tell them doesn’t match up to what the records say. It may be recorded that they have given their consent, but either they apparently lack the capacity to do so or they say they have refused to do so, and this is a concern.”

The CQC chief executive also urged hospitals to minimise the restrictions they place on patients.

She said: “We recognise the importance of ensuring people’s safety, but more hospitals are keeping psychiatric wards locked at all times, even though they often accommodate voluntary as well as detained patients.

"In some places there are blanket bans on mobile phones and internet access. These sorts of measures could compromise patients’ privacy or dignity, hold back their progress and even breach their human rights.”

In its report the CQC also revealed that more than 4,000 people had been made the subject of a community treatment order in 2009/10, more than ten times the number the Department of Health had predicted.

These orders, introduced in November 2008, are designed to ensure there is effective care outside hospital for patients who, on being discharged, may refuse to take their medication or co-operate with community mental health services. One in five patients was recalled to hospital.

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22.Oct.2010

Local authorities and other organisations will need to make significant efficiency savings in the provision of adult care and ensure that decisions are made in a “fair and equitable” way, a senior health official has said.

In a letter to directors of adult social services, David Behan said the Comprehensive Spending Review had provided a stable base on which to build ahead of the recommendations of the Commission on the Funding of Care and Support.

Behan – Director General for Social Care, Local Government and Care Partnerships at the Department for Health – claimed the settlement for social care was “highly positive”, providing sufficient resources to protect people access to care and avoiding further restrictions to services.

He pointed to the additional £2bn funding for social care in the CSR, although he acknowledged that this came in the context of a reduction to overall local government funding and that difficult decisions would still have to be made.

“In order to maintain people’s access to care, local organisations will need to drive forward with reforming and redesigning services in order to make significant efficiency savings and transform the way that social care is delivered,” Behan argued.

In relation to social care, local authorities would therefore need to make efficiency savings by:

• Helping people “to stay independent for as long as possible, for example through re-ablement, reducing the need for care”
• Ensuring that people receive care and support in the most appropriate and cost effective way to meet their outcomes, “for example through assistive technology and driving forward with personal budgets”, and
• Maximising the spend on frontline services, “for example by reducing back office costs and making better use of the social care market”.

Behan outlined an expectation that the investment in social care would encourage improved integrated working between local authorities and their NHS partners.

The Department for Health will next month publish an ambitious programme for social care, he said, “where local authorities will be expected to put individuals in greater control of their care, foster a vibrant social care market, and make significant efficiency savings by focusing on prevention and delivering more cost-effective care”.

Behan added: “The upcoming years will provide an opportunity for us to move forward with pace to reform the system and to develop a genuinely personalised and preventative service.”

In a similar letter on social care sent to senior management of NHS bodies, NHS chief executive Sir David Nicholson said the settlement represented a “fantastic opportunity to support integration between health and social care services at the local level”.

Sir David said it was right to await the outcome of the consultation and Parliamentary approval for the government’s NHS reforms in Equity and Excellence, Liberating the NHS White Paper.

“However, there is no reason why NHS leaders should not be engaging meaningfully now with general practitioners and local authorities on how they can make the quality and productivity savings, within the current structural and legal framework,” he added.

Patients and users do not recognise a divide between health and social care, he argued, and so organisational boundaries should not be allowed to get in the way of high quality care.

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19.Oct.2010

The distinction between health and social care should be relaxed to make it easier to target funding where it is most needed, London Councils has argued.

In its submission to the NHS White Paper, the group also called on the government to rethink its proposal to abolish the current statutory health overview and scrutiny committees that ensure accountability of health providers. London Councils proposed that an overview and scrutiny function is retained instead as a committee of the main health and wellbeing board.

It also urged the government to end the ring-fencing of health funds, “the knock on effect of which is to place a greater squeeze on local government social care budgets, as well as other parts of the public sector which help to keep people well”.

The submission claimed that London’s local authorities are uniquely placed to support GPs to take on greater responsibility for health care commissioning. While recognising that the Health Secretary wants to give GPs flexibility in how they group together in commissioning consortia, it said there are benefits of groups establishing themselves in reference to borough boundaries. This would maximise opportunities for joint working between health and local government, London Councils suggested.

