 Fel wirio, mae angen i miriau cymaint cyntafau yng Nghymru bydd y Cymru ym 17 adrodd Cymru. Rhywbeth yn g mulchgallariedd ar flynyddiol o arferwag unrhyw unigoddiol yn Gwyllwch Argyflwyllol a bleoedd o giddasol i gyfnog gyllidiaeth yn gyhoeddol i'r parlymydd dechrau. Mynd i gondol, sef roedd y gallu gwerth i mi roi Hannah Johnson yw unrhyw gael. Eryd yn eich gwaith efo'r gwaith eich eich cyfnodd cyfnodd hwn o'r Fffinantriaeth hoursig ond y Finansial Memorandum i'r National Care Service Scotland byl, ac erfawr welcon i'r gweithio Dona Bell, director of social care in national care service development, and Fiona Bennett, interim director for the NHS integration and social care finance at the Scottish Government. I understand, Dona, that you would like to make a short opening statement. Thank you very much, convener, and thank you for having us along today to give evidence and to take questions on the NCS bill financial memorandum. This is an enabling bill, which sets out a number of provisions. The national care service, as proposed in the bill, will bring together social work, social care and community health to strengthen health and social care integration for adult services. By the end of this Parliament, accountability for adult social work and care support will transfer from local government to Scottish ministers. A decision has not yet been taken on whether children's services or justice social work will be included in the scope of the national care service. The Scottish Government is currently establishing a programme of gathering evidence and undertaking research to inform those featured decisions. The aim of the national care service is to improve consistent, fair and high quality care for everyone in Scotland, reducing the current variations across Scotland that many people have raised over recent years. Important to note that this is not about nationalisation of services. The proposed bill sets out that, at a national level, the functions are focused on consistency through national oversight. Services will continue to be designed and delivered locally. That is right to support delivery with and for our communities and the people that they serve. The principles of any new system will be person-centred with human rights at the heart of social care. That means that the NCS will be delivered in a way that respects, protects and fulfills the human rights of people accessing care support in their carers. The NCS bill sets out a framework for change. The detail relies very much on co-design, co-design with people, people with lived experience of and people who deliver community health and care support. Our partners and stakeholders will also play a vital role in that co-design moving forward. The delivery of social services in their widest sense has been reviewed and revised a number of times since devolution. The independent review of adult social was clear that each time there has been a gap between legal and policy intent and delivery. This new and different approach to drafting the detail intends to reduce that gap and deliver public service improvement collaboratively. The financial memorandum sets out the estimated costs for establishing and running the national care service and the proposed local care boards. It does not cover any proposed changes to wider policies such as those set out in the independent review of adult social care, for example reopening the independent living fund or free personal nursing care rates. Integrated health and social care has long been the joint ambition of local and national government, but people who access and deliver care have told us that it is not delivering the quality of services needed consistently. Combining national oversight with local expertise will ensure that the right balance can be struck in ensuring consistent and fair quality of service provision across Scotland. It will allow for better sharing of good practice and innovation and remove unwarranted duplication of functions, making best use of public funds. The financial memorandum includes significant assumptions on required investments in pay terms and conditions for frontline local government care staff if they were to transfer to the national care service. Discussions across the local government about their future role have not concluded. The approach taken to the financial memorandum was to ensure that the broadest range of costs was provided to Parliament to promote transparency. Finally, to be clear, we are not waiting for the national care service to start improving social care. We are already taking steps to improve outcomes for people accessing care and support, and our priority will continue to be maximising frontline spending. The Scottish Government's commitment to fair work and the support for pay and conditions is a long-standing policy and will be embedded into the values of the new national care service. By rewarding and valuing the workforce to deliver the best possible service for the people of Scotland, we will make the sector fit for the future and more attractive to people coming into the profession. Thank you very much for that opening statement, and you will understand that, given the submissions that we have received, there are likely to be a number of questions from myself and colleagues around the table. I will open up straight away with the submissions from the Convention of Scottish Local Authorities that say that, in the long-term resourcing of the national care service in matters in relation to borrowing, holding of reserves, pensions, audit and VAT and shared services, the draft bill memorandum does not address those points explicitly, and there is an unacceptable lack of clarity. One of the issues that came very much to the fore in all the submissions was when we asked them, did they have enough time for the consultation, and every one of them answered with a one-word answer, which was no. When we asked them to elaborate on that, they said that it was over the summer, it was far too short given the magnitude of the bill that is before us and the depth of the financial memorandum, which is one of the most detailed, if not the most detailed, I have ever seen. How do you respond to those concerns on those issues that I have raised? The consultation was very well responded to, so the consultation took place over the course of a number of months, as you would expect. Overall, responses were received from 1,291 respondents and they expressed a variety of views, so we did get a very good response to the consultation. What people are saying is that, for a bill of this magnitude, it simply was not long enough to provide the detailed responses that people would have liked to have given. Why was it constrained in the way that it was at the length of the consultation? Surely for something so momentous, including the transfer of 75,000 staff, one would have thought that getting it right was the most important thing and therefore that the consultation could have and should have been extended to allow for more dated deliberations. As I mentioned, it is over the summer when there is a lot of disruption. People come out of the pandemic when folk are not at the same level, they are not at the same level, they are standing in the ability to communicate with colleagues, etc. Why was there not more time given to people to tease out a lot of the issues that have been raised as a result? The time given for the consultation was in line with the time given for any other consultation on legislation. It is important to note that this is an enabling bill and there is significant detail that is yet to be worked out through the co-design process. While the consultation has focused on the primary legislation at this point, there will be a significant opportunity to continue to consult and, particularly around the co-design point, the difference with this bill is that we will work with people to co-design the detail that will give people plenty of opportunity to engage on the very detailed matters that you have raised in your comments. To be honest, it looks to me and many others that we could be building a house on sanity here. You have to get the primary legislation right first before you can really think over secondary legislation. I am struggling to remember when I have had submissions that have been quite so excoriating with regard to such a bill in terms of financial aspects of it. For example, the cause that I have talked about is the fact that there was no business case produced before the draft bill to set out the rational costs, benefits and risks of international care service to facilitate meaningful scrutiny by Parliament. Why has that not been done in terms of the financial memorandum? I know how bills have been done in the past. I have had financial memorandum over the years. I have only necessitated one or two pages. There has not been a lot of meeting in them, but this is a monumental change over a number of years affecting an extremely vulnerable section of all our communities. Surely much more thought and depth should be put into the financial aspects of it and the deliverability of it in financial terms? I agree that it is a very complex and significant bill. In terms of the business case, the programme business case is in development at the moment and will be published shortly. Given the nature and complexity of the changes that are proposed, I suspect that three business cases will be brought forward to address the very specific nature of the change around the care boards, around the integrated health and social care record and on any organisational change that is required. The work to develop the detail is under way at the moment, but again that is subject to the co-design process, which will influence the final shape of the national care service as set out in the financial memorandum and in the bill itself. There is detailed work going on at the moment to set all of that out. That will give Parliament and others the opportunity to scrutinise that in quite some detail. I am interested in the co-design phase a couple of times. There is a feeling among organisations such as local authorities that they are being bounced into this. The co-design is not really a meeting of minds or indeed equals in terms of that. How is the co-design going to work in terms of—I am thinking specifically about the financial structures, because that is a remit here rather than the wider aspects? We have already launched the lived experience expert panel and the stakeholder panel. That happened just in advance of the national care service forum at the start of the month. We have begun the co-design process and there are a number of events planned to support that. We have been very clear, particularly with the people who use services that form has to follow function. The important part of that is to work with people to understand what they need to deliver for them and with them. I am not sure about your comments about being bounced. That is how people feel lack of consultation and almost imposition of how this is going to work rather than a working together to put a system that might deliver over the next decade and beyond. That is really the expression that I am getting. I do not have colleagues who have a different view, but that is certainly an impression that I get from the missions that we have been getting from speaking to my local authority and others. Certainly the approach to co-design has been hugely welcomed by people who use services, by people who work in services. The approach has been almost universally welcomed from people who want to be involved in shaping the national care service and shaping the delivery of services that they either use now or are likely to use in the future. That was certainly reinforced at the national care service forum a few weeks ago. There is huge enthusiasm for the co-design process. It is in line with the Scottish approach to service design, which has been used in the development of Social Security Scotland and has been very successful. I think that the people who have been involved in that process have found it very useful. They have found that it has improved both the development and the delivery of services for them. Certainly there are clearly mixed views on the co-design process, but from what we hear from people who use and work in services they are welcoming of that approach. One of the submissions that we have received is the VAT baseline that is included in the figures on table 2. To be fair, time has trundled on and I believe that it was published before we had the latest skyrocketing levels of inflation, but it says that the response received from COS. Again, those figures are misleadingly upgraded each year from a 2019-20 baseline by inflation plus 3 per cent, which does not reflect subsequent local government settlements. That is important, given that it was announced way back in May, that it is completely odds with the reality presented with the Scottish Government's own resource spending review of a flat cash settlement. Surely that alone means that the financial memorandum is no longer for purpose and requires an updating at least? There are slightly different basis for the two figures that we mentioned. The number shown in table 2 is intended to show what may happen to spend over the coming years. It is different from the resource spending review figures that set out what the budget might look like. We note that those are indicative figures while we do further work through the co-design process around the exact services that will be transferred. Inflation is another key point. That was written at a point in time in May. There have been significant changes to inflation since then, so we absolutely are keeping a live model behind the scenes of changes to any financial assumptions that take place. However, it is an important point to note that those are indicative future expenditure numbers rather than budget, which is what the RSR is intended to set out. The concern, of course, is that the costs use a starting point, current expenditure and the actual costs of delivery of social care. All those who are currently responsible for delivery of social care fear that there will not be enough money, frankly, for the delivery of this service, especially as a Parliament under severe financial pressure. Local authorities are already facing financial restrictions. We have an ageing population. How is this circle going to be squared? As noted, the financial memorandum does not intend to set out the full range of policy commitments that are being looked at in terms of social care. It is focused on the establishment of the national care service. I realise that. There is a number of caveats at the start of the financial memorandum that make that, and Spice have repeated that, and their submission to this. We are aware of that. At the same time, there is a structure being developed here that looks to have unrealistic parameters. That is a concern to all of us. On the calculation method that we have used in table two, we have tried to be as transparent as possible. We have taken publicly available data on expenditure for these services. We have used inflation, which is set out at the bottom of paragraph 30. We have used the 3 per cent inflator in terms of increasing demand. If inflation goes above the figures there, which we know it has, we have tried to be transparent about how that has been calculated. We will do much further work with local authorities through that process to understand the true cost base. If that is the case and the true cost base is accepted, how will rural resources come from in order to fund it? That will ultimately be answered through the annual budget setting process. That financial memorandum again gives indicative costs of what relates to the provisions in the bill. Ultimately, we set budgets annually. Through the business case work that we have discussed, we will have to think about that affordability. There are different processes for funding social care at the moment across local authorities, through the different income streams from council tax, the general revenue grant from Scottish Government, from charges from service users. All of that will need to be carried out with a rigorous financial assessment to understand that. You are basically saying that, ultimately, local authorities might just have to find money for somewhere else? We have