Guidance

Legislative Reform (Disclosure of Adult Social Care Data) Order 2025 - Impact assessment (HTML)

Published 21 May 2025

Impact Assessment (IA)

Date: 01/09/2023

Stage: Complete

Source of intervention: Domestic

Type of measure: Legislative Reform Order (Secondary Legislation)

Contact for enquiries: - Joseph Whitfield

Title: LEGISLATIVE REFORM (DISCLOSURE OF ADULT SOCIAL CARE DATA) ORDER 2025

IA No: CO2031

Lead department or agency: Cabinet Office     

Other departments or agencies: N/A

Summary: Intervention and Options

RPC Opinion: N/A

Cost of Preferred (or more likely) Option

Total Net Present Social Value: £19.5m (over 10 years)

Business Net Present Value: £0m (over 10 years)

Net cost to business per year: £0 (see analysis summary)

Business Impact Target Status: N/A

What is the problem under consideration? Why is government action or intervention necessary?

In 2016, an amendment was made to the NHS Act 2006 which meant that local authority adult social care data was re-classified as patient data. This has impacted existing counter-fraud legislation, Schedule 9 of the Local Audit and Accountability Act (LAAA) 2014, meaning patient data can only be shared with entities listed as ‘relevant NHS bodies’.

This prevents the National Fraud Initiative (NFI) in Cabinet Office (CO) from sharing adult social care data with local authorities for the purposes of identifying and recovering fraud - which was an activity which the NFI undertook prior to the amendment. This has been detrimental to local authorities due to a reduced ability to tackle fraud and error.

To address this, the Government will introduce a Legislative Reform Order (LRO) to amend the LAAA 2014, and the Welsh equivalent - the Public Audit Wales Act (PAWA) 2004, to enable the recommencement of the matching and sharing of adult social care data across local authorities in England and Wales, putting all UK nations on the same footing.

What are the policy objectives of the action or intervention and the intended effects?

The primary outcome is for the NFI to recommence mandatory data matching for adult social care data with local authorities in England and Wales. This will be implemented for the NFI’s 2024/25 National Exercise.

The aim of this, which is supported by a track-record of evidence from when the NFI did this previously, will be to prevent fraud and error loss in adult social care services in local authorities. The outcomes are specific and measurable, they will unlock financial benefits (c. £4.6m in recovered fraud/error every two years - based on previous benefit realisation).

The effect, and indicators of success, will be reductions in social care fraud (personal budgets alone totalled £9m in fraud in 2018-19), with financial savings repurposed by local authorities and positive feedback from the majority of the NFI’s users through its annual survey.

What policy options have been considered, including any alternatives to regulation? Please justify preferred option (further details in Evidence Base)

The LRO is the natural alternative to primary legislation, as the amendment required is specific and addresses a legislative anomaly caused by other primary legislation. The LRO is the most appropriate means to achieve the government’s goal. Primary legislation would be an excessive measure for a one-clause reform to existing legislation.

Non-regulatory options do not exist. The NFI has no other mechanism for mandating data matching for fraud and, without mandation, local authorities would not voluntarily disclose or match data for fraud to the same scale, as evidenced in the three years since the NFI offered this matching - and so equivalent outcomes could not be achieved. This option is not recommended.

The ‘do nothing’ option is the current status quo. This is having a detrimental impact on the NFI’s ability to help prevent and recover fraud/error, leaving acute vulnerabilities for fraudulent exploitation in adult social care. The demand for this change from local authorities is also strong, and the longer this legislative anomaly remains, the greater the reputational damage. Thus, the do nothing option is not an acceptable approach, something endorsed by the Public Sector Fraud Authority and CO Ministers.

Does implementation go beyond minimum EU requirements? No

Is this measure likely to impact on international trade and investment? No

Are any of these organisations in scope? Micro: No, Small: No, Medium: No, Large: No

What is the CO2 equivalent change in greenhouse gas emissions? (Million tonnes CO2 equivalent)

Traded: N/A, Non-traded: N/A

I have read the Impact Assessment and I am satisfied that, given the available evidence, it represents a reasonable view of the likely costs, benefits and impact of the leading options.

