Staffing costs – senior leadership
Whilst these senior staff might make up a relatively small proportion of the number of employees in an organisation, due to higher salaries they make up a disproportionate percentage of current staffing spend. For scenarios whereby total demand on an organisation is smaller, this leadership overhead can make up a significant proportion of spend. It has been assumed that the director level leadership team for each directorate is fixed in its scale, and that by increasing the number of authorities in a geography, it would be needed to duplicate this team across each service. The senior leadership team spend has been calculated as a fixed overhead for the baseline scenario. This has then been uplifted by inflation, and scaled by demand with a 50% weighting (e.g. a 50% reduction in demand would result in a 25% reduction in this cohort). It has been assumed that senior leadership includes staff with salaries >£70k/ annum/FTE.
Suppression handling
Where placement cost values in data returns have been redacted, the following approach has been taken to “filling in the blank”. Where an average over a larger geographical area is known, the missing value has been set for all unknowns to that average. Where a total at a larger geographical area is not known, a flat average of the known data has been assumed.
Unit cost regression analysis
Hypothesis: Smaller authorities have less buying power in the market, so all things being equal, they pay more for the same provision. As a response to feedback, analysis was conducted to assess the impact of scale on unit cost. To do this, Older Adult Residential Care bed unit costs (as provided in the ASCFR data) were focused upon – these are the most consistent setting, have the biggest population size and the data-set is most readily accessible nationally.
The factors that best explain the difference in cost between authorities were considered:
Population size of relevant cohort (i.e. 65+) – ONS estimates 2023. Median income - Earnings and hours worked, place of residence by local authority: ASHE Table 8 2024. IMD – Indices of Multiple Deprivation 2019.
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