not went through that process yet to know that. There are mountains and mountains here, but I do not want to steal all the thunder. One thing I want to talk about now is VAT, because looking at the financial memorandum directly, as opposed to submissions in paragraph 52, it looks almost as if there is a cavalier approach, a kind of fingers crossed and it will be all right on the night kind of approach the way this has worked. It talks about the requirement for more work and engagement to determine the most suitable and affordable design in terms of pensions. Then it goes on to VAT to say, if care boards are not able to reclaim VAT in a similar area to integrated joint boards, there could be a significant financial impact. It goes on to say that the work is under way to understand this potential cost and how it might be mitigated to ensure maximum support of front-line services. VAT costs are not assumed. I would have thought very likely, but what can a level of certainty be got that we will be able to deliver? If we do not get the VAT allowance that we would hope for and that the current joint integration boards get. I would just want to be clear that we have not taken a cavalier approach to this at all. I know that you have not. I am just saying the way it is written. In my view it is a kind of wealth that happens that way and that way. I am fully aware that you have spent countless hours on this, but that just jumped out at me on that. That felt as if well. We will just have to work it out some other way. That is why I am a wee bit alarmed as to what the probability is that this will be resolved, given the financial impact that it will obviously have. To note the work that we are doing at the moment on VAT, we have engaged independent advice to fully understand the VAT consequences of any options that may be taken. At the moment, section 33 bodies can have full-fat recovery. Section 41 bodies cannot, which are the type of bodies that NHS boards are. Depending on the way that the care boards were set up, they could fall into either of those categories. There is currently a review from HM Treasury on whether section 41 bodies will fall into the full recovery model going forward. That decision will also have an impact on us. Ultimately, again, through the options of brazel and business case, we will continue to seek independent expert advice to make sure that we are fully aware of any VAT risks and mitigations. In terms of pensions, there is a real concern about viability, given that the local gummit pension scheme is fully funded and whether or not the national care service would be able to be admitted member of the scheme. Is there anything that you can revise on with that in that regard? Similarly, we want to make sure that we have robust evidence before making any suggestions or options about what may happen with local government pension schemes. We have recently put out a contract in Public Contract Scotland to procure again for advice for that to make sure that we are given an unbiased and evidence-based approach. We would look to fully engage with the 11 different local government pension schemes to understand the impact of any member's moving out of those schemes. Ultimately, the bill provides the ability for those staff to move, but it does not say that they will. Again, it would have to be considered on a local authority basis. I will ask a couple more questions, because I want colleagues to be able to come in. One is about charging and SIPFAT. They have said that there are concerns that the recommendations to increase free personal and nursing care for self-funders will not necessarily deliver a reduction to paid by self-funders. What is the thinking behind that? The financial memoranda does not go into those recommendations, which I believe are based on the independent review around bringing free personal and nursing care rates up to those in the national care home contract and potentially removal of non-residential charging. Both of those policies and areas have been worked on in line with, but it can happen out with the national care service, so those are parts of the areas that we are looking at in conjunction with the national care service, and the financial impacts of those will have to feed into our assessment of best value and affordability for the national care service going forward. Okay. Just one final one for me. I think that one of the very positive aspects of the bill is the right to breaks from caring, but of course that, again, has cost and staffing implications. What Seatford said, this should be a role for professional assessment of need, as we see currently in social care and in the NHS. This will require financial investment in the professional workforce, but it is dependent on the workforce being available. That seems more of an issue to me, because we know that chronic shortage of people in the care sector is 300,000 across the UK. How deliverable is that going to be in terms of staff? How do you feel that we are going to be able to do that, given the workforce challenges that we have at the moment? The workforce challenges are well understood. We have been working very closely with COSLA. I referred in the opening statement to the activity that we are undertaking just now to improve social care services, and that has been done on a joint basis with COSLA and local authorities and other partners. We have plans under way at the moment to have a greater focus on workforce planning, on recruitment, on retention and on the activity on learning and development for social care staff, because that has been one of the key issues that has impacted on retention, along with pay terms and conditions. There is some significant work under way at the moment to develop the social care workforce and to make sure that it is able to meet demand both in terms of numbers but also in terms of skills and capacity. I thank you for that. I am sure that colleagues have a number of other questions to ask. The first will be John to be fought by Michelle. I understand the point that, for example, pay of care workers is not a part of the bill and therefore is not part of the financial memorandum, so whether or not care workers get paid more is something completely different. On the rights to breaks from caring so that carers would have a right to a break, that is part of the bill, so should all the costs of that be in the financial memorandum? The purpose of the financial memorandum is to ensure that we are costing the implications of the bill. We have been clear that there is work that is happening anyway. I have already referred to the activity with COSLA. While the two things are linked, it is not necessarily a direct implication of the bill around pay terms and conditions for staff. Right, the pay terms and conditions I get, but surely the break and the cost of the breaks for carers are part of the bill? On the figures that are associated with the financial memorandum, Fiona, I do not know if you want to go into a bit of detail about the assumptions. Tables 12 and 13 set out the cost of easy access breaks and the additional cost for right to break. As I noted in the previous two tables, nine and 10, there are a number of different assumptions that would vary those costs. Things like residential or non-residential care that is most fitting to support the right to breaks, the length and the frequency of breaks, the number of people that would uptake that level of care, etc. We have set out as best as we can in tables 12 and 13, the estimated cost of those additional rights to breaks. There are quite a lot of assumptions in there. As you work on this and develop it, how will the Parliament and this committee be able to keep an eye on that? The point has been made that we do look at an FM in quite a lot of detail, but when it comes to secondary legislation we do not often see much detail. Have you any thoughts about how this committee and the Parliament can look at that? I have been clear already that we have to do significant further work as the co-design process proceeds to set out the financial implications, to set out the value for money questions that we need to answer. We will be very happy and would expect to provide the committee with all the information that we are producing. Ministers will expect us to do that, so parliamentary scrutiny can take place. The arrangements can be made to do that. Right, so every quarter, once you get to a significant stage, what update would you update the financial memorandum? Is that how it would be done? We would bring forward, so I have already referred to the business cases that we will produce that will set out the real detail of the costs and implications. I think that certainly providing the committee with those and with any updated financial projections as we move forward would be absolutely appropriate. One of the points that Cosle and others raised was the fact that the present care service that they are providing will be partly funded by Government grant and partly funded by council tax and so on and so forth. To take a round figure, say a particular council spending £100 million on care services, £80 million of that comes from grant and £20 million is raised locally by council tax. When that transfers, would the Government take the £80 million away from the council or would it take the £100 million away from the council? We have a lot of work to do to work through all of those issues. It is fair to say that every council will have a different set of arrangements. The proportions will be different and they will secure funding from a mix of sources, as we know. We will have to work through that and I think that that is part of the business case process that we will need to work through for each of the care boards and that may differ across the country. Fiona, is there anything that you want to add to that? Absolutely, that is right. The affordability of the services provided by care boards will absolutely have to be regularly assessed before a final decision can be made. Indeed, it may be the case that some local authorities maintain that service provision at a local level where they feel their best place to do. That assessment shows that, therefore, it would be on a case-by-case basis, that transfer of funds. It does sound quite complicated and there are other areas. I think that if I am right when the colleges came together and everyone was getting paid the same, it took quite a long time to bring all the staff levels, because people were on all sorts of different pay and conditions. That would be an issue too, wouldn't it, that the staff in 32 councils are probably paid in 32 different ways? Yes, it definitely would. Police and Fire had some of the similar issues. We have tried to estimate in table 8 figures for pay in terms of conditions that relate to local government staff that could be in scope for transfer. The baseline for that was very difficult to get one, because there could be 32 different rates of pay in terms of conditions, etc. However, we have done our best to show from no staff transferring to all staff transferring what the annual increase for pay in terms of conditions might look like. It is helpful to note that, in table 8, the bottom two lines are for staff in direct delivery roles for social care. Another area that could be complex is the whole thing about assets and borrowing, because the point has been raised by SIPFA that a care home would be the obvious example if it belongs to the council at the moment. Would that transfer and how much of the borrowing, because probably most councils will have borrowed to finance that kind of thing, although, in Glasgow, they get rid of a number of existing smaller care homes and built some larger new ones? Again, that would have to be case by case, would it? Yes, it would. There will be different arrangements whether local authorities own some buildings such as daycare centres and care homes. They could be leased, they could be under PFI agreements. Again, we would have to go into local authority by local authority, but also asset by asset basis to fully understand that. There is public available information through the Care Inspectorate about local authority run care homes and other services, so we have an indicative idea of the level of assets potentially in scope. We would have to do much more work with local authorities to understand the current cost base, including things such as backlog maintenance. There are various different factors as well as the actual capital value of the asset. To make a point, it is absolutely not a foregone conclusion that assets will or would transfer, and we would say the same about staff. That will be a matter for discussion. It is important that there is an ability to transfer assets, but it is not a necessity, but it is necessary to potentially support the transfer of accountability. Ministers may need to have the ability to step in or a point, an operator of last resort. It is important that we do not make assumptions that we are transferring all assets or all staff before we have had that opportunity to go through the co-design process. I agree that you should not be making a sweeping assumption. It just makes it very difficult for this committee to examine all of this when it could be all the assets transfer, none of the assets transfer or some kind of mixture, and we have no idea what kind of cost would be used for that. I suspect that other colleagues may come back on that as well. Just on the transferring of the staff point, the suggestion was made that not all the staff might be covered by TUPI, and I was a little bit surprised about that. I would have thought that if they were with the council at the moment or with the integrated joint board, if they came into the national care service, all the terms and conditions would be protected. That is right. I am not sure whether that reference was made. It was not yourself, but it was one of the witnesses. I would not say that that was created under employment law. Staff have to transfer under TUPI arrangements so that there is no detriment in terms of terms and conditions. That is the principle that we would be taking. The convener mentioned VAT, and he said that the UK Government is making some decisions on the HMRC and that he was aware of what was going on. Just to press you a little bit more on that, is it possible—whatever their decision is and whatever they decide to do—is it possible to design a set-up so that we do not end up having to pay VAT? With the police and the fire, we got into the situation where Westminster was being inflexible or HMRC was, and we have ended up paying VAT, which we would not have otherwise. Is it possible—can you design a system so that we will not pay VAT whatever Westminster decides? There are still a number of options open to how care boards will be set up as to where the commission arrangements will be held as to whether local authorities will still be service providers at a local level, et cetera. There are a number of variables in that, all of which will have different effects on whether VAT will be subject to that or not. I suppose that the two main variables with HMRC at the moment are in terms of that wider review at a UK level of whether section 41 bodies will become a full recovery model, or whether the types of care boards such as what happened with police and fire could be added to be a section 33 body. We have had very early discussions at an official level with HMRC to understand the process for that. Again, we look to learn lessons from things like police and fire. Ultimately, there are still numerous options available to us, and we definitely want to understand any VAT implication before making any further decisions. Could you not rule out VAT being paid because we will design a system that fits in with what HMRC wants? I do not think that it would be the right thing to look at that in isolation, so I think that it is important to think of the number of factors that we are looking to achieve here. VAT not being paid is absolutely one of those, but we need to understand that the model that is set up delivers the numerous things that the national care service is trying to achieve, as I say, including not incurring that VAT cost, so it absolutely will be taken in the round of factors. Is that related to what kind of legal bodies the care boards would be? Yes, so how the