The group added that local government in London “stands ready to make an offer to GP consortia to support them in their health care commissioning activities, building on the existing experience that local government has in joint commissioning arrangements across health and social care".

Cllr Colin Barrow, London Councils’ executive for health and adult services, said: "London local government has led the way in working more closely with health services to deliver a better deal and better services for residents, and so we are ideally placed to ensure the government’s reforms are a success.

"But in turn for our support, we want government to recognise what we need to deliver lasting public health improvements: an end to the arbitrary ring fencing of health funds and local flexibility to make best use of available health and social care funding in ways that best meet the needs of our communities."

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13.Oct.2010

Disputes about accommodation and after care costs for individuals discharged from hospitals may be increasing. A High Court decision resolves some of the problems, says Denis Edwards.

The costs of accommodating vulnerable adults and providing them with the full range of community care services can be significant. It is not surprising, therefore, that disputes sometimes arise between different local authorities about which of them is responsible for the future costs of a person’s accommodation and care after leaving hospital.

Clearly, the problem does not arise where a person has settled accommodation. In that case, the person remains resident there and the same local authority continues to be responsible for him or her even after a long hospital stay.

But in many cases vulnerable adults will not have settled accommodation. They may be transient or may have given up accommodation or may simply have been accommodated by a local authority on a temporary basis, for example, under s.21 of the National Assistance Act 1948 (“the NAA 1948”), before being admitted to a hospital for a long period. In some cases, they will have been detained under the Mental Health Act 1983 (“the MHA 1983”).

Often, the person will have entered a hospital or unit in another local authority’s area. Equally, before going into hospital or being detained under the MHA 1983, he may have had temporary accommodation in a local authority area, having been resident longer term elsewhere. When the person eventually leaves hospital, which local authority is responsible for the future costs of his accommodation and care?

This was the issue presented by the recent cases of R (M) v. (1) Hammersmith and Fulham LBC & (2) Sutton LBC and R (Hertfordshire CC) v. Hammersmith and Fulham LBC* (“the M case”) [2010] EWHC 562 (Admin).

The M Case

The M case was actually two cases. But they both involved the same type of dispute between different local authorities, so that for present purposes it is only necessary to focus on the M case itself.

The claimant, who was a vulnerable adult aged 61 years old, had been resident for more than 15 years in the London Borough of Hammersmith and Fulham (“HBC”). In 2006, he was involved in a serious road accident and spent three months in hospital. After being discharged, HBC accommodated him but after a while and various changes of accommodation, his placement failed.

At the end of July 2007, the claimant was transferred to a home in the London Borough of Sutton (“SBC”). He spent six months there, during which time, and with the consent of his family, he terminated a tenancy agreement with HBC. By April 2008, HBC’s social workers and the operators of the home in SBC decided that the home was not appropriate for him. In April 2008, however, he was detained under s.3 of the MHA 1983 and remained in a hospital in the area of SBC until October 2008.

On being released from detention under MHA 1983, he wanted to go back and live in HBC. A dispute then broke out between HBC and SBC about which authority was responsible for his accommodation and social care services.

The legal position

Section 24(1) of the NAA 1948 provides that the authority responsible for providing accommodation under the NAA 1948 is the one in whose area the person is “ordinarily resident”. Section 24(3) provides that where a person has no settled residence, the authority in which the person finds himself has a power to provide residential accommodation.

By virtue of directions issued by the Secretary of State in 1993, the powers conferred by s.21 of the NAA 1948 were converted to duties. At the same time, the Department of Health issued a circular – LAC(93) 7 – providing guidance on what “ordinary residence” means for the purposes of the NAA 1948.

The Secretary of State’s 1993 directions make clear that, in the case of persons suffering from mental disorder, the responsible local authority under the NAA 1948 is the one where the person is “ordinarily resident”. For those with no settled residence, the responsible local authority is the one in whose area the person is. In other words, the directions mirror the statutory provisions in s.24 of NAA 1948 as they apply to all persons.

