07/11/05 - Free elderly care policy heading for 'spectacular' failure.

The Flagship Scottish Executive policy will fail "publicly and spectacularly" because of lack of funds, according to a leaked report.

In a warning that could spell political disaster for ministers, the report says free personal care for the elderly faces cutbacks as early as next year, when the number of those receiving services will have to be slashed.

Council chiefs fear a £300m hole will open in their budgets over the next two years, states the report, written by finance chiefs at the Convention of Scottish Local Authorities (Cosla).

Scotland on Sunday has obtained a copy of the report, which is to be sent to the finance minister, Tom McCabe. Cosla had refused to publish it, having decided it wanted to deal in private with McCabe first.

It warns: "Either the consequences of insufficient funding will be seen in ... key pressure areas or there will be pressure on council tax."

But the specific warning over free care for the elderly, introduced by Henry McLeish in 2001, is most likely to attract attention. The policy cost £140m a year at introduction but is believed to have mushroomed since then and no one is clear about the current cost.

The paper claims ministers need to hand over at least £7m extra in council budgets if the policy is to be sustained from April onwards.

"There are more people needing services (legitimately) than councils have resources to pay for," the paper warns. "More resources need to be put into this system or else it will begin to crumble,"

"If the budget is not increased, waiting lists will grow and the free personal care policy will fail quite publicly and quite spectacularly. Authorities will be under so much pressure that the current practice of managing waiting lists will be impossible.

"If the weekly rate is not increased, service levels of numbers to whom services are provided will need to be reduced, thus impacting negatively on waiting lists," it concludes.

The funding dispute between Cosla and the Executive promises to become one of the major political issues over the next two years.

Local authority chiefs say the pressure on their budgets will become most acute in 2007, when the budget shortfall is greatest. They warn they might have to impose massive increases in council taxes in April 2007, just a month before the Holyrood elections are due.

That would turn council tax rises into a major election issue, with potentially devastating results for Labour, the majority party at local authority level.

Council leaders say they will use the explosive political potential of council tax rises just before a Holyrood election to their advantage.

Council chiefs blame the funding crisis on the massive increase in "ring-fencing" that has occurred under the Executive, where ministers hand out cash-specific projects.

Ministers are also accused of backing far too many massive spending commitments such as free personal care, free bus travel for the elderly and generous teachers' settlements

Source : EGOV