Contact: Gordon Shinn, ext 7526

1 Summary

1.1 The attached report was submitted to the Executive Member for Social Care on 20 June.

1.2 The Executive Member for Social Care agreed the recommendations, namely:

1.2.1 That the final accounts for 2002/03 be approved.

1.2.2 That the Cabinet be requested to approve the carry forward of 50% of the 2002/03 underspending (£36,000) to 2003/04.

1.2.3 That the Cabinet be requested to approve the addition of £950,000 to the 2003/04 revenue cash limit, representing the unspent balance of the £2m approved for services to help reduce the number of delayed hospital discharges.

1.2.4 That the Cabinet be requested to approve the carry forward to 2003/04 of £692,000 capital in addition to the £3,062,000 already agreed.

2 Recommendation

2.1 That this report be noted.

APPENDIX

Contact: Gordon Shinn, Head of Finance, ext 7526

1 Summary

1.1 This report summarises the spending on Social Care in 2002/03.

1.2 It recommends that the final accounts for 2002/03 be approved and that £36,000, representing the Service's 50% share of the underspending, be carried forward and added to the 2003/04 budget.

1.3 Overall there is a net underspending of £72,000 (0.03%) against the 2002/03 revenue cash limit of £210.4m.

1.4 The major variations from the revised estimate are:

	£000
Children & Families	2,786
Older People	226
Adults with Physical Disabilities	-1,053
Adults with Mental health Needs	-552
Contingency / Grants	-1,047

1.5 The County Council's policy is that 50% of any underspending should be added to the Service's budget in the following year. Cabinet decides what use should be made of the other 50%. It is proposed that any carry forward will be used to meet non-recurring commitments in 2003/04.

1.6 On capital, schemes to the value of £2,583,000 started in the year and schemes to the value of £3,062,000 have been approved by Cabinet to be carried forward to start in 2003/04.

1.7 In total, this amounts to £692,000 less than the approved cash limit for the capital programme.

1.8 Further details on the main differences between the actual revenue expenditure and the revised budget for cash limited expenditure are given in Part A, below while details of revenue expenditure, which is not included in the cash limit, are contained in the appendices at the end of the report. Part B deals with capital schemes. Part C explains the basis of the financial control assurance statement included as Appendix 7. Part D covers the requirement to report on partnership accounts.

2 Part A - Revenue Expenditure under the Service's control

2.1 Revenue expenditure under the Service's direct control is subject to a cash limit. For 2002/03 the adjusted amount is £210.4m as set out in Appendix 1.

2.2 The final outturn was £72,000 less than the cash limit. The overall position is analysed in Appendices 2 and 3. Appendix 4 includes a more detailed statement of variations from the revised budget. That includes a summary of reasons for underspends on assessment and care management, management and support services totalling £2.9m.

2.3 The underspending in 2002/03 compares with the outturns in recent years as set out in the following table:

		Variations from Revised Budget
		£'000	%
1998/99		-295	-0.2
1999/00		725	0.5
2000/01 *		1,490	0.9
2001/02		-295	-0.2
2002/03		-72	-0.03

* The £1.49m overspend in 2000/01 was affected by the £725,000 overspend brought forward from 1999/00. This was subsequently written off by the Policy and Resources Committee.

Comments on main issues

2.4 The year was one of great pressure on the Social Services budget for many reasons which have become familiar in recent years: high service demand levels were sustained and increased, meanwhile the costs of care purchasing increased by considerably more than normal inflation expectations.

2.5 These two factors operating together can be seen most clearly in the purchasing of nursing care. In 2001/02, the Department supported 2,500 new long-stay placements in nursing homes. In 2002/03 this had increased by just under 6% to 2,700. Nursing placements as a proportion of all long-stay placements of adults and older people grew from 37% to 39%. Nursing home beds are significantly more expensive than other forms of residential care and the annual fee increase agreed for nursing homes was much higher than for other categories of home, partly because of a need to maintain capacity in this sector in the face of homes' closures.

2.6 This analysis also illustrates what has been, and remains, a major and growing pressure on the Department: the Government's expectation that action will be taken to expedite the discharge from hospital beds of older people no longer seen as needing active medical care. This requirement is the reason for a substantial proportion of the purchasing in the nursing home sector.

2.7 The decision of the Cabinet to make additional funds available for tackling delayed transfers of care was particularly welcome.

2.8 Inevitably, the budget pressures experienced had to be balanced by action being taken to restrain expenditure in other areas of the budget and to raise additional income wherever possible. Reductions in cost were achieved by more frequently using external sources of funding, such as the Independent Living Fund and Transitional Housing Benefit, to support packages of care. Likewise, the costs of some of the most expensive residential care placements were also reduced by successfully seeking contributions from partner agencies. Strenuous action was taken to ensure that NHS organisations fully met their commitments to individual service users under continuing care agreements.

2.9 The main area where budgets were not fully spent was the Department's staff. In part, this was the result of recruitment difficulties - there being insufficient numbers of appointable people responding to advertisements. In some instances, however, advertisements for vacant posts were delayed in order to stay within budget, though the underlying presumption was, and remains, that front-line posts will always be filled without undue delay.

