Sefton Council’s care company has been criticised for a ‘lack of consistency’ around financial management as a local authority report warned of questions about the ‘viability’ of some of its services.
Sefton Council set up New Directions Ltd in 2007 to provide adult social care services across the borough. Last year, the company found itself in financial difficulty with a nearly £600k loss recorded.
Its fortunes have improved in the past year as the company now reporting a small profit of £26k for the year ending 2022, although a number of issues have been identified with how the company is run.
In an annual report prepared for a meeting of the borough’s overview and governance committee which met yesterday at Bootle Town Hall, the company’s financial leadership came in for some criticism.
In particular, it noted “a key issue is the internal financial planning, budget management and oversight arrangements.” Problems with calculations and projections around costs for services have impacted on planning decisions with the situation “further exacerbated by the lack of consistency in relation to the Head of Finance for New Directions.”
The annual report, one of three which have been carried out into the council’s companies, has been provided as part of Sefton’s aims to “ensure that the governance of its wholly owned companies meets best practice within the sector.”
The review has been informed by a document produced by Local Partnerships into the governance of local authority-owned companies. The document includes a foreword by Max Caller, the commissioner first appointed to carry out a review into best practice at Liverpool Council which led to a bombshell report and the installation of commissioners to oversee several council departments.
The Sefton report noted the council is currently undertaking a full review of its own companies’ compliance using the advice provided in the Local Partnerships report as part of a “continual drive to ensure best practice is followed.”
New Directions Ltd was operating without a business plan in place during 2021 according to the report, but this has since been rectified with a three-year plan approved last year into how to move the business forward.
The company aims to be both provider and employer of choice for adult social services in the borough and delivered over 50,000 hours of domiciliary care in 2021 and over 700 hours of respite care.
The service also provided hospital discharge support and during lockdown provided both outreach support and meals for vulnerable residents across the borough.
It also remodelled the Woodlands a short-term supported living service for adults with mental health issues, and received an ‘outstanding’ CQC rating for one of its services.
One of the key challenges facing New Directions is financial – with inflationary pressures and additional unplanned costs feeding into a precarious situation which requires “efficiency savings and new and innovative ways of creating value for money.”
In the light of these pressures, the report states that while the company has a “strong cash base” the viability of some services is “in question” – although the details of which services are at risk are not provided.
The situation has been exacerbated by there being “no definitive information on costs for each individual service” and a need for “greater transparency” on internal governance and audit arrangements.
The report adds that there are “no formal contractual arrangements in place2 f or areas of provision, nor is there any routine monitoring of either compliance or quality.
There is also no agreed approach to dealing with further inflationary pressures in the future.
Several recommendations are provided in the report, including around work to develop services to provide more support for people with complex needs, expand into mental health provision and provide a supported employment programme.
The company also intends to undertake mock internal inspections in the future of its services and improve its approach to data collection and analysis.
In conclusion, the report notes the importance of “strengthening and improving” governance arrangements so that decisions and plans are better communicated between the council and the company in the future.
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