Signed by the responsible: Scott Dennison (CO Chief Economist)

Date: 01/09/2023

Summary: Analysis & Evidence

Policy Option 1

Description: FULL ECONOMIC ASSESSMENT

Price Base Year:  2023

PV Base Year:  2023

Time Period Years: 10 years

Net Benefit (Present Value (PV)) (£m):

• Low: N/A
• High: N/A
• Best Estimate: £19.5m (across England, Wales and Scotland over a 10 year period)

COSTS (£m)	Total Transition (Constant Price)	Years	Average Annual (excl. Transition) (Constant Price)	Total Cost (Present Value)
Low	N/A	10	N/A	N/A
High	N/A	10	N/A	N/A
Best Estimate	N/A	10	£0.031 (i.e. £31,000)	£0.267 (i.e. £267,000)

Description and scale of key monetised costs by ‘main affected groups’

If resuming the social care data matching, the biennial (two-yearly) local authority fee would be uplifted to cover the cost of additional social care data matching, by around £150 per mandated social care dataset per local authority. When this matching was previously undertaken, often no more than two datasets were requested by local authorities - making £300 our estimated cost per local authority.

In order to total maximum annual costs for local authorities collectively, the £300 two-yearly cost is divided by two, making £150 per local authority per year. As there are 153 English local authorities (only tier one, London and unitary authorities), 32 Scottish local authorities and 22 Welsh principal councils (207 in total) with responsibility for adult social care provision, the £150 figure is multiplied by 207 to create a total cost of £31,000 for all local authorities annually and therefore a PV of £267,000 over a 10-year appraisal period.

Other key non-monetised costs by ‘main affected groups’: N/A

BENEFITS (£m)	Total Transition (Constant Price)	Years	Average Annual (excl. Transition) (Constant Price)	Total Benefit (Present Value)
Low	N/A	10	N/A	N/A
High	N/A	10	N/A	N/A
Best Estimate	N/A	10	£2.3	£19.8 (across England, Wales and Scotland; see estimated local authority breakdown below)

Description and scale of key monetised benefits by ‘main affected groups’

We expect outcomes from mandation to be similar to previous years, with higher outcomes in the first data matching years due to the period since 2019/20 in which the service was not provided.

We would therefore expect social care data matching in the 24/25 NFI National Exercise to achieve counter-fraud outcomes of at least £4.6m across local authorities in England, Wales and Scotland over a two-year period (£4m from England, £500,000 from Scotland and £150,000 from Wales). Therefore, breaking this down annually, the total estimated benefits for all local authorities combined would be £2.3m, and a PV of £19.8m over a ten-year period. This takes into account that all future benefits (for years 2 onwards) are likely to be slightly reduced.

Breaking this down by local authority, they would individually benefit to different extents as not every data match will guarantee cases for local investigation, but based on previously reported outcomes from care homes data, we can project an average saving per local authority, over a two-year period, of:

• £25,000 in England,
• £17,000 in Scotland, and
• £7,000 in Wales.

Other key non-monetised benefits by ‘main affected groups’

Reducing economic crime - Fraud in adult social care is a top tier issue for local authorities. Resuming this activity would signal to fraudsters and criminals that adult social care fraud has enhanced scrutiny and is not such an easy target for exploitation; and

Reducing burdens on local authority staff - From the 2022 NFI national survey, 63% of the 84 respondents agreed/strongly agreed that the NFI provision of this service would remove or reduce costs, burdens or obstacles to efficiency for their organisation. Implementing this change would support these colleagues to tackle more bespoke fraud cases.

Key assumptions/sensitivities/risks

UK inflation - For the NFI’s services, participating bodies pay set fees for the NFI depending on the type of organisation. For the NFI 2020/21 exercise, mandatory participants’ fees ranged from £1,150 to £4,380. Fees are consulted on prior to each exercise and will be published once completed for 2024/25. Future fees for future National Exercise may be slightly increased due to inflation (although not at the rate of inflation).

BUSINESS ASSESSMENT (Option 1)

Direct impact on business (Equivalent Annual) £m: N/A

Costs: N/A

Benefits: N/A

Net: N/A

Score for Business Impact Target (qualifying provisions only) £m:

N/A - this provision will not be applicable to ‘businesses’.