type of body they are set up as. Okay, thank you. I suppose that my question going back to the top level is how did we get to this point? I think that we can agree, even thus far from the session, that I am surprised by the complete lack of what I would regard as fundamentals in the financial memorandum. We have covered a number that was here, but I would like to understand why I understand that an FM is required to be produced alongside a bill, but how do we end up in a position that we have an FM that does not even begin to cover the fundamentals? For us as a committee, speaking personally, I can have no confidence whatsoever, based on my experience mostly in business, that the FM represents any level of accuracy and therefore value for money whatsoever. So how did we get here? Okay, so the process of development of the bill, you will know about. The independent review of adult social care reported and set out a series of recommendations and suggested significant change, as you know. Obviously, the current government committed to the development of the national care service and committed to doing that in a way that was co-designed with people and people who work in the system and people who use social care services, and that is an essential tenet of this work. The implementation gap that Derek Feeley set out in the independent review is incredibly important. I think that he referenced the world-leading legislation that we have on self-directed support, the carers act, but his main issue was around implementation gap. So where we are is that we have this world-leading legislation, which is not being implemented consistently, and I certainly people tell us that it is not being implemented consistently and in a fair way. So the approach that we've taken to the development of this bill is different and for good reason, and that obviously has implications for the financial memorandum, because we have significant co-design work to do. The bill is an enabling bill, as you know, and there is work with people, with stakeholders to work through the specific costs. So it is different in terms of the financial memorandum. The costs that have been supplied are based on publicly available information. There are ranges set out there, which give a good understanding, but it is true that there is more work to do, and as I've already said, there will be clear business cases developed for the detail of the plans, which will allow parliamentary scrutiny. So following up on that then, so it's policy driven, and I understand clearly you're correct to set health and social care being amalgamated as being a wish for a long time, but this different approach has clearly introduced significant other risks in terms of even apportioning or estimating costs up front, because the ranges that you've set out are from here to here. I mean, if it was your personal money, you wouldn't be risking it, put it that way. So how are you going to mitigate against the risk of significant cost overruns in a multitude of areas? I mean, my colleagues have mentioned that, we've got that, we've got pensions, defined benefit pensions, we've got assets, we've got staff, double running, we've got IT, we've got even uncertainty over the governance of boards, each one of those introduced additional costs. So how specifically are you going to mitigate the risks in the process you're adopting? Yeah, and I would start off by saying that we are very aware of public value and the cost to the public purse, so that is at the front of our minds at all times as we are developing this work. There are a range of areas that you've highlighted in particular. We, and Fiona's already, I think outlined a number of the risk management strategies, but certainly the programme of work that we have under way at the moment is very clear about all the risks that we have in the programme, whether they be delivery risks around safety and effectiveness of delivery, whether they are financial risks and the range of risks that we may emerge because we're very clear that there are a number of risks within this. Fiona, I don't know if you want to say a wee bit about the financial risk management. Yeah, to note, one of the biggest drivers of that range that's given is whether local government will remain a service provider in their local area or not. So until that process has worked through, hence we've tried to be transparent to show that the full extent, if all staff transferred, for example, or if none did. So there is a lot more workings, of course, behind the ranges that are given there. In terms of the financial risk of overruns, again, this sets out a financial estimate at a point in time. We would, through the annual budget process, set a budget for the national care service development for that future year that would set out what budget is available for that, and that would be backed up through the business case approach, so the value for money assessment with economic case and financial case in line with the Green Book guidance. So we would only make financial commitments when we had the evidence to show that that did prove value for money was there. You make a point based on my own personal experience. Arguably any programme plan is only ever accurate after the programme's finished, and that's the standard issue and risk for all the spend of this. But what you're describing makes that more likely rather than less likely, because with each you're talking about these business cases and the areas that you mentioned earlier, only at that point will we start to get a sense from a financial perspective of the risks to the public purse, and there are concerns over the scrutiny of the Parliament, which I would absolutely back up my colleague Mr Mason. I did look in the financial memorandum, specifically on the word risk, and the word risk is only mentioned twice there, but what this is screaming out to me is a huge risk. I feel as though given whether you're under pressure of timescales to deliver on this, but at the moment from a financial scrutiny, I'm looking at a blank check for the public purse, and I find that deeply worrying. So have you been, if you'd had your choice, produced that financial memorandum, or would you have wanted more detail and further breaking down based on the policy provision? So will you push to bring that forward? No, so I think we have, I mean, few are in particular, and others have spent a huge amount of time developing this financial memorandum, and I think that it is the nature of the approach, because, as I've said, form does need to follow function, and we want to be really clear with people that what we're developing works for them. We've talked a lot about the risks, and I can provide some real reassurance that, as part of the programme work, the risks are very much at the front of our minds, whether those be delivery risks, financial risks, et cetera, et cetera. So we are absolutely aware and actively managing the risks associated with this programme. What people talked to us about is the opportunity that we may be able to, or the opportunities, actually, that we can achieve through the development of this work. So, certainly, the feedback, the forum, and in other discussions that we've had, is that there is a huge opportunity here to develop services that really work for people, and that are consistent and fair, and that is absolutely what we want to set out to do, is to maximise those opportunities while managing the risks very, very carefully. So, just to finish off on the last point from my own clarity, this will be the only financial memorandum, and the way that you will break out the detail and the associated risks and potential cost overruns, which is what we are concerned about, is via the detailed business cases and regular updates to this committee. Yeah, that's right, and again, to reassure, you know, the day that this financial memorandum was submitted, it's not that the work stopped in terms of trying to estimate that financial impact. That's been an on-going process since this was put forward in June, and will continue to be, so that the detail is, as we get more evidence, as we work through that co-design process, it's a very live process to understand the financial estimates and risks that come with those. So, when do you anticipate baseline in your estimated costs? What point does that occur? In other words, should we know you're nailing your colours to the mastabit war? Yes, I mean, this is the initial public-facing document to set out the initial costs that we are projecting, the first programme business case that we put out will therefore set out the next iteration of those costs, and will be clear as to any changes from this document to the next, as to which assumptions have changed, so there's a clear audit trail of that. Thank you. Okay, thank you. List before by Douglas. Thank you. Can I put on record very similar concerns to those that have been spoken about by my three colleagues so far? Because a financial memorandum is a very important part of any bill, any legislation whatsoever. Legislation is important that when we're passing it, it is good law, and good law has certain principles to it, namely that it has to have a clarity of purpose, it has to be understood, it has to be workable, but it also has to have very strong evidence base. And I think that what we're struggling with in this committee just now, albeit that we're only looking at the financial memorandum, not at the wider policy commitments, is that that evidence base is lacking. And you've just given an answer to Michelle Thomson, which makes clear that this is a very much an on-going basis that it will be updated. Our problem is that we have to scrutinise this. Do you accept the criticism that has been levelled at you from people who are about to give evidence later on this morning, and others who've given us written submissions? I think the convener described it as excoriating criticism. Do you accept that they have a point that there is not enough information for them to make a value judgment about how to proceed with this? We have had a number of conversations with the colleagues who are putting forward that criticism over the course of the last number of months. I think that this all goes back to the way in which this bill is being developed, and the way in which it is being developed is to use the co-design process, and I absolutely understand what you say about good law. I think that the really important point is that, yes, we absolutely need to have good law and it needs to be very clearly evidenced, but we also need to have excellent implementation. Working in this way to work with people to co-design the fullness of the national care service will help us and help people to ensure that we are able to effectively implement the national care service. Do you accept that we've moved too quickly? Given that you obviously have to take evidence from the stakeholders who are involved in this, who are the ones who are going to be on the front line of delivering what will effectively be a new system, would it have been better to have a slightly different approach to the design of the bill so that we would have a more substantial financial memorandum that was with greater detail than we have just now? Would that have been a better approach? I think that we are comfortable with the approach that we have taken, and I know that ministers are comfortable with the approach that has been taken. One thing that is very clear from the people who use services is that they are absolutely hungry for change. There is an opportunity here to work concurrently to develop the detail, while at the same time making sure that the bill is both effective, good law and implementable. I understand fully why people may wish to see a policy change. You are quite right, there is a lot of opinion that would like to see a change in the delivery of health and social care in the way that that is all organised. I absolutely understand that. That is about the actual procedure of how that can best be put into practice. I want to ask you if you feel that the stakeholders who are giving evidence to both yourselves and to us as a committee, do you think that they are comfortable with the process of effectively being a bit left in the dark when it comes to a lot of the costs that have not been laid out? Do you accept that that is a criticism that has to be addressed? Obviously, I cannot speak for other people who are giving evidence. They will give their own evidence. Certainly, our engagement has been very proactive and there are many discussions under way. I would say that stakeholder feedback is mixed. Obviously, I have read the submissions to the committee. Some are of the view that there has not been enough time and there has not been enough consultation. Others, as I have already said, are very keen to progress with change. My final point is that I remember in this Parliament that Mr Mason cited the example of college regionalisation, which was a substantial change to the college sector. I also remember the children and young people's bill, which is a huge bill. At the beginning of those processes, we had issues about the financial memorandum and just how accurate that could be. If it is a very substantial piece of legislation that those were, not only does it take a lot of time to go through the Parliament, but particularly in a time when inflation costs are rising substantially, that affects the financial memorandum over time. My concern is that the policy change, which is huge, I am not going to argue about the merits and demerits of the policy change, but the financial memorandum that accompanies that is really important. I feel at the moment that we are not in a position to make a very good judgment because we do not have enough information. It shows the best evidence from the data that we had and information that we had at a point in time. We have made a commitment to bring further financial information to give that level of detail once we know some of those more detailed design options. Again, I apologize for mentioning it before, but I would come back to the point that this does not make a direct financial commitment. That shows an outline of the costs that the legislation is going through in car, but we will ultimately still, through that budget-setting process, through that value for money assessment, through business cases, make sure that we have the evidence before making any direct decisions. I was going to go back to a point on the VAT. Obviously, that is a big risk going forward. What could that be, the worst-case scenario? How much are we talking about here? It was a detailed assessment done when IGBs were set up in 2013-14 around the potential VAT impact, which estimated that to be in the region of 32 million. That was done on an individual local authority basis, so there was a collection of data and analysis done. We are not at that stage yet. Again, as I noted, we have appointed an independent external advisor to let us understand that high-level impact. We would look to do that more detailed calculation again over coming months to understand what that figure looks like, but to know that the work that was done previously in 2014 showed a potential 32 million impact. Would that come back to committee again? That would be part of updates that we would give, whether that is quarterly, whether that is through the business cases, the VAT impact on different options within that business case would be set out. That number would be part of that. Okay, thank you. Another part to raise was touched on. I think that it was by Michelle IT costs. It does mention in the papers that we have got that, obviously, a key part of the bill is to enable creation of nationally consistent, integrated and accessible electronic social care and health record. We understand that those detailed costs cannot be here as yet, but there is not even any indication of what those costs would be in this FM. So, the indicative costs will be set out through the strategic outline case when that is published. The bill itself does not directly say that a care record will be established. We do not need the bill in order to establish the care record, hence that was not a focus of the financial memorandum, but that high-level envelope of costs will be set out through the strategic outline case as part of the business case process