2.10 The most significant variations in the direct service costs (i.e excluding Commissioning, Assessment, Care Management, Support Services and Management costs) of each client group are explained in the following paragraphs.

Children & Families (£4.3m overspend)

2.11 Net expenditure on children's services has increased by £6.8m compared with 2001/02. Some of this additional investment has been used on `Quality Protects' initiatives and has been funded to a great extent by the increase in the Children's Services grant. These initiatives include:-

· Centralisation of the Foster Care Recruitment and Adoption teams

· Increased payments to foster carers - both basic allowances and skills fees, helping to attract and retain foster carers

· Development of services for care leavers, including payment of allowances and supported lodgings

· Further development of Family Group Conferences

2.12 The overspend reflects the increasing demands as a result of the growth in the number of looked after children over the year - an increase over 100. This has been reported on regularly to the Executive Member throughout 2002/03, although there was a significant increase in external placements in the last quarter of the year.

2.13 The number of children in residential non-county placements increased by 9 (15%) between March 2002 and March 2003. The annual cost of such a placement is typically at least £50,000 and exceeds £200,000 in the most difficult cases.

2.14 There has also been a significant increase in the number of children placed in independent foster agency (IFA) care. The net increase was 33, with each placement costing about £39,000 per annum.

2.15 The number of children placed with `in-house' foster carers increased by 65 during 2002/03 at an average annual cost of approximately £15,000 (including support services).

2.16 Cover for high levels of staff vacancies and other absences in children's homes led to increased expenditure on overtime and agency staff, resulting in an overspend of about £0.5m.

2.17 These pressures were offset to some extent by underspends on staffing budgets mainly due to recruitment difficulties.

Older People (£651,000, overspend)

2.18 Net expenditure on older people's services has increased by over £13m (18%) compared with 2001/02. The main areas of this increase were:

· Approximately £4m on services provided for `former preserved rights clients', which were funded by Government grant (£13.5m across all client groups).

· Additional purchasing costs, arising primarily from a 14% increase in the price paid for nursing home placements and a 5% increase in `very dependent' residential care prices.

· Full-year effect of the Government's Building Care Capacity Grant - an extra £2.6m - which has been used to develop services to help reduce delayed discharges from hospital. This included the completion of two intermediate care schemes (Copper Beeches and Emsworth House Older People's homes), implementation of other support schemes such as `welcome home' and carers' support and improvements in the Occupational Therapy technicians service.

2.19 One of the main focuses in the year has been to work with health colleagues to reduce the delayed discharges from hospitals. Despite this joint working the Government announced during the year that it would be bringing in a `re-imbursement' or `fines regime' in 2003/04, such that Social Services would have to pay to Acute Trusts a daily amount (expected to be £120 in Hampshire and other South-East councils compared with £100 elsewhere) for each client who is delayed from leaving hospital. In December 2002 the Cabinet agreed to release up to £2m to Social Services to help address bed blockages in 2002/03 and into 2003/04. Up to 31 March 2003 approximately £1.05m was spent on providing services to these clients.

2.20 Approximately 550 packages of care were arranged. However, despite the injection of these significant resources the target number of delays at the end of March - set by the Social Services Inspectorate (SSI) at 125 - was still exceeded by 100. Care arrangements were, and continue to be, hampered by market capacity, although significant resources are being directed towards increasing service provision.

2.21 The SSI target included the total cohort of patients in acute hospital and not just those awaiting social care provision. For example, others may be waiting for internal NHS transfers and others may be `self funders' who are arranging their own care. However, the additional investment and joint working with Health has resulted in a reduction in the proportion of the total for whom Social Services has responsibility which fell from over 60% to about 50%.

2.22 The estimated full year cost of the services provided in paragraph 2.10 above is £4.6m. Resources continue to be invested to reduce the numbers of delayed discharges and the Cabinet has agreed the release of a further £3.5m in 2003/04 for this purpose, subject to the approval of a business case. However, it is important to secure the release of the balance of the £2m previously approved (£950,000) so that investment levels can be maintained and the numbers of delayed discharges reduced as much as possible. It is therefore recommended that the Executive Member seek confirmation from the Cabinet that this sum will be added to the 2003/04 cash limit.

Adults with physical disabilities (£424,000 underspend)

2.23 Although there has been an underspend on these services, there has been a 20% increase in net expenditure (£3.6m) The main increases were:

· Approximately £2m on former preserved rights clients, for which there was Government Funding

· More complex and higher dependency clients

· Young people moving through transitional age to adult services (10 new clients)

2.24 Net spending was less than the cash limit primarily as a result of:

· Maximising the use of Government grant funding and accessing the Independent Living Fund

· More effective negotiation with health colleagues regarding `continuing care' financial arrangements

Adults with Learning Disabilities (£49,000 underspend)

2.25 There has been an increase of £7m (28%) in net expenditure compared with 2001/02. The majority of this is in relation to the cost of former preserved rights clients, which was funded by government grant.