Evidence Base

Problem under consideration and rationale for intervention

1. The National Fraud Initiative (NFI) and its users (local authorities) want a legislative amendment to require all local authorities (across England, Scotland and Wales) to share adult social care data. This will enable the NFI to use this data in its matching activities and have an impact of around £4.6m in reduced fraud loss across the UK. For England alone this represents at least 300 cases of fraud every two years.

2. Recent evidence from CIPFA^{[footnote 1]} estimates counter-fraud outcomes to be more significant - with suggested savings at over £14m between 2014 and 2019 and £8.2m for 2019/20 alone. The King’s Fund^{[footnote 2]} also estimates that total expenditure on adult social care in England alone is now more than £2bn more than in 2010/11, indicating that there may be even more outcomes to be generated from data matching. From 2019/20 to 2020/21, the average weekly cost of residential and nursing care increased by 2.6% to £767 and has increased on average by 3% since 2015/16.

3. In addition, research by the Fighting Fraud and Corruption Locally Strategy published in 2020 by CIFAS (formerly Credit Industry Fraud Avoidance System) identifies a number of fraud risks in social care. These include false declarations overstating needs, multiple claims by the same individuals across different local authorities, third-party abuse by those close to individuals receiving care, and the continued claiming of support after an individual has died^{[footnote 3]}.

4. The NFI previously had the power to access adult social care data, but lost it in 2016 when the NHS Act 2006 was amended to treat social care data as patient data. Legislation underpinning the operation of the NFI only allows for the disclosure of patient data to specific bodies listed as “relevant NHS bodies” - this does not include local authorities (NFI users). The issue only affects England, Scotland and Wales but not Northern Ireland as health and social care trusts in Northern Ireland are already classed as relevant NHS bodies and are able to share and obtain social care data under the LAAA and Northern Ireland-specific legislation.

5. A legislative amendment to the LAAA 2014, via an LRO, will enable Cabinet Office and Audit Wales and Audit Scotland) to disclose social care data, as patient data, to local authorities, for investigation for fraud. This will allow us to obtain at least the same outcomes as previously, through mandation. We would be legally required to mandate all social care data for processing. We could make a single change to the LAAA, that takes effect for the devolved Audit bodies without them also needing to legislate, upholding the UK-wide service.

6. The issue is unable to be resolved through other means. The NFI has no other mechanism for mandating data matching for fraud and, without mandation, local authorities would not voluntarily disclose or match data for fraud to the same scale, as evidenced in the three years since the NFI offered this matching - and so equivalent outcomes could not be achieved. This option is not recommended.

Rationale and evidence to justify the level of analysis used in the IA (proportionality approach)

7. The level of evidence presented throughout this impact assessment is based upon a suite of:

a. audited, qualitative evidence from when adult social care data matching took place^{[footnote 4]};

b. external academic reports (e.g. CIPFA, King’s Fund and CIFAS) into the level of estimated fraud in local government, which include figures around adult social care specifically; and

c. qualitative evidence gathered from multiple annual surveys from NFI clients (most of which include local authorities).

8. Owing to the simplicity of these amendments, and for specific purposes, we are confident that the level of evidence we have obtained provides a confident basis on which we can be consistent in obtaining outcomes, backed-up by robust evaluation.

9. See other sections for further examples of evidence given.

Description of options considered

10. Legislative - Legislative Reform Order: We would opt to amend paragraph 4(6)(a) of Schedule 9(a) of the LAAA, and Section 64D of PAWA, to add a provision that exempts matched adult local authority social care data from a restriction on disclosure. This would allow the results of the data matching to be disclosed to local authorities.

11. This is the recommended option due to the available counter-fraud outcomes and support from users and stakeholders to date. Separate primary legislation would not be proportionate to the scale of the proposed provision. Bills for the 4th Parliamentary Session may not obtain Royal Assent until Summer 2024, but this is too late to allow the NFI to include adult social care matching in the 2024/25 National Exercise.

12. Do-nothing: The ‘do nothing’ option is the current state of play. This is having a detrimental impact on the NFI’s ability to help prevent and recover fraud, leaving acute vulnerabilities for fraud exploitation in adult social care. The demand for this change from local authorities is also strong, and the longer this legislative anomaly remains, the greater the reputational damage. Thus, the do nothing option is not an acceptable approach, something endorsed heavily by the government.