for that record. But do we have any idea what those costs would be at this point then? No, we have not done detailed costings on yet at the moment. We have done some preparatory work. We have done an international comparison of other that is live at the moment in terms of where other places have set up something similar. We can look to other, I suppose, large-scale digital projects. The set-up of social security, for example, has digital costs in its business case, but those are not directly comparable to that record. I do not think that it will be right at the moment to give that envelope in this financial memorandum based on not knowing some of the detail at the time that it was done. I think that asset cost has been mentioned as well. It could be different across different boards on whether they own the assets or not. Local authorities may own and at a care home, for example. That could be under a lease agreement, it could be under a PFI agreement. We do not have the detail of that at the moment. That would have to be done through conjunction with local authorities. Would the new national care service aim to take ownership of those, or would the local authority still be a provider to the national care service, or is that still to be worked out? It is still to be worked out. In the independent review of adult social care, that has absolutely been agreed by ministers. Derek Feeley and his panel were very clear that local authorities have a clear role to play in the future of social care. Absolutely could, and in his view, should be an on-going provider of social care. Obviously, as we were through this with local authorities, there will be a choice for local authorities to consider, but certainly we are keen to continue to engage. We know that many very high-quality services are provided by local authorities. That is leading on to my next point. It will be a choice to the local authorities, because the statutory duty will move on to the Scottish Government away from local authorities. Local authorities, if they want, as Mr Mason would say, and that often costs more than they are taken in, they could choose to say, well, we do not want to provide the service anymore. Over to you, national care service, you can buy this building if you want. Would that be right? That could be one outcome, but there are many outcomes that lie between the current arrangements and that arrangement. As we go through the business cases, there will be additional capital costs potentially to the Scottish Government to buy assets from local government who choose to pull out of this service and leave it up to the national care service. Potentially, yes. There are numerous complexities with that in terms of the valuation method that would be used for those assets as to whether there is a market value or not, to say things like backlog maintenance and any insurance liabilities on those buildings. It would almost have to be in a building by building basis to understand the complexities of each building. I guess also from my time from local authority, I remember private care homes that go into administration, for example, and the local authority having to step in and buy that asset potentially to keep some, because there was obviously a resonance with complex needs in there that had to be cared for. Going forward, that would be a national care service that would have to step in and provide that service and buy that asset if it was felt that it was the right thing to do. That was the point that I was making earlier about the provider of last resort. I guess the other slight question that I had was around some local authorities have allios providing this care. I guess that would be in the future be decided whether that allio would still remain part of a local authority or potentially that would move across to national care service, or whether that allio would continue and provide the care as a provider, would that be right? We need to do that analysis to understand the most effective model, both in terms of cost and delivery of services. We would have to understand whether those allios would transfer or remain. The last point that I was thinking was that the Scottish Government's desire just now is to try and reduce estate, to try and reduce offices, to have more people co-located. I guess that what it looks like from this financial memorandum is that there's actually going to be new offices as this extra level is created. Is this not really going against what the Scottish Government is trying to do at present in trying to rationalise? So we've tried to be transparent in terms of showing what the cost of a new premises would be. We would absolutely try to get synergies with existing public sector estate and not take on new premises where at all possible, but we've tried to be transparent here by showing the upper end of what the costs could be if that was not possible for some reason, if it was deemed not fit for purpose, but absolutely we'd look to maximise the existing public sector estate before taking on any new property commitments. In terms of local authorities, they've obviously been, well, the voice of local authorities have been vocal in here and obviously saying that there's so many unknowns for their member. So when will they have a bit of clarity going forward? Obviously they're probably going to be going into the budget setting process in the next few months, so when will they have that clarity or start to get some clarity? So the intention is to publish the programme business case later this year. What I would say is that we continue to engage with COSLA and local authorities on all of this work. It is very, very complex and we know that local government have a huge amount of expertise and so we're very keen to work with them. I think there is a series of the business cases that we've set out that we intend to produce and we're keen to work with COSLA and others to develop those. Final, final points, I reckon. Obviously, I think you mentioned earlier that some boards may differ how they provide service between boards. I'm not sure if that's what you said or not. I'm not sure either, in which context. Because I thought that the whole idea of this was to provide consistency right across Scotland and I'm just trying to think of our different boards doing things different ways than do you lose that consistency across Scotland. So there's consistency of quality and standards. I think that we're really clear and this chimes very well with local delivery of care. We know that the delivery of services in rural and remote areas, for example, will not be the same as delivery of care in urban areas. We think that it's really, really important that there is delivery flexibility and that there is an opportunity to co-design services locally so that they're the best fit for people. So it is that mixture of national frameworks around both standards and quality and the ability to design services locally to meet the needs of the population. So there will be consistency in standards and quality but the delivery mechanisms might differ across the country. So you potentially still have a postcode lottery depending on where you live and the type of service you're going to receive? I would probably describe that as rather than a postcode lottery because the intention is to not have a postcode lottery on standards and quality but flexibility on the best means to deliver for the local population. That would be designed along with people to ensure that it met their needs. Have that standards and quality as things are just now? We have a number of national standards at the moment and what we see at the moment is real inconsistency across the country. I think that the point is about accountability for those standards and how people can hold those who are accountable at the present time. We know that there is significant variation across different local authorities in different integration joint boards. People tell us routinely that there are things around portability, being able to move packages of care and the standards and quality that exist. We know absolutely that there are very high-quality supports and services that are being provided at the moment. The staff groups who provide that care and support are extremely committed, very highly skilled and very highly valued, but we know that it is inconsistent. That has concluded questions from colleagues around the table. I have still a few to wind up with. The first thing that I am going to ask is a follow-up to what Douglas is saying. It says here that the stated purpose of the bill is to improve the quality and consistency of social services in Scotland. From what we have been discussing today, it is like a sledgehammer to crack a nut, it seems. Surely, if there is an issue of consistency and qualities that you have just touched on and answered by Douglas, they should be addressed directly. Where are the problems of quality and consistency? Name, shame, or it would not be easier to ensure that duties are imposed to make sure that they do uplift their standards to those who are doing best, which would be happy for you to name also. It seems to me to be a monumental, as Michelle pointed out, risk to have a bill of this nature with all the financial implications because there are a few service deliverers who are not currently up to scratch. If I can take you back to the independent review of adult social care, there was a huge amount of consultation, a huge amount of engagement with people, with providers of services, et cetera, that led the Derek Filial and the panel to the conclusions that a national care service was required to achieve consistency and quality. And certainly around the cross boundary issues that were made very clear to Derek and the panel, it is really important that we have the means to ensure that there is consistency and quality across the country. At the moment, there is real variation and there is no current means by which, in the current arrangements, ministers do not talk to a lot with colleagues from local government about local democratic accountability. There is currently no means. Sorry to interject, but you can say that about any service. You could say that about education as well. It is not going to be the same everywhere. Bin collections probably are not the same in northeasers. They are in Aberdein. Does that mean that you have to have a national bin collection service and national education service? Surely, if there is an issue that is affecting some local authorities, perhaps the cross boundary issue on how common this cross boundary issue is, that is what you address rather than throw the baby out of the backwater. It seems that a slide is having to me the whole policy. It is not for us to criticise the policy per se, but the financial wraparound of it is obviously concerned. The Fraser of Ireland Institute, for example, said that if the service is underfunded, it is unlikely to be any better than the system, it seeks to replace. Obviously, if we are going to be putting colossal sums of money into new structural changes, then that means that there is going to be less money available, surely, for delivery at the coalface. I cannot comment on any other services that might require a national approach, but certainly the strong view from the independent review, the strong view from the consultation responses, was that a national care service to promote quality, fairness and consistency was the preferred approach. Ministers have absolutely got behind that and are clear that that is the direction of travel. It is a significant change and we are very well aware of the significance of the change and the complexity of the change. I think that what the independent review and the consultation have told us is that it is well supported by people who use services and supported by people who work in services. There will be others who disagree, but that is not the overwhelming response from the consultation. The priority now, given that political commitment behind it, is to ensure that it is delivered as effectively as possible. Throughout the evidence today, you have talked about co-design process going forward. You have talked about working with stakeholders and you have said that the engagement has been very proactive. The Society of Local Authorities, chief executive, said in the submission that local government was not involved in the development of the proposals prior to publication of the paper. If there is all this proactive work, why was local government not involved? They go on to mention that the consultation provided very little information about what the proposal would mean for vulnerable adults, children and families who rely on social work and social services. They also said that it was a large tick box format. What are we, as a committee, to take from that? What is your response to that? We meet with COSLA, with SOLIS and other local government representatives very regularly, both on the current arrangements and improvements to social care and on the national care service. We have invited COSLA and SOLIS to be part of the strategic delivery board for the national care service and to contribute to the programme. We do absolutely engage and did so during the consultation process. The consultation was very clear in the aims that were set out for the national care service and the structure of the bill. Local government colleagues had the opportunity to respond to that and engage with us over the course of that period. We will question them when we have the panel before us in the next few minutes. The financial memorandum anticipates savings and efficiency through shared services across the national care service, but does not acknowledge the corresponding loss of economies of scale for local government, does it? One of the things that has been pointed to us, and I mean that directly from local authorities as well as through the submissions, is the impact on the viability of some of our smaller local authorities. What is the unintended consequences to the finances of that? It is important to note that we are not saying that all services would transfer far away from local government. Would it be more appropriate for those services to stay in local government, whether it is a smaller, more remote rural community? For example, if that economies of scale made it better for those services to remain in local government, that is absolutely still an option from this bill. Why would we have to engage on a local authority by local authority basis to understand the impact of withdrawing those social care services, to understand what that would look like before any decision is made so that we are doing that with the best evidence that we can have? So there may or may not be withdrawal of 75,000 staff from local authorities, that is what is set out, yes. The total range of staff in scope at the moment from Chippell SC data is 75,000 staff split between the 32 different local authorities. But the point that I am making is, will viability of the local authority to be taken into account or will it be done purely on the isolated nature of looking specifically at this delivery of this service? We will need to understand the impact across local authorities, absolutely. I think that Solace has said in a quote, that organisational changes appear lighter to consume much of the total funding available for the NCS, which has stated to be over 840 million by 2627. That is about half of the total investment in adult social care alone that causes social work to Scotland, and others consider that it is needed. In addition, that would not include the investment in justice in children's social work and social care services that it desperately needs now. At the beginning, we are in a situation of financial difficulty, financial challenge in Scotland and across the UK. So how are we going to be able to square a circle of having these huge organisational changes and at the same time being able to deliver for the people who require this service? So I think that it is important to note the types of costs that are included in the financial memorandum. So there is that public commitment to the 25% increase over the course of Parliament, which you have referenced. When we look at civic costs such as in table 8, the pay in terms of conditions costs, which are a substantial amount of the care boards costs, that is for those