Significantly, however, s.24(5) of NAA 1948 introduces a deeming provision for cases where one local authority provides accommodation for persons who are ordinarily resident in another authority’s area. The effect of s.24(5) is that a person is deemed to continue to be “ordinarily resident” in the area of the first authority.

On the other hand, s.117(3) of the MHA 1983 provides that where a person is discharged from a detention under the MHA 1983, the local social services authority which is responsible for him is the one for the area in which he is “resident” or to which he is sent on discharge.

The court’s decision

In the M case, HBC accepted that the effect of s.24(5) of NAA 1948 was it continued to be responsible for the claimant while he was accommodated at the home in SBC. However, HBC argued that the effect of s.117(3) of the MHA 1983 was that SBC was responsible for the claimant’s accommodation and after care costs following his discharge from the hospital where he had been detained. That was where he was “resident” at the time of his discharge. In contrast, SBC argued that HBC was responsible by virtue of the deeming provision in s.24(5) of NAA 1948.

The court concluded that HBC was correct. Section 24(5) of NAA 1948 was not relevant to the construction of s.117 of the MHA 1983. Accordingly, SBC was responsible for the accommodation and after care costs of the claimant following his discharge from the hospital in SBC’s area.

This result followed from the unavoidable fact that prior to his being admitted to hospital under the MHA 1983, the claimant had been “resident” in the area of SBC. And, of course, he also continued to be resident there while in hospital there. While he may have wished, on discharge, to be resident in HBC, the only possible conclusion was that he was resident in SBC.

Legitimate expectation?

SBC had sought to rely on a legitimate expectation it claimed it had under an agreement reached in 1988 by the Association of Metropolitan Authorities and the Association of County Councils, recorded in a document dated 4 October 1989. Its effect was that even in the cases of mentally ill persons, the deeming provision in s.24(5) of NAA 1948 applied. On this basis, SBC argued, HBC should be responsible for the costs of the claimant’s future accommodation and social care following his discharge from hospital.

However, the court concluded that it did not have any evidence of practice under this agreement to support SBC’s argument. There was therefore no legitimate expectation for SBC to rely on.

General practical points

1. Local authorities need to be aware of the different triggers for their duties under the various community care statutes. Under the NAA 1948, the main trigger is “ordinary residence”. The duties are owed to persons “ordinarily resident” in the authority’s area. There is no special meaning attached to the term “ordinary residence”. It is to all intents and purposes the same as “residence”.
2. The Chronically Sick and Disabled Persons Act 1970 adopts the same considerations of “ordinary residence” as those in the NAA 1948. Accordingly, “ordinary residence” is the threshold for the duties under that Act too.
3. In contrast, the Children Act 1989 adopts a different approach for determining the authority which owes duties to children under s.17 and s.20 of that Act. The law here is that an authority owes the accommodation and welfare duties to children “within their area”.
4. Similarly, the assessment duty under s.47 of the National Health Service and Community Care Act 1990 is owed to those who “may” be provided with community care services. The s.47 duty therefore has no residence threshold – see R v Berkshire CC ex parte P (1998) 1 CCLR 141. It is owed to all persons who are in the authority’s area, irrespective of where they are resident or ordinarily resident.
5. Finally, the M case may not be the last word on the question of which local authority is responsible for the accommodation and after care costs of a person released from a detention under the MHA 1983. The legitimate expectation argument arising from the 1988 agreement was not determined. The lesson for a future case is to identify any evidence of practice which supports an expectation that the authority which is responsible for after care costs is not the one where the person happened to reside prior to admission.

Denis Edwards is a barrister at Francis Taylor Building. He can be contacted at This email address is being protected from spambots. You need JavaScript enabled to view it.. This article was first published in the FTB Local Government Newsletter, which is available here.  The newsletter contains short and practically focussed items sent quarterly by e-mail to busy local authority practitioners and is written by FTB’s specialist local government team. To subscribe to the FTB Newsletter, please e-mail This email address is being protected from spambots. You need JavaScript enabled to view it..