Expenditure Planning in the Personal Social-Services - Unit Costs in the 1980s

During the 1980s, unit cost inflation more than swallowed up all the increased spending on local authority social services, leaving a 10 per cent net reduction in service volumes. This increase can be only partly explained by increased labour prices and increased client needs resulting from the implementation of community care. Explanations in terms of quality and efficiency changes are explored in relation to individual services, and there appears to be a prima facie case that efficiency reduced during the 1980s. Variation between local authorities in the costs of apparently similar services rose during the 1980s. An analysis of these variations shows that those authorities which experienced the greatest rise in unit costs also had the greatest reduction in service volumes. Unit cost containment has been greatest where there was grant reduction and a declining local tax base, while volume declined most where there was rate-capping. The rising variation in unit costs has been responsible for the widening gap between standard spending assessments and what local authorities have wanted to spend on personal social services. If these increased variations reflect widening efficiency standards, then reversing this trend will require that social services department managements have both the motivation and capacity to implement unit cost monitoring and control.