local authority staff who would potentially transfer to the 75,000. Those costs are in the system, those staff exist. That is again trying to be transparent to show that those costs would then fall to the care board, but the pay in terms of conditions uplift each year will happen within local authorities now. Sorry, it is the organisational change that I am talking about. Yeah, but just when we quote the number, they are so in terms of the 25% increase, which is 8 to 840 million, compared to the costs in the financial memorandum. Not all costs in the financial memorandum are for organisational change, some are, but there is a substantive amount for things like pay, terms and conditions, as well. Okay, lastly for me and the last one in this session, is it your view that the financial memorandum delivers best estimates in the cost of delivery of this legislation? I believe that it does, based on the time it was written, based on the data and evidence. Hold on a second, based on the time it was written. Okay, so we are not at the time it was written in terms of where we are now, which is more important going forward. So, yes, things that we have mentioned, like inflation, are obviously extremely volatile at the moment, so the numbers that are presented for inflation will have to and are being reviewed on a regular basis, but yes, I believe that this does set out the best estimate of the envelope costs that we have at the present time. Okay, well, thank you very much. It has been a fairly long session, so thank you very much both to Tony Bell and Fiona Bennett for the evidence this morning. We're going to have a break for five minutes, and then we'll take further evidence. Okay, thank you. We'll now continue our evidence-taking on the financial memorandum to the National Care Service Scotland Bill, and I welcome to the meeting Sarah Waters, director for membership and resources at the Convention of Scottish Local Authorities. Sharn Waring, chair of SIPFA Integrated Joint Boards, chief finance officer section, and Paul Mann, executive director of finance and corporate resources and deputy chief executive south Lanarkshire Council, representing Solace Scotland. So, we move straight to questions, and I think the first question I'd like to ask is that, what do you believe has motivated the Scottish Government to take such momentous steps? I'm bringing forward this bill, because just to help you out, I mean, you know, Christine, as you all want to take the fifth, it seems. What they've basically said is to ensure consistency and quality of service. So, what is it about the services that lack the quality and consistency that you all want to see? Go on, Paul, on your desk, which you speak first. Thank you, chair. In terms of what's motivated the Scottish Government, I'm absolutely sure it's good intentions, right? It's a, you know, a desire, right? We've quoted consistency, we've quoted, and the discussions that we overheard earlier on, an absolute desire, and again, that comes through in consultation to improve the quality of services. And I think everybody, including us, including the people who sat here preceding us, would share, right, those goals. I think the issue that we've got is the route via which we get there, right, because the change that's mapped out in the financial memorandum, and that's the part that we're here to talk about today specifically, the change that's mapped out is seismic, right, and it means wholesale complete change for services that are currently being provided by health and social care partnerships and by local authorities and by any sports across Scotland. And it will be far reaching, and it's got a massive degree of risk attached to it. And I suppose, you know, coming back to the business that we've got in front of us today, in terms of the risk, the quantification, right, of the financial change and the financial element of that risk, I think has loose ends in it, right, and I think they're considerable and I think they're far reaching. So, you know, coming back to your question, chair, it's absolutely founded on good intentions. We all share the good intentions, but we've got misgivings about the path that's being laid out to take us there. I mean, to be fair, I think it's more than misgivings, having read all three of your submissions, I mean, I think, you know, that you, there clearly is strong from what I am reading, correct me if I'm wrong, opposition to this whole philosophy in the bill, and obviously you've been looking at the financial aspects of that, but what alternatives could the Scottish Government deliver if it was not going down this path, Sharon? I suppose going back to that other point as well about the role of the care inspectorate and about that quality and standards. No, we do have mechanisms in place currently that look at quality of services and drive that quality up. I suppose the question is how do we build on existing arrangements that we have in place? Integrated joint boards have been up and running for seven years, it's not a long length of time, but there's also a lot of reserved legislation there that could actually be brought in to take them on to the next step, but it seems that we are actually not throwing the baby out of the bath water and starting again. So some of the aspects that could actually be taken forward is actually to develop integrated joint boards further, and the original legislation allowed for that to happen in due course. So I think that there are options to take that forward and allow the integration joint boards to grow and be a bit more independent and to run more of these services as the intentions were originally set out. So Sarah, is that Sipha's view? There is an element of frustration, understand, among the Scottish ministers and other MSPs, the fact that there still is this inconsistency and there isn't the same level of quality everywhere. The bill team as you'll note talked about, for example, specific issues cross boundary. I don't know how big an issue that is. I mean, I think obviously Cossillol will maintain the position that part of the reason for the perceived inconsistencies, the differentials and quality is because councils have had to take really tough choices over the last 10, 15 years in relation to resources and really no area has been left untouched by those decisions, whether it's, we heard some of the previous speakers talking about the lack of investment in assets, care assets, fleet for social care workers. There's a range of areas where councillors have had to take those tough choices and I think to use the term, I think it's really overused in our postcode lottery. It's not a lottery, we don't take decisions out of ball machines, they go through due process in council chambers with considered officer opinion. So it's not a lottery, it's just different. I think Paul's absolutely right, we are motivated by the same things and I think if you look at policy areas like early learning and childcare, the end was potentially not as prescribed as the national care service answer. I think we worked with Scottish Government in a space that was about thinking about different types of service provision in different local areas, what was going to actually be most appropriate, but I think in this case it's that desire for absolute consistency has meant that, well it's got us to where we are, we don't have that. Every ELC service is not identical but we're delivering the policy intent but we're delivering it in different ways to respond to local circumstance and I think more of that approach potentially could have been taken in this too, as Paul said, get to the same end goal. Now consultation, I mean at the start which obviously you missed because you were travelling here, the consultation, all your responses was when the question was asked did you have adequate time for consultation, you all responded with one word answers which was no and I did actually put that to the bill team who obviously tried to defend the consultation period, but I wonder if you can tell us how much time do you feel this could have been for consultation, how could that be improved, what further consultation can there be and I'm going to be asking all three of you this so it's not, so I'm keen. What is your view, what confidence do you have about the level of engagement in terms of the co-design which I believe the bill team mentioned on at least four separate occasions in the previous session, if they've talked about being proactive and engaging with stakeholders etc etc and that doesn't appear to be your collective view, so I'm just wondering if you can talk us through that perhaps Sarah, do you want to go first on this occasion? I think that yes I mean you can't deny there has been an engagement and consultation process but this is this is huge you know this is not just a kind of standard policy consultation where you can just sort of roll out your national standards for community consultation and engagement but I think the other problem is the definition of stakeholders you know there's the three organisations represented today are not just they're pretty significant stakeholders if you take the amount of staff for example the fact that this could potentially remove a third of staff and budgets from local government it's a pretty hefty stakeholder in the whole process so I think it's the nature of the process has been a kind of one size fits all in terms of how you engage and how they've consulted and actually it was quite difficult you know to for for organisations like ourselves to put forward that view and make sure that the that everybody was aware of the the scale of the stakeholder in this case so I think that has perhaps been part of the the issue during the process yeah I think that's a really good point to to have made um Sean I think the challenge for us was it came at a time when we were actually looking at recovery and we're still actually dealing with another wave of Covid and it also happened over July and August which is the main time when staff trying to get some annual leave as well so trying to get the work done on that consultation over that period was challenging for us with the context in which we were all dealing with so I think another few months for us to do some further work on it but also to try and understand you know what was actually in the document and what it was saying and like Sarah I think the the comment about stakeholders and engagement no we work in this arena day in day out but we were involved just like all the other stakeholders and actually we feel we'd been better if there were actually more detailed involvement and a better understanding of what it is we do and a better understanding of the services involved and what the implications would be for this and actually a more detailed engagement with us would actually be more helpful as part of this process but as Sarah said we are treated just like everybody else and on one level I do understand that but the implications for us are significant and I think it'd be more helpful to have a more detailed engagement with us as we go through this process but yes a bit longer particularly the time when this came would have helped us all to respond and deal with it better collectively across Scotland as we all work thanks. Yeah so basically what you're saying is there that the consultation because it was there was so many people consulted that your own contributions have been hugely diluted in terms of how what's been taken on board by the bill team you know as we as a financial man has been put together. Paul? Just again I would back everything that Sarah and Sharon have said you mentioned to chair that there's a theme of cursory no responses in terms of did you have enough time to respond to this now a lot of that is driven as Sharon says by the time frame across which this was done which did feel unnecessarily compressed like Sharon says isn't there a period in late summer when a lot of people take holidays. One of the things that you do you know again you'll pick that up from the space summary that's in there there's a consistency to the responses and a consistency to the themes that were in there so the bodies who responded I don't think had enough time drew on views that were there but which have already been expressed to the Scottish Government for a period of time right across which a you know for a period of time across which dialogue around this has happened right so that there is a consistency of theme within those which was there to be drawn on but the point I would make is it doesn't feel as if that side of the argument is being listened to and that the outcome that we're being pointed towards which is a huge change doesn't seem to vary across this. Okay thank you I mean you've mentioned Sharon about the you know that you know that the importance of strong financial leadership when you talk about the fact that you know this isn't being recognised in the consultation the financial memorandum or indeed the bill and you talk about the lack of robust information so for the record I mean you've talked about some of it in your submission but what additional information do you feel you would require at this point? I think we've highlighted our particular concerns around that around pensions around information around assets and transfer of assets and implications for that that is a big concern also the status of the public bodies as well there's no currently we are section 95 officers there's no reference to what the status of the chief finance officers will be there's no status on the legal status of what the bodies will be which then leads obviously to concerns around VAT and as I say there I think there's a big risk around VAT and I also think it's a lot more significant than the figure that was quoted earlier on as well and just now we do are able to reclaim VAT you know if I look at my my own area as a IGIB and having that status as a 106 public body we can reclaim all the VAT I reckon based on if it changed tomorrow we couldn't recover VAT alone it would be 7 million for us we are 11 percent of Scotland no so that gives you an idea of the range it could be and it could be further depending on the extent of services that are in scope so I think there's huge risk there and I do think we need to understand a lot of these areas first before we go forward because these will actually have a significant cost implication if we don't understand the legal status what the the rules are for that body and VAT and pensions and all the other issues around buildings and transfer of assets and the cost of maintaining these buildings as well going forward yeah I mean i mean you've said in your submission that the level of uncertainty remaining unknowns do not allow for any certainty around the reasonableness and accuracy of the cost that saves included and you're going to say that the use of large ranges in costing do demonstrate the uncertainty within the financial memorandum so just wondering I put this question obviously to the building when you were there do you feel that the financial memorandum has met its the best estimates criteria in relation to the cost of the bill as it's laid out the figures and the ranges there do look as if they cover the cost albeit inflation has significantly moved however there are gaps and they recognise in the financial memorandum that there are gaps and it's the gaps actually we are concerned about because those gaps we think will bring significant costs which will add to the implications here also the one area I am a bit concerned about though is the range for new demand for services that is growing significantly we have seen increases around demographics grow particularly post Covid and what's built into the financial memorandums only 3% and just now we are seeing ranges of between four and six percent so it is running higher than that and we know that we have got an aging population and I think the challenges for future years are all I'm going to see that grow so that area is possibly an area it's on the light side okay and Paul you've basically said that well the financial memorandum acknowledges it follow what is required this year when other team prior to the publication of the bill to support adequate scrutiny okay yeah coming back to the question is there at the back of that in terms of what's in the financial memorandum right and