National Care Service: cross-party Committee requires new Financial Memorandum

First Minister Nicola Sturgeon has described the National Care Service (Scotland) Bill (the Bill) as the most significant reform to public services since the creation of the NHS. The Bill essentially allows Scottish Ministers to transfer social care responsibility - including staff, assets (such as buildings) and equipment - from local authorities to a new, national service. However, as the Bill continues to progress through Stage One of the Holyrood legislative process, criticism has been mounting, not least around the likely associated costs with the new National Care Service (NCS).

The Finance and Public Administration Committee has now reported on the Financial Memorandum for the Bill, expressing “significant concerns” around the level of detail provided to date, and seeking a revised Financial Memorandum at least two weeks before the Stage One debate, scheduled for March 2023. The Scottish Government will now be required to respond to the report’s formal recommendations. As matters stand, the report concludes that: “the Committee finds itself unable to assess the affordability of the Bill”.


This is a framework Bill; the detail of how the NCS will operate in practice will become clear only after the Bill passes, when decisions are made on which of the powers created by the Bill will be exercised. For example, with Professor Brigid Daniel overseeing work by the Centre for Excellence for Children's Care and Protection (CELCIS) on the question of where children’s services should best sit, there remains uncertainty over whether these services will form part of the NCS. Further, the express intention is that the services to be delivered by the NCS will be co-designed with all stakeholders – including, crucially, service users – after the Bill has been passed by the Scottish Parliament.

There will be heavy reliance on secondary legislation, which is subject to less Parliamentary consultation or scrutiny, which the cross-party Committee has expressed its disappointment on. The Committee has called for a timescale to be published for the co-design process, noting that it is usual for legislation to implement change after the shape of that change has been designed.

A Financial Memorandum is intended to inform on the financial impact of a Bill’s provisions. With regard to the National Care Service (Scotland) Bill, the Memorandum considers the anticipated costs of setting up the structure, but not the detailed costings associated with the transition or delivery of services. That, to an extent, was to be expected; however, the Memorandum has been described by the Finance and Public Administration Committee as “inadequate”. The Committee note that the Memorandum delivers less detail than would have been expected in the areas which it does address, and not enough to allow effective scrutiny or to permit conclusions to be drawn on financial sustainability of the NCS. For example, the Memorandum does not address costs of information integration or sharing, which is likely to necessitate digital transformation, or related to specific innovations of the Bill, such as ‘Anne’s Law’.

The Committee expressed that primary legislation should not be brought forward without a full and proper business case. Witnesses flagged that other framework Bills anticipating large scale reform, such as Bills addressing reform of the police and fire services or social security administration, were preceded by detailed business cases, but none is yet available for this Bill; it is being prepared, but no publication date has been announced. Even with a business case, VAT liability created issues for the reformed police and fire services for some years.

Meantime, the Committee considers that the Memorandum’s assessment that the potential transfer of 75,000 local authority staff and, as yet, unidentified local authority assets to new employers or owners will have little or no impact on the public purse is “unrealistic”, noting the need to harmonise terms and conditions of employment, the possible impact on pensions, and the potential need to transfer over 1,000 care homes.


The Financial Memorandum has assessed likely costs over a five-year period of up to £1,261 million. The COSLA has assessed that establishing the NCS structure alone will cost up to £250 million, with up to £500 million per annum initially being spent on structural reform, rather than on service improvement. The costings currently provided by the Memorandum were up to date as of June 2022. However, inflation has been highly volatile since.  Either way, a Financial Resolution will need to be passed before this Bill completes Stage One of the legislative process. 

The Finance and Public Administration Committee has recognised that it is for the leading Health, Social Care and Sport Committee to decide whether the case for the NCS has been made, although financial sustainability is a key factor in this.  Several witnesses questioned in evidence whether there was an established policy need for an NCS as envisaged by the Bill, or whether this government funding could be better spent on frontline services. Evidence suggested that there was a role for a national body setting standards, but also proposed that the policy aims could potentially be met by a hybrid system, building on what has been achieved by previous reforms, rather than starting afresh. The report states of the Bill that “these potential changes could have a significant impact on how local authorities, health boards and others continue to deliver their services…”.

We will continue to monitor and report on the progress of this very significant Bill which will be of interest to both public and private organisations along with the general public more broadly.

Read other items in Personal Injury Brief – December 2022

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