Policy objective

13. The primary policy objective is for the NFI to recommence mandatory data matching for adult social care data with local authorities in England and Wales. We intend that this provision is implemented for the NFI’s 2024/25 National Exercise. This also includes the period for the 24/25 Work Programme Fees consultation which involves a six month notice period for any changes, as set out in the NFI’s Code of Data Matching Practice.

14. The intended outcomes are to prevent fraud and error loss in adult social care services in local authorities. This form of data matching has a proven track record of delivering results. Counter-fraud outcomes^{[footnote 5]} from social care data are significant - cumulative savings stand at over £14m from between 2014 and 2019. We would expect similar levels of savings if this work recommenced.

15. As a result of this track record, our intended outcomes are specific and measurable. They will unlock financial benefits (c. £4.6m in reduced fraud loss every two years - based on previous benefit realisation) which will be evidenced through routine savings data reported to the NFI through its National Exercise.

16. The effect, and indicators of success, will be reductions in social care fraud (personal budgets alone totalled £9m in fraud in 2018-19), with financial savings repurposed by local authorities and positive feedback from the majority of the NFI’s users through its annual survey.

Summary and preferred option with description of implementation plan

17. See the draft implementation plan, using an LRO, below:

Stage	Timeframe
Drafting consultation document & impact assessment (if required)	Complete
Agreement from CO Legal/ SCS and Minister	2 weeks
Share consultation document with Devolved Authorities (need Welsh Assembly Ministerial agreement) and share with relevant OGD e.g. DWP	2 weeks
Publish consultation with sufficient response time	4 weeks
Draft LRO document & explanatory memorandum (can begin drafting during consultation period)	4 weeks
Review consultation responses, amend the LRO and explanatory doc	2 weeks
Seek Ministerial, SCS, Welsh & legal clearance for draft LRO	2 weeks
Submit to OPC	10 weeks
If no alterations, publication of LRO to Parliament for committee scrutiny	1 week
Parliamentary committee scrutiny by both Houses (up to 60 days)	9 weeks
Draft LRO laid before both Houses for second stage scrutiny (up to 15 sitting days if unrevised, 25 if revised)	4-6 weeks
Finalising LRO, arranging Parliamentary approval motion, Ministerial speaking & briefing notes, confirmed final Welsh consent & informed stakeholders of LRO introduction	2 weeks
Parliamentary debate & resolution to approve	2 weeks
Total time	44-46 weeks

Monetised and non-monetised costs and benefits of each option (including administrative burden)

Option One: LRO amendment to enable mandation of social care data

Costs

18. At present the NFI generally only mandates data from local authorities for matching as part of the National Exercise, every two years, and this carries a standard fee for local authorities in England to cover the cost of NFI processing.

19. If resuming the social care data matching service, the biannual LA fee would be uplifted to cover the cost of additional social care data matching, by around £110/£120 per mandated social care dataset. In the initial phase we would expect this to be no more than 2 datasets, though we would explore interest in the number of datasets to be mandated through consultation.

20. The NFI always consults on the inclusion of datasets and a scale of fees ahead of each National Exercise. local authorities would have the opportunity to share their views on costs as part of a fee-specific consultation ahead of any future mandated matching (the next scheduled National Exercise is for 2024/25).

21. For Scotland and Wales, costs would fall directly to Audit Scotland and Audit Wales rather than individual Local Authorities, due to a different funding model for the devolved administrations. Costs are similar per LA in each jurisdiction.

22. The costs charged from local authorities cover the costs of NFI processing. The NFI team provides some support to Local Authorities in submitting their data, for investigation and uploading ‘data match’ results.

Benefits

23. In the immediate future, we would expect outcomes from mandation to be similar to previous years, with higher outcomes in the first data matching years due to the period since 2019/20 in which the service was not provided.

24. We would therefore expect social care data matching in the 24/25 NFI National Exercise to achieve overall total counter-fraud outcomes of at least £4 million across local authorities in England, based on local investigation over a 2 year period. We would expect overall outcomes of at least £500,000 for Scotland and £150,000 for Wales over the same period - minimum overall outcomes of at least £4.5 million across England, Scotland and Wales.