whether it represents information that the parliament funnily enough I was doing my next question actually funnily enough I mean my next question was going to be seen as well ask it just now is what should be in and what shouldn't be in the FM is there something anything in there that shouldn't be in it and what additional content should there be so you may as well ask that okay right so it's a again a number of points around that in terms of what is in there right that there is a representation of what's spent currently right which is which is drawn in but it's based in 2019-20 as Sharon says is then uplifted for demographic pressures by a level of 3 percent which is an assumption of itself and there's an estimate of inflation right which sadly right will be by now dated right moving forward across a period of years what I would need to write as a local authority director of finance way that up against this we've got a a spending review that's based on flat cash settlements for local authorities without demography uplifts or inflation right so you've you've got spend currently with limitations right in terms of what's in there but that doesn't represent what the cost of a national care service could be right so that there's another leap of faith in turn in that so it doesn't represent the full costs of the the the outcome of the filly review the national care service consultation you can't see the total costs you're not able to look at what the priorities would be within that or to to properly compare alternative models against what's laid out in that financial memorandum our point of view I believe is that we think that we're entitled to a clear picture of what this would cost and that would extend to things like improvements in the service which is what everybody's after and investments they need to be made so acknowledging the financial memorandum does set aside a number of improvements around health and social care which are other aspects of government policy not directly related to this bill but they probably are requisites for success of a national care service so that's in terms of the comments that were made in the the soulless submission and in other submissions around you know the misgivings right i'll use that word again around what's in the financial memorandum it's founded on that and again that there is a piece of this for me which is about what is this going to cost in total and you know we talked earlier on about a figure that's referenced within the the spending review of £840 million and an explanation was given of that but if we weigh up these things and weigh up the costs of structural cost and compare that to £840 million is there actually money in here to fund improvement and that's something that that's genuinely concerning I think for everybody within the local government community and again I appreciate that there are there are pieces that need to be kept out of the financial memorandum but there's also I think it's just paragraphs 16 onwards there is a summary of of economic benefits but I think it's reasonable to assume that all of the system changes that are in the orbit of health and social care at the moment are referenced in the benefits that would accrue from that improved system so just a number of I believe shortcomings right in the financial memorandum a number of leaps of faith but they take us to a position where we are acknowledging there's a risk in making a massive change okay thank you and Sarah yeah and I'm glad Paul mentioned the resource spending review because that was published at the end of May and then the financial memorandum came out in June so the resource spending review said that the 840 million figure and that could be swallowed up by the the cost of running the service and the setup costs because I think they come to about 750 million I think it's welcome to see in the FM that actually they're acknowledging that there is increases in demand and there has to be increases in cost but nowhere else do we get that recognition of those cost pressures and demand pressures the RSR absolutely did not do it for local government it has stated 10.6 billion core funding between now and I think that there's a hundred million uplift in the last year of the spending review so I'm not quite sure how on one hand we can acknowledge that yes there are cost pressures demand pressures and yet in a resource spending review set at local government well I'm sorry we don't recognize population increase demand increase inflation pay pay inflation it just doesn't you know and one was published the month after the other so I do welcome that they've considered that but I think we need to welcome we need to do that across the piece and not just in one particular area when there is a solution in or a proposal in mind yeah I don't necessarily want to speak for my colleagues but I'm probably going to say I think we were all concerned about that particular aspect of it I'm just going to ask one more question before we move on to our colleagues and that's about viability I kind of asked that of the bill team and I don't think that they gave a particularly comprehensive response but Paul you mentioned that at the last time you were at committee what's the same we'll kick off with you first what's your view in terms of the impact on viability particularly with smaller local authorities but also the kind of economies of scale that you would have within other local authorities such as South Lanarkshire no listen you're absolutely right I did mention this the last time I was here and the in the back of this that there would be you know and again I'm making assumption about how this is going to work right I'm assuming there's going to be as is referenced in the documents you've all got today a transfer of 75,000 people to a national care service so you have a an exodus of that activity that workforce the support structure for that from the local authority side of things so that's about a third of what a local authority does and you know colleagues who were before the earlier on mentioned yet these things are happening these costs are incurred these people exist it presupposes that the folk who are doing you know those support and administrative tasks for health and social care partnerships are discreet and are doing that for the health and social care partnership alone it's not the case right you know things don't work in silos like that you would be aghast if they did right so you know that there are a there are flexibilities there are expertise that stretch beyond health and social care people will support other things as well as that particularly in smaller local authorities you're going to get those crossovers so those people leaving is going to have an impact on the critical mass of what's left and again this isn't a plea to preserve local authorities or just leave things the way they are where I'm coming from and saying this is we need to acknowledge that that's implicit in what's being put to you and in the financial memorandum but I don't think it's adequately recognised in the financial memorandum so that there is a cost and there is a risk of saying to local authorities we're going to take that proportion of what you do away from you you're going to lose a critical mass within authorities up to you know my own is the fifth largest authority in Scotland there are aspects of what we do which will strain because of this right so I just I don't get how smaller authorities are going to be able to come through this and be able to provide services in the way that they did before but it's not recognised in here and that's the bit that concerns me yeah I think there's also something and it's not necessarily viability you know financial viability but you we need to think about this in the context of local democracy as well and you know what this will do to the the kind of scope of of decision making locally is is significant and I think before COVID we were going through the local governance review and we were looking at fiscal functional and community empowerment and there were some pretty radical proposals coming from some council areas along with their partners about things like single public authority and that would that was looking very much at fiscal and functional empowerment and I think there's a danger that you know this closes some of those options down I mean I heard what the last speakers were saying about it can look different in different areas but I still think there's something about the interaction between that potentially local models that make sense for example in island communities I don't think it's any secret that Western Isles and Orkney put forward the single public authority models but you know first of all Scottish Government has kind of kicked that review somewhat into the long grass we are trying to get it back on on board but things like national care service really do impact on what's going to be kind of left in terms of local democracy yeah big fan a single public authorities myself but we'll now expand around the table to include Douglas as previously befalled by Michelle thank you just following on actually you mentioned that local governance reviews have been any more work on that because you're right this place has a huge impact on on that review if social care suddenly comes out of being under local governments responsibility we are getting back into discussions with civil servants around that but recognising that the context is extremely different so there is a team in Scottish Government now engaging with cause law on that because this really should go hand in hand but that that review I would I would think anyway yeah and just your point convener about single public authorities that was just one example you know there were other kind of examples that came forward as well about doing things differently or we already see in highland there you know that there's the lead agency model so it's not as if you know that there are other options out there so I think that the local governance review is going to be really challenged by the national care service solution in this current form yeah you know one of the things where I was asking the bills team about earlier obviously this you know this is obviously a political will for this to happen so it will happen in some form up we just don't know how it's going to be yet so what would the local governments preference be would it be to you know the transfer or 75,000 jobs transfer of all assets you know Scottish Government take the whole take the whole lot or is it to be still a provider to the national care service where you still maintain the assets you still maintain most of the staff the statutory duties gone to the the the Scottish Government or the provider of last resort that's gone to them some people might actually think that's a good thing so what would your preference be for how it's shaped up I can answer that to start off with mr lambsden the in terms of preference right and there's an element of this that I'm giving you is personal preference right the there are structures there right there is a structure there with health and social care partnerships which Sharon mentioned earlier on have other powers that could be taken right within the legislation that is that exists that envelope could be pushed that's a structure that's maturing right and developing right and has had a period of time to embed but it's not that long right since that change was made and in the midst of that we had a pandemic right which these organisations were absolutely at the fulcrum of does it need a reinvention of that system in order to deliver improvement is where I would come from there was reference made earlier on right to a desire to improve consistency but to improve quality as well that's paramount in this could the role of a national care service right be to sit within the existing structure with a remit of looking at quality and consistency and delivering on that as opposed to you know going back to the point you made a second ago just you know the consolidation of 75 000 people into into something new that needs to be set up administered run and a system that needs to be changed right over the short to medium term and is that is that the best way to progress at this point in time so if there was an alternative personally that would be my own alternative so you would potentially still have the the boards that the government seem intent on doing you still have the boards and then they would be what commissioning services from the maybe the ijb's or from other places and still set in the quality and consistency that you talk about as well I think in terms of the picture that I was trying to present right if there was a national care service within this I probably wouldn't be advocating a change away from the existing system of health and social care partnerships but if there was a new body inserted in there with a mandate of looking at your quality and consistency and your in tandem with other agencies and regulators that are there at present right specifically to look at that within the existing structure right is that a way ahead and the statutory duty would still remain within local authorities then you know in terms of a preference right and the preference that I was looking to express was that right you could exist with the structure as it stands pushing pushing out potentially the boundaries for health and social care partnerships taking them to their limit right if that's what's wanted if that's what's required if that's what's asked for at a local and a national level but is there space for something else right that could ensure quality and where appropriate consistency because there has to be and there is within the current system room for local decision making and and room to make decisions that suit local circumstances and that's a strength one of the key things I think that works really well is the strategic and operational when when those sit together and what works really well for health and social care partnerships is having that strategic and operational responsibility it works really well but it's really well on the ground there is local arrangements because we don't all have consistent services in just now and I think if we did all have consistent services that would definitely be an improvement and I think going forward as I said earlier on I think we looked for a hybrid model I think a lot of the work that's getting done in IGIBs are are really good but we can make improvements but I think as Paul says that overacting but essentially to help drive forward quality and consistency would definitely help again quality and consistency of the services are in scope would also help but don't separate out the strategic and the operational aspects because that's the one thing that actually makes the biggest improvement around service delivery but again a hybrid model for from us building on what we've already got rather than starting again and putting the money into frontline social work services and into the provision we would see the money better spent because it was interesting to hear from the bills team that you know that we're still going to be inconsistencies dependent with your rural or urban anyway so it wasn't going to be uniform right across Scotland anyway so for my thinking it's maybe changing from 32 different setups to maybe five or six I don't know how many boards there's going to be so we'll see you going forward that's all I've got just now okay thank you very much Michelle to for by john good morning I read all your submissions with great interest and I share your concerns about some of the areas that have already been touched on around that pensions assets governance and so on and I added in the last panel in some of my own however just in the interest of giving every panel an equally hard time I just want to ask some questions and point out that any change it's made that's either perceived to or removes responsibilities is always resisted by the affected body so my question to you all is to what extent are you a simply resistant to change and b protecting your own turf if you like you should see your smile which you can go first so very interesting question obviously we weren't here for and to be interested in the responses from your last panel on that I think that in terms of resistance to change I think