MPs have expressed concern that the Government’s New Burdens Doctrine does not guarantee funding for significant new costs for councils such as those arising out of the implementation of the Care Act 2014.
Under the doctrine the Government commits to assess and fund extra costs for local authorities from introducing new powers, duties and other government-initiated changes.
In a report, Care Act first-phase reforms and local government new burdens, the influential Public Accounts Committee warned that "carers and the people they care for may not get the services they need because of continuing reductions to local authority budgets and demand for care being so uncertain".
The PAC accused the Government of not being sufficiently open and transparent in classifying new burdens (like the Care Act) or reviewing their impact.
“This creates significant uncertainty for local authorities….These unfunded pressures on local authorities will make it more difficult for them to meet their statutory duties and will increase pressure on council tax,” the report said.
The committee urged the Department for Communities and Local Government – which oversees application of the doctrine – to ensure that departments reviewed significant new burdens following implementation, as the Department of Health had undertaken to do for the Care Act.
The PAC said the DCLG also needed to ensure that Spending Reviews and annual finance settlements for local government took full account of the many cost pressures local authorities faced, whether or not they met the government’s definition of a new burden.
“The Care Act is one new area of work for local authorities which will add significant costs locally. Government must recognise this and ensure funding is monitored as it beds in so that carers and the people they care for do not lose out,” the PAC said.
Meg Hillier MP, Chair of the PAC, said: "The Care Act should mean carers get proper support from local councils, but with budgets squeezed this support will be hard for councils to deliver.
“Local government is taking on more and more responsibilities from central government, but the money does not always follow. The concept of ‘new burdens’ is simple enough yet the Government’s definition of these burdens fails to reflect reality.
“If new costs to councils are not adequately funded then services will suffer. There is also a real danger of cost-shunting – in this instance, costs of providing care falling on other public services, carers or the people being cared for.
“This is an issue of concern to the Committee across public services and we will continue to monitor how the Government funds local government."
The PAC report also expressed concern about the Government’s ability to identify individual local authorities that were struggling and to respond quickly enough.
“The decision to delay implementation of Phase 2 of the Care Act means that people will have to pay more for their care for longer before the cap on care costs is finally implemented,” it noted.
“Given the tough financial context, we were pleased to hear, though, that Government will not claw back the £146m of funding it provided to councils in 2015-16 to prepare for Phase 2.”