2.26 Provision was made in the budget for the main pressure areas, which were:

· Increasing complexity and higher dependency clients

· More young clients reaching adulthood (25 new clients)

2.27 Efforts continued to be made in 2002/03 to attract as much transitional housing benefit (THB) as possible. Approximately £1.9m was achieved, which exceeded the budget assumption by about £0.5m.

Adults with Mental Health needs (£311,000 underspend)

2.28 The main reasons for the underspend were:

· Maximisation of the use of Government Grants

· Obtaining additional transitional housing benefit

Contingency / grants

2.29 Some grants and other balances were held centrally during the year, pending final determination of their use. Most of these were allocated to relevant budgets but a contingency of just over £1m was retained centrally. This also included a £300,000 increase to the cash limit in respect of the balance of the transfer of the Social Services bad debt provision to the corporate provision.

3 Part B - Capital expenditure 2002/03

3.1 The outturn for 2002/03 is set out below with details of the total resources and of the individual schemes started in the year appearing in Appendix 6.

	Locally Resourced Programme	Supported by Government Approvals	Total
	£'000	£'000	£'000
Total resources	5,732	605	6,337
Value of schemes started in 2002/03	2,183	400	2,583
Value of schemes carried forward to 2003/04	2,857	205	3,062
Over/Under commitment against the cash limit	692	0	692

3.2 The total starts limit for 2002/03 amounted to £6,337,000 and schemes to the value of £2,583,000 were started in the year.

3.3 Major schemes completed during the year included those within the Older Persons' Homes Investment Strategy - Green Meadows (Denmead), Deeside (Basingstoke) and Solent Mead (Lymington). The construction of the Day Centre at Solent Mead was also completed.

3.4 The provision of intermediate care facilities at Emsworth House (Emsworth) and Copper Beeches (Andover) were completed in 2002/03, whilst work at Thurlston House (Fleet) will start in 2003/04. The children's respite unit in Basingstoke, being developed jointly with Health, is also due to be completed in 2003/04.

3.5 Schemes with a total value of £3,062,000, originally programmed to start in 2002/03, have been approved by the Cabinet to be carried forward to 2003/04. The combined value of these schemes started and those approved to be carried forward to start in 2003/04 is £5,645,000, which is £692,000 less than the cash limit. Details are set out in Appendix 6.

4 Part C - Departmental Assurance Statement

4.1 A Statement of internal financial control will be included in the 2002/03 statement of accounts. As part of the process of enabling the County Treasurer to form a view on the effectiveness of internal financial control, the Chief Internal Auditor has produced an independent assurance statement on the adequacy of the system of internal control in each department.

4.2 Appendix 7 contains the statement relating to the service and concludes that the Social Service Department has an effective framework of control, which provides reasonable assurance regarding the effective, efficient and economic achievement of the departments objectives, but that audit testing has shown that controls are not always working in practice. An action plan is in place to address that issue. The overall opinion on the County Council's internal financial control arrangements will be reported to the Standards Committee.

5 Part D - Partnership Accounts

5.1 The County Council is required to publish partnership accounts where it is the accountable body and no report has been made to another committee or partnership board and where the full expenditure is not included in this service's accounts. Appendix 8 shows the Income and Expenditure account for 2002/03 in respect of the Wessex Youth Offending Team (YOT).

5.2 The Wessex YOT is funded through a combination of the 16 partner agency contributions and Youth Justice Board grants. Hampshire Social Services contribution to this in 2002/03 was approximately £1.2m, representing about 25% of the total cost. This is included within the main set of accounts.

5.3 The YOT had to draw on accumulated balances in order to fund the deficit of £152,000 in 2002/03. The main reason for this was an increase in IT support costs of £139,000.

Recommendations

That:

1 The final accounts for 2002/03 be approved.

2 That the Cabinet be requested to approve:

i) The carry forward of underspendings amounting to a net £36,000 as set out in paragraph 1.3.

ii) The addition of £950,000 to the 2003/04 revenue cash limit, representing the unspent balance of the £2m approved for services to help reduce the number of delayed hospital discharges.

iii) The carry forward to 2003/04 of £692,000 capital in addition to the £3,062,000 already agreed.

Section 100 D - Local Government Act 1972 - background papers

The following documents disclose facts or matters on which this report, or an important part of it, is based and has been relied upon to a material extent in the preparation of this report.

NB the list excludes:

1. Published works.

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

TITLE FILE

None

Appendix 1

Social Services

Revenue Expenditure 2002/03

Construction of Cash Limit

* Prior to 2002/03 Social Services had its own provision for bad debts. Following the decision to have one corporate provision an adjustment of £300,000 to the Social Services cash limit was agreed.

Appendix 2

Social Services

Final Accounts 2002/03

Summary of Revenue Expenditure

Appendix 3

Social Services

Revenue Expenditure 2002/03

Analysis of Cash Limited Expenditure over Services

Appendix 4

Social Services

Revenue Expenditure 2002/03

Major variations in cash limited expenditure - under/overspending £

Appendix 5

Social Services

Revenue Expenditure 2002/03 not included in the Cash Limit

Appendix 6

Social Services

Capital Programme 2002/03

Appendix 7

Social Services

Departmental Assurance Statement

Appendix 8

Wessex Youth Offending Team

Income and Expenditure Account 2002/03