local government has had to do a lot of change over the last 10 15 years and I think we have shown that where where the the context is set right for that change that we can work really constructively on on getting an answer that is is right for for each local area I think through things like the statement of the joint statement of intent I think we showed that actually we know there are areas where we want to see change and improvement so I don't think there's resistance I think it's I think we would want to see it carefully incrementally and in a considered way but I mean there are areas like for example workforce planning where we absolutely want to see a change it is an impossible task for each each health and social care partnership to to grapple with that on an individual level so there would be no resistance to change in some of those areas that paul was talking about workforce planning training terms and conditions fair work agenda ethical procurement these are types of things absolutely wouldn't I don't think you would find any resistance to those things certainly within local government but I think it's that that whole scale structural change that I think we need we need the detail and that's that's probably there's a lot of the resistance comes from the the detail or lack of detail sorry in the FM just building on that before Paul and Sharon come in we talked earlier about economies of scale and I think it was yourself that mentioned that paul in terms of the loss of economies scale for local government however there is a correlate to that which is a benefit of economies of scale to the Scottish government and I'm asking about this because as we all the way through this session and on a continual basis we're all commenting about you know public sector funding we're in a precarious position so what specific economies of scale can you see with at least some of the proposals for the Scottish government and therefore for the public parts given that it strikes me and I've put this on record before that for us to have 32 local authorities with duplicate functions right across the board isn't necessarily the most efficient way so I'm interested in your thoughts about where the economies of scale are for the Scottish government rather than the disbenefit of economies for scale to yourselves okay well I'll come back in on that first I suppose if I point back to the financial memorandum there's a significant cost in there in terms of local and national boards and the extent of the cost does leave me wondering where are the economies of scale? It doesn't mention economies of scale with financial memorandum. So that's the perspective that I've got on it that there is a figure in there I think as well of 25 to 40 million pounds right which is assumed has been the costs currently right of supporting and running these services but there isn't any background to where that comes from so from the perspective of the financial memorandum that I believe is one of the the shortcomings in it right is how it identifies if there would be savings in moving from a series of health and social care partnerships to a system of a national organisation and local boards regardless of how many of those there are so that is an issue I've got with this and Sharon do you want to come in and answer those two questions and then we'll work on them? Yes no we have been very much at the forefront of this change so we are not resistant to change and we actually are keen to see the health and social care partnerships develop further so that's not our issue in relation to this. I think from where we are sitting if you look at economies of scale the one way to do it the obvious one which isn't pulled out is the fact that you reduce from 32 to a smaller number and it doesn't commit to what that number would be so that's the obvious way to bring that economies of scale and make savings. I think the opposites challenges is size and scale and that connection back to local communities because that's very much what we build our services on so I think there's a challenge to get the right balance when you look at going forward the economies of scales but also that local community connection because that is really what these services need to be built on. Okay thank you for that my last question then is actually and I brought it out earlier as well in terms of process in terms of the production of the financial memorandum it's got to be produced alongside the bill that is a matter of process in this place if you like but it strikes me that for a very large bill in some day reference colleges earlier which I imagine was similar I mean this is absolutely huge and in reality I can't see how a financial memorandum with any degree of accuracy whatsoever can be produced at this point in time where there's still huge questions over the requirements and the enactment and so on. I asked earlier in the earlier panel about that about how we as a committee are going to ensure that there's adequate financial scrutiny that's our primary purpose and the assurance I got back was that the resultant business cases containing the risk assessment as well would be brought forward to us so that my question to you from the other side is will that in your opinion be adequate because I think we all agree there's significant gaps in the FM as it stands at the moment so will the process as it currently functions from a scrutiny of financial perspective work for something of the scale? I don't think it will right and I think there's a summary in at the end of the space briefing which lays out the risks for the committee and it reflects on the work that's been done in the financial memorandum and it acknowledges that it's where it is it's the best estimate at this point but it goes on to list a number of emissions and shortcomings and then it makes the point that where decisions are taken that are implemented through secondary legislation and I'm not a lawyer or an expert in parliamentary law and you'll know far better than I do right you know where those distinctions lie they're not usually the subject of a financial memorandum right so the system and the financial memorandum as it stands I don't think would propel that back in front of yourselves as a committee so the the short honest answer for myself is not I don't think this is going to work anybody I just think there's a significant areas where there's more detailed information required for to establish that it's a robust financial memorandum and I think some of the questions that we highlighted around the legal status of the boards and the vac implications etc and what that's going to mean going forward could add significant costs which I think if there was a more detailed business case done as part of this process to start with I think we'd have had more sound and secure costings I think just to add I think because there's going to be such a or there would be such a residual impact for councils financially I think there's really need we need to see a process for how for example that's going to be monitored the kind of audit and scrutiny and inspection bodies that deal with local government how are they going to kind of ensure government ministers during the process that you know the way in which money is being accounted for is it's just going to be really really complicated because of the that kind of interrelationship so I think we need to see some kind of plan for that as well okay so just the absolute clarification on that just a one word answer i'm looking for is should the financial memorandum be revisited I believe it should be given where we are that's a one word answer yes sorry yes yes yes okay thank you John two for by les thanks very much convener I mean the word the words best value have been mentioned and you know we appear to have 500 million to a thousand million over the next five years just going into the structure of this new organisation so I mean if we have that kind of money sitting around are you is your argument that it is not best value to set up a new structure would be better using that money to increase wages or to improve the actual system that's water yes I think I mean capacity is a huge issue for social care we I think we absolutely know that because of demand because of winter pressures because of residual Covid impacts complexity of demand so yes we would we would invest in the things that are needed to be invested in so capacity fair work some of the you know if we think about getting to net zero some of the social care estate will require significant work to get to that point even the practices in social care the vehicles that our carers are driving around in this all requires investment if we're to deliver better care okay I'll let you all come in due course as you want I mean one of the arguments for this new system has been that would be more consistency and there's also been the suggestion that would become more like the NHS which is a national organisation but I mean it does strike me that the NHS can be quite inconsistent at times all all the health boards do things differently every GP practice seems to do things differently every optician every dentist because they're all private so I mean there is quite a mixture in the NHS I mean do you think it's even if we go to a national care service is it going to be more consistent than we presently have or is it just going to be a different kind of inconsistency I would suggest and again this came up in the earlier session right that there are a whole number of variables in here right and there are a whole number of answer unanswered questions and a theme in the response is well that you know will either cross that bridge when we come to it or that's a decision that can be taken locally then that doesn't take you towards consistency right and there's a conversation that I listened to earlier on around assets and how would it work with assets would the assets be rented by the care board would they become the property of the care board what would happen right and the response is well we'll see and that that could be a decision I think that the response given earlier on was that could be taken on an asset by asset basis so if you pitch responses like that in amidst all the other variables I don't think this guarantees consistency right I do think and I'll go back to what I said earlier I think it's well intentioned but I don't think it gives you any kind of certainty that you're going to get to something that's delivering a consistent care services across Scotland okay well I was going to come on to assets and things like that so let's explore that a wee bit further I mean can you give us a kind of idea on miss wearing or anyone you know if we take say care homes for example or other care assets you know is there a variety I mean are they are they mainly owned are they least is there a PFI in there somewhere how does the borrowing does borrowing relate to a particular care home or how does that work can you give us a bit more kind of background or detail I think miss wearing I'll start off in that one so you will find that some of the local authorities do have their own care home provision I currently work in Glasgow we have our own local authority residential care homes and it's a new newly built estate over the last 10 15 years it's been invested in some local authorities don't have their own care homes particularly some of the smaller areas and rely on the the private and the independent sector to provide that care home estate and they are funded through a range of mechanisms some of them are very much PFI's or through their own arrangements financial arrangements the voluntary sector obviously have bought assets in the past and maintained those assets so you already have a diverse range of financial arrangements across the care home sector just now so I mean as it happens one of the glasgo's ones is in my constituency in Delmanac I mean without being too specific would glasgo generally be using a prudential framework or whatever to borrow for these kind of developments so there was prudential borrowing for the care homes in Glasgow and a lot of local authorities would use that arrangement for their own capital towards it as well so it was a mixture of funding went into those but would some councils if maybe the care home had been built a while ago they'd have paid off the debt so actually the asset would not have any debt linked to it Mr Manny I'll come in on that one going back to Sharon's point that there is going to be a mixture right so you may have situations like that you're going to have I would imagine in the majority of cases with owned care home or care facility right stock you are going to have a degree of debt attached to it and what again the financial memorandum doesn't consider is how's this going to be dealt with right so is that for example if ownership was to be passed to a national care service that there would need to be some form of arrangement behind that which supported the transfer of the debt from the local authority to the national care service but this doesn't get factored in right so again this is just one of one of a number of uncertainties that lead to us having misgivings about what's mapped out within this and another aspect around assets is what it's going to cost to maintain right and to modernise but because we're we're faced with duties right around you know moved to carbon reduction standards and moved to net zero standards over the next 15 years so those would be costs that would be picked up by a national care service in this scenario just now those aren't in local authority budgets and frankly on our side of the table we're tearing our hair out figuring out how we're going to get the money together in order to meet those costs but that would be implicit and a move of those assets across to a national care service up to these boards as well so this is really complicated but it's treated very very lightly in the financial memorandum and is your understanding that it would be the local council would decide if they wanted to transfer a particular care home or other asset to the national care service or would that be the decision of the national care service or how would that be decided frankly I don't know right and that's one of one of the things in this that's got an open-endedness about it right and if you had a if you had a situation where you know a goal of consistency of standard across Scotland right is resting on an approach which is you know reliant on whether individual local authorities about individual assets are prepared to continue running them or not or transfer them to a national care service it's not a solid foundation to do this do we know how many care homes there are in Scotland must be hundreds I'm assuming there'll be hundreds but we need to get to that figure that's okay my point was just going to be if we're going to look at every individual care home for every council and third sector and private sector that's going to be quite a lot of work for somebody isn't it yeah right if we move on I mean vat has been mentioned and I don't know if I love our any of our finance experts can kind of give us some background in that but I mean I did try and press the officials earlier as to you know could they work around the VAT are we dependent on HMRC and Westminster to make decisions about VAT because we did end up paying money I think with police and fire that we didn't really want to have you got an angle on VAT are you concerned about that I think we're absolutely concerned about it and again I come back to you know if there are along with assets and probably along with pensions as well right these are things that are really at left hand by the financial memorandum that their acknowledges has been very important issues that are going to be returned to and I think in the case of VAT with some expert advice right to look at the position and the financial memorandum you know acknowledges this and it acknowledges the fact that if care boards aren't able to reclaim VAT then it would have a significant financial impact so that should worry is all from the off it's possible right to get exemption from VAT so I think we mentioned earlier on you've got the VAT act from 1994 local authorities under that have got exemption from VAT but that would take time to get there there is also a UK government you know I