Tuesday, 27 January 2015

Priory House

One of the most difficult decisions the last Administration had to take was the closure of Priory House. The decision was on the recommendation of a cross party working group supported by officer recommendation. Current Leader Ron Woodley was belatedly opposed to the plan and pushed for the home to retained and operated through a trading company. The evaluation of his proposal included the following conclusions:

A full evaluation of the viability of Councillor Woodley’s final Business Plan was commissioned …. and has now been carried out by LaingBuisson who are one of the UK’s foremost and highly regarded providers of information and market intelligence on the independent health, community care and childcare sectors. LaingBuisson’s conclusions are as follows:
 The revised Business Plan is not viable for the following reasons:

 It is based on weekly self-funding fees that do not reflect market rates.

 It is based on weekly NHS step-down fees that do not reflect market rates.

 The physical structure of Priory House makes it unlikely that it could attract self-funders.

 The revised Business Plan, based on market fees, would lead to a cumulative loss of £754,474 over a three year period.

Even if the revised Business Plan were viable, there are reasons why the Council might not wish to implement it:

 The revised Business Plan envisages a care home primarily for self-funders, a group for whom the Council has no financial responsibility.

 Many care associations have taken Councils to the High Court over the fees they pay care homes: Southend’s position in any action would be seriously weakened if it were seen to be charging residents almost twice what it pays for care home places.

 If the Council offered places in Priory House at £800 it might have the effect of pushing up prices in other care homes and so the Council could have to pay more for the beds it purchases from the independent sector.

 If the Council tried this option and it went wrong the Council would find itself financially liable for all losses incurred assuming the Council had underwritten the trading company and / or suffering reputational damage by walking away from the creditors of a failed company and failing the residents of the home.

The full report is available through the Council’s website. Ron did not like the decision and has now reversed it based on the delivery of a reduced cost base and increased income. I feel sorry for professional officers at times like this who have to deliver against their original advice. The latest report does not address the risks recognised in November 2013. This is in my view a bad decision driven by injured pride rather than informed political judgement.

Labour councillor David Norman has cabinet responsibility for a decision which involves using £100K from the Business Transformation Reserve for a business project previously discounted, spends £225K of precious reserves, and results in a shortfall of savings for 15/16 of £167Kwhich have to be found elsewhere. More importantly it ignores the further and more fundamental risks being played as previously identified by external advisers and the council’s own officers.

At times of financial hardship when difficult decisions on economies need to be made and officers are concentrating on the maintenance of services is it really appropriate to be taking these sort of risks and asking officers to develop a commercial enterprise in difficult circumstances and in a crowded market! The council needs to concentrate on what it does well and cost effectively and not try to outdo the private sector whilst bound in the red tape and regulation inevitable with local government.

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