25. While local authorities would individually benefit to different extents, as some may not always have cases for investigation, based on previously reported outcomes for care homes data alone, we can project an average saving per LA in England of up to £25,000 in overpayments avoided over a 2-year period based on care homes data alone. Based on previous outcomes from care homes, we would also expect outcomes of up to £17,000 per LA in Scotland and up to £7,000 per authority in Wales over every two-year period. These outcomes would not be achievable without a compulsory requirement for data to be provided.

Option Two: Do nothing

26. As this option is the status quo, it will incur no further costs to local authorities that will be mandated to carry out adult social care data matching. However, the return on investment is significant for local authorities^{[footnote 6]} and not pursuing this amendment would lead to significantly reduced fraud outcomes, resulting in less financial benefits.

Direct costs and benefits to business calculations

27. After consideration of the available guidance, this measure has no measurable impact on business/voluntary and community bodies due to the nature of this measure only affecting local authorities. See monetised costings section for further details on local authorities.

Impact on small and micro businesses

28. After consideration of the available guidance from the Regulatory Policy Committee, this measure has no measurable impact on small or micro businesses due to the nature of this measure only affecting local authorities.

Wider impacts (consider the impacts of your proposals)

29.  Implementing this measure has the following anticipated wider impacts:

a. enhanced prestige - The NFI’s inability to provide adult social care data matching services is having a reputational impact with both current and future clients who seek to benefit from our counter-fraud data matching products. Fulfilling this change will demonstrate our commitment to all clients, both existing and new, that we are serious about tackling fraud in all its forms - enhancing our ability to ensure more local authorities can use and benefit from our services;

b. Reducing economic crime - Fraud in adult social care is a top tier issue for local authorities. Resuming this activity would signal to fraudsters and criminals that adult social care fraud has enhanced scrutiny and is not such an easy target for exploitation; and

c. reducing burdens on local authority staff - From the 2022 NFI national survey, 93% of 84 local authority respondents across England, Scotland and Wales, said there would be value in the NFI collecting social care data at a national scale through mandation, reflecting requests for the service to resume. 63% of the 84 respondents agreed/strongly agreed that the NFI provision of this service would remove or reduce costs, burdens or obstacles to efficiency for their organisation. Implementing this change would support these colleagues to tackle more bespoke fraud cases.

30.  After consideration of the CMA’s competition assessment checklist, this measure will not affect the supply of products or services in macro or micro markets.

A summary of the potential trade implications of measure

31. After consideration of the available guidance from DIT, this measure has no measurable impacts on international trade.

Monitoring and Evaluation

32. The impact, specifically the financial costs and benefits, will be measured through the NFI’s regular benefits realisation process it undertakes through its two-yearly National Exercise and other voluntary products (currently: Fraud Hub, AppCheck and ReCheck). This involves working with local authorities (and other organisations) who provide data that demonstrates specific benefits (e.g. the 2018/19 mandated data matching exercise of care homes data from care homes in England to deceased persons data generated over £2m in overpayments recovered and avoided).

33. All benefits demonstrated are subject to thorough auditing by the Government Internal Audit Agency. Once this has concluded, the NFI produces a public report every two years, summarising cumulative savings over that period - breaking this down into specific categories. Adult social care data would be one of these categories once implemented. Thus, this will be the largest indicator for success and a key part of our evaluation methodology and process.

34. The other element will come from user-feedback once the change has been implemented. The NFI’s most recent survey highlighted 93% of 84 local authority respondents across England, Scotland and Wales, saying there would be value in the NFI collecting social care data at a national scale through mandation. Our future surveys, once the legislation has been amended, will include similar questions to ensure the change is meeting user-expectations as intended.

1.   Fraud and corruption tracker, p. 11. ↩

2. Expenditure ↩

3. Fighting Fraud and Corruption Locally (PDF, 1,951KB) ↩

4. National fraud initiative reports ↩

5. Projected and actual monetary savings. ↩

6. Estimated value of £8.2m in 2019-20 alone. The CIPFA survey has historically estimated the value of fraud in local social care close to £14m, reflecting the scale of possible fraud in this area. Fraud within personal budgets alone has been projected at £4.9m for 2019-20 and over £9m for 2018-19.One authority gave an example that one adult social care fraud case totalled over £80,000. ↩