think proposed changed legislation right which was looking at getting all public bodies to a position where they would be able to fully reclaim VAT but I'm led to believe that that isn't going to be legislated until the middle of the decade so this isn't an insurmountable problem I don't think right but how you would get to the other side nobody really knows right and it is left hanging in the financial memorandum and as Sharon indicated earlier and as you point out yourself if we ended up in the position that Police Scotland ended up in they were having to face I think Police Scotland were having to face VAT bills of around £25 million per annum right and that that was purely as a result of structural change that they moved from one camp to another and they found that they were liable for a VAT bill and unless that work's done and we don't know how it's going to be done or by whom that's the risk that we're really on the wrong end of just now I mean Ms Waring is that tied in with the the legal bodies the type of legal bodies that we end up with here because I think you mentioned that in your submission I think it is partly tied up with that because just now we are one of six public bodies so we are tied to local authorities as IGIBs so we can reclaim VAT so that's part of the issue but as Paul mentioned there is other work under way nationally to look at VAT but it's the timescales around that but we do think no if that can't be resolved it could be a significant number. Is there a wide variety of kind of legal setups that we could have for the like for the care boards or I mean I don't know what kind of I'm assuming there will be some a range of options but I'm not a legal expert I would need to have a lawyer to look at what the options would be to tie it in but I understand there are a number of options you could have. Okay and the final area I wanted to touch on was like the staff if the staff are transferring there was a suggestion I think it was in the SIPFA paper that some staff might not be able to transfer under Tupi. So I think we also mentioned that as well our concern is that a number of us are in joint posts and we have responsibility for health functions as well as social work functions and Tupi has a threshold in relation to how much of your role was transferring for you to be transferred under Tupi and we think some of these posts won't reach that threshold which is why we're asking the question around that. Right just to clarify that in my mind so if somebody's currently got a role that's partly health and partly social care it would depend how that role was split so if that person moved into the new body it might not be Tupi because only a part of their role is in there. Tupi has a threshold where say 80% of that role has to be a transferable role for Tupi apply so the question for us would Tupi apply to all these posts and I think that work needs to be talked about. Right and presumably I mean the 32 councils will have slightly different terms and conditions for all of these staff so there would be quite a lot of work to if you're going to make them consistent and then just the final point on pensions as well is there a concern is that is that linked to the Tupi one that they might not be able to stay in the local government pension scheme? I think in terms of Tupi right pension arrangements aren't guaranteed in the same way as other employee rights are. Right so what usually happens with a Tupi transfer is that pensions are what they describe as being carved out right and the point there is that the body to whom the employees are transferring doesn't have to replicate the pension arrangements of the body from whom they were being transferred so what I'm trying to say in a really long-winded way is there's a limited guarantee under Tupi of pension arrangements for people now that there's a wider set of concerns that we have around pension arrangements and it comes back to you know that that figure 75,000 people effectively leave in local government where are they going right so is there a new pension arrangement for them and I've outlined some of the limitations that are there around Tupi but if they were going to leave those pension schemes what would be the impact on the pension bodies across Scotland? Would it not be neutral for the pension scheme? I don't know and that's the bit within the financial memorandum that is left unconsidered so what we haven't done right is an analysis of who would be leaving, what the liabilities would be, what the element representing them within the fund would be and what the potential impact would be but again coming from the data that's there that's a mass loss of people from those pension funds so that there's impact there that's going to have to be considered and worked through. Recruitment and retention in the care sector is difficult and one of the things that local government tries to promote is some of the terms and conditions and some of the pension arrangements in local government and I think staff you know a new organisation if it was going to I don't know if it's going to create you know different pension arrangements it would have to make sure that they were attractive because if recruitment and retention is difficult enough with a good sound pension scheme I think it would be even more challenging if there's a lot of uncertainty as well and I think all the submissions have pointed out the uncertainty this is going to create in a really challenging area. We've already seen the news last night about hospitality wanting to recruit 30,000 people over the next couple of years that's going to be in direct competition with recruitment to health and social care. Okay, thanks much. Okay, thanks very much. I've just been advised that there are 1,044 care homes in Scotland and both Douglas and Michelle are keen to come in. Is it a supplementary to what's been asked? Is it the same with you, Douglas? Okay, well what I'll do is I'll let Michelle in with a supplementary then Liz to have a few questions. No, no and then it'll be Douglas. It's actually just a quick supplementary on the pension schemes perhaps I'm not understanding correctly but the existing pension schemes are defined benefit run, defined contribution is that right? Okay, so therefore would it not be the case that that actually is a benefit to those schemes because given that the liability lies with the provider where you've got massive inflation and it's a defined benefit scheme I imagine there's a lot pension schemes at the moment are feeling somewhat nervous so to my mind that would actually be a benefit losing a lot of people from a local council perspective albeit I accept it's a problem for the two-page scheme or am I misunderstanding something? There's probably two points I would make around that so that the local government pension schemes in Scotland have funds right so it's not what's described as a pay-as-you-go scheme right which is what by and large that the government schemes are which is that today's pensioners pensions are paid right to these people. I used to work in a pensions company so I'm with you. Sorry, I apologize. So you've got these funds right so the question I'm asking and the point I'm making is that it is left hanging by the financial memorandum. I fully accept that. The assumption I'm not making and the work that we haven't done is to sit round with the pension funds and say if they did this what would this mean right so that is something that is still to happen right and that's the point I'm making as opposed to arguing for a benefit or a dis benefit what it is going to have as an impact. Correct, I absolutely agree with you and I suppose my point is that where it me in terms of getting to the detail around the financial memorandum the fact that these are defined benefits and the liability will lie with whoever takes them on would be a pretty big consideration to get costed up given that liability consideration and would be actually might be quite a benefit because it's a worry for every pension scheme so it's got to find benefits but that's a minor thing. Thank you, convener, thank you. Okay, Elizabeth, I have a question for you. Thank you. Ms Wearing, you said something very interesting in relation to an earlier question from Michelle Thomson about IJBs, namely that you felt that there was scope for improvement within that. What did you mean by that in terms of the role IJBs have particularly in this context and would that have any implication for the financial aspect? I was referring to the original legislation that was put in place to set up integrated joint boards. There was a lot of reserved powers which wasn't introduced at the time and I think there was further scope to develop the IJBs through the current legislation to develop them further and there is also opportunities there about more consistency in relation for example to the services that are delegated to them so just now across Scotland we don't all have the same services delegated so one that I'm party to does have adult social care children and families services as well as criminal justice as part of the scope but a lot of other IJBs only have adult social care services in scope but that legislation had a lot of reserved powers which haven't been enacted which I think would have been an opportunity to explore further without no starting again. Just in that context given the concerns that you rightly have about all these proposed changes do you think that there could be changes made to the IJB system that would help provide better as in to try to achieve the aims and objectives that everybody wants to see but without this major overhaul? I think there are changes that could be made and I'll give an example the talk earlier on about people wanting to move areas and move their packages of care with them. The guidance that we have that covers that's ordinary residents you know there is scope to go and revise that guidance and actually make changes to that so that people can passport their care packages with them a lot easier so I think there is scope to do and sort some of these issues out without having to go through a whole series of new legislation a new body to then sort some of these issues out. I think there's things that could be done just now. I was just having a look there's three councils that use allios to provide care. One's Glasgow, one's Aberdeen and one's Borders. Has there been any work done on the impact of these allios? I'm trying to think whether if local authorities didn't have a statutory duty anymore could they still have an allio that's provided in that service or what would impact be any thoughts? Glasgow no longer has an allio providing care we are now it's all in house it's all part of the health and social care partnership and actually we've seen benefits by that coming back in and being under the operational umbrella of the health and social care partnership. So that would just leave Aberdeen and Scottish Borders down so any idea of whether that could continue or whether it's something we'd have to change and I think it was something that needs to be looked into. Again it comes back to that question about it should provide or sit out with or and how much of that provision actually transfers into the care boards and I think it relates more to that decision rather than the set-up of the allios. Scottish Borders County is actually back into council so it's only one but I think you know I was just talking to Paul about this and I think your comment I wrote it down Paul it just compounds the upheaval I think it just adds to the complexity at a local level which our colleagues previous to this said you know would have to be revisited and I think we've all been struck by it on an asset by asset local authority by local authority basis so I think that gets you then right back into the the kind of nuts and bolts of building us a kind of national care service from the bottom up which you know if you're talking about economies of scale and management of that I think it's really complex. Okay thank you well that's concluded questions from colleagues I've just got three more questions and it's one for each of you so hopefully it won't take too long. So the first one I'm going to ask is to Sarah and it's about paragraph 68 of the financial memorandum which basically says it will take approximately 10 years to reach a steady state number of carers with plans and statements. It goes on to say this assumes the right to personalise short break support under the carers that are at the establishment of the bill as implemented from April 2025 although that date is still to be decided now given the the kind of comments you made earlier on about demography rise in demand generally speaking without this do you think that even this is a realistic timescale basically to deliver that by 2035. Gosh that's a big question. I think against the context of all the other changes I think it could be really really challenging I also note from the the upper and lower estimates that it then flatlines from 2029 30 I mean I don't think that's realistic I think in any context I don't think that's realistic I think demand well costs increase pay increases demand increases so I think it's just it's one part there's so many moving parts in this that I think it's I think it could be really challenging. Okay did he ask that we hadn't had any discussion on that and any questions on that previously so I thought I wanted to touch on that. For yourself actually Sharon it's this issue in your own submission we say that there's concern that the recommendations increase free personal and nursing care for self funders will not necessarily deliver a reduction to the amount paid by self funders I'm so wondering if you can expand on a wee bit about what your concerns are there. So our concerns is that the care home providers will put their rates up and the people won't then see the benefit of that increase and as you'll be no doubt aware the rates were privately funded service users are significantly higher than the rates that the local authority contracts would have and we did see this before when we seen the introduction of free nursing and personal care that the rates for privately funded clients did go up and none of these go through the local authority contracts so we're not able to provide a level protection either to those service users. Okay that's very important and for yourself in terms of your own submission Paul you've said that if a new national care service can't be fully funded then the Scottish Government should agree to last recommendation independent review of adult social care to considering consultant options or raising new revenues to increase investment in social care now what kind of new revenues and options would we be talking about potentially. Okay so what we're talking about there is the broader picture in terms of the tax and revenue raising situation that exists within Scotland and what that points to is the fact that you know the root of many of the issues that people have with the care system is funding right and that's again it's a theme that's there within those submissions and it points across to I think Mr Mason made the point earlier on if there was an amount of money of that volume that could be put into the system right you know is there a better use of it than structural change so if there was money to properly address a if there's money to properly address demographic change to address things like inflation to address investments in the system there is no doubt that you would get a better system of care right and what the submission is pointing to is can we be alive to every opportunity right and I get it's a phrase that's doing a lot of heavy lifting to try and generate those funds for investment that that may well be tax policy it may well be things for example like charging for services but again within that within the move towards the national care service and within the financial memorandum there is a desire to look at charging for certain care services with a view to move in the other way and reducing those so it's that broader picture it's about proper funding okay thank you very much I'd like to thank your witnesses for their contributions today we're going to move into private session now so I'll just call a two minute break to allow our witnesses the public and the fish report to leave