Contact: Paul Carey-Kent, contact ext: 7524

1 Executive Summary

1.1 There has been an unprecedented amount of change in Social Service finance arrangements between 2001/02 and 2002/03, notably departmental reorganisation, the new children's residential strategy, changes in the market for older persons services, major new grants and the transfer of responsibility for preserved rights. This has been combined with considerable volatility in demand levels. The combined result is that forecasting the budget outturn position is more difficult than in previous years at this stage. However, there do appear to be substantial additional pressures on the budget such that an overspending of up to £3.6m is likely if no corrective action is taken. This would represent a 1.7% overspend. This is broadly consistent with the pressures which have been identified in the Social Services budget at this stage in previous years, which suggests that it should be possible to manage the position down to a balanced budget. Nonetheless, this will require resolute management action and firm prioritisation of service provision.

2 Introduction

2.1 The estimated year end position for 2002/03 based on analysis of the position as at 31 July is pressure of £3.6m (1.7%) as shown in Appendix 1. This compares with a 1.5% projected pressure at the same time last year (with the result of the year end underspend of £0.3m, 0.2%).

2.2 This £3.6m position excludes three factors which, taken together, are likely to be in a broad balance:

· The loss of income expected to result from the Government's `Fairer Charging' policy. The Council's response to these requirements is being considered by Cabinet on 23 September, and if the recommendations are accepted will confirm a loss of £0.7m in 2002/03.

· Adjustment to the 2002/03 cash limit for 50% (= £148,000) of the 2001/02 underspend on Social Care.

· Addition to the cash limit from central contingency of the balance (£0.5m if the employers' current offer is accepted) of the cost of this year's pay award in so far as it exceeds 3%.

2.3 A year end spend within the cash limit is believed to be difficult to deliver but achievable if the department manages down pressures as much as possible by:

· reviewing commitments

· reviewing contracts (including block purchasing)

· renegotiating funding arrangements, particularly with health

· maximising the use of government grants (including best use of preserved rights funding)

· acting to counter the effects of delays in the benefits flowing from the children's residential strategy.

3 Client group comments

Children and Families

3.1 There are two main pressures:

· Non-County Placements. The budget is based on a saving of £0.5m compared with last year as the residential strategy (approved by the Executive Member at her meeting on 21 June 2002) takes effect. That strategy reduced the number of in-house residential placements by 20 in line with Government requirements for smaller homes but envisaged that this would be compensated for not by additional non-county placements but by moving children from residential into foster care and from foster care into supported placements at home. The timescales for making this transition now appear optimistic and in addition new demand pressures have arisen. The result has been an apparent increase of 30 (subject to continuing close scrutiny of the relevant management information) in Non-County Placements.

· The transition to a uniform rate of pay for foster carers (covering all costs without the need for separate allowances) has proved difficult to implement in practice - total costs appear to have risen, though analysis is continuing to establish whether this might be offset by reduced placement costs not yet recognised in the projections for non-county placements.

3.2 These factors between them account for the £2.1m pressure on children's service budgets. This will necessitate rigorous scrutiny of any further placements, linking these to the delivery on the reduction of existing placements together with delay in implementing the increased staffing proposals for children's homes under the residential strategy. It will also require tighter control of recruitment, less use of agency staff and action to reduce costs and increase income through contract negotiations and increased sale of places at Swanwick Lodge. Whilst these actions may bring the children's budget back to a balanced position, it is accepted that realistically an overspend of £0.5m is likely.

Older People

3.3 There are three significant pressures on this budget:

· the ongoing costs of the packages of care implemented in 2001/02 using `cash for change' funding from the Government via health: the commitments recur but this year's cash for change allocations are focused on new pressures.

· Increasing pressure on prices as turnover occurs (with new clients being paid at a higher rate than established clients) and increased levels of dependency (for clients needing to be reassessed to higher priced levels of care)

· demand pressures: compared with this time last year, independent sector residential placements have risen by 8% (with a reduction in ordinary placements more than offset by increases in higher dependency placements), nursing care placements by 4% and domiciliary care packages by 9% (offset by some reduction in in-house domiciliary care placements due to home carer recruitment difficulties).

3.4 These factors have led to a net pressure of £1.7m. In order to offset these pressures, the full extent of which has only recently emerged, it will be necessary to tighten the application of eligibility criteria in the remainder of the year. This will, however, make it harder to achieve performance indicator targets for increases in the numbers of older people supported.

3.5 Uncertainties in the position for older people stem from a difficulty in establishing the grant position in particular for the two major areas of:

· preserved rights (see separate report to the Social Services Policy Review Committee meeting on 27 September 2002) under which £13.5m has been transferred to the County Council to cover the costs of transferred clients (this grant does also cover adult services in part). Whilst it appears likely that this sum will be adequate to cover direct care costs, the knock-on effect on care management and levels of income and the adequacy of the grant to cover those remain areas requiring further investigation.

· Cash for Change: the Government has allocated £5m of new grant to the Council to facilitate in reducing delays in hospital discharge. Questions remain over how best to use this money and the consequent effects on the overall budget position.

3.6 Taking all these factors together, it is expected that the older persons budget can be delivered to the cash limit.

4 Adults

4.1 This covers mental health, physical disability and learning disability clients. Whilst there are pressures due to additional placements in learning disability it is thought at this stage that these can be offset by increased savings (above the £1m built into the original budget) from the use of transitional housing benefit. A balanced position is therefore expected.

4.2 Fieldwork and Management and Support Services

4.3 Although fieldwork shows a pressure of £375,000 at this stage, it is expected that this can be managed down through focusing recruitment (with appropriate incentives) on the most crucial posts whilst managing vacancies elsewhere and using recruitment to replace more expensive agency staff. Management and support services currently show an expected underspend of £76,000: in view of the pressures on the frontline services it is considered appropriate to take measures to increase this so that an under spend of £0.5m is achieved, so balancing the overall budget. This will impact on the training programme and the speed with which premises issues can be tackled, but is considered unavoidable.

5 Capital programme

5.1 The capital programme cash limit for 2002/03 is £5,995,000, including funds carried forward from 2001/2002, capital receipts generated in 2001/2002, Supplementary Credit Approvals for the development of mental health services and the Social Care Information System, grants for Information Management developments and Information Technology for looked after children and a Joint Finance contribution from Health.

5.2 As at 31 July 2002, schemes to the value of £577,000 were committed as shown in Appendix 2.

5.3 As regards the progress of significant schemes: the Winchester Learning Disability Resource Centre, known as The Grove, was officially opened on 16 July; the modernisation of Havant Day Services has just been completed, as has the conversion of Cliddesden Road, Basingstoke, a former children's home, into a family support centre; whilst the refurbishment schemes at Green Meadows, Denmead, Solent Mead, Lymington and Deeside, Basingstoke, Homes for Older people are due to complete in November 2002; and January and February 2003 respectively. The construction of the new Alton Day Services building is due to commence in October this year.

5.4 Expenditure on minor works, furniture and equipment and information technology is projected to be contained within their respective block allocation cash limits.

Recommendations

1 The Executive Member notes the budgetary position at 31 July 2002 and approves the management actions being taken to restrict spending to within the cash limit.

Section 100 D - Local Government Act 1972 - background papers

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2. Documents which disclose exempt or confidential information as defined in the Act.

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