Contact: Nick Gibbins, ext 7544

1. Summary

1.1 The review indicates a few areas in which revenue spending is likely to differ from the assumptions in the budget and where management action is required but no major issues that require immediate corrective action. With the exception of an underspending on the Leading for Success project, the Policy and Resources revenue budget overall is forecast to be in line with the cash limit.

1.2 Performance in reducing delayed transfers of care from hospitals has continued to improve and the release of the £3.5m contingency sum in the 2003/04 budget is proposed

1.3 Capital payments are likely to be above forecast levels, continuing the pattern of recent years with much reduced levels of project slippage. A review is currently in progress to ensure that any additional payments incurred in 2003/04 will be covered by additional credit approvals or external contributions.

1.4 The following decisions are sought:

i) To note the current position on the monitoring of the revenue budget and capital programme and the action being proposed.

ii) That the planned underspending of £75,000 in the Leading for Success programme be carried forward to 2004/05.

iii) To approve the release of the £3.5m contingency for delayed transfers of care from hospital.

iv) To approve an addition of £373,000 to the capital programme in respect of building works for the Hampshire and Isle of Wight Magistrates' Courts Committee, financed from capital grant and credit approvals from the Department for Constitutional Affairs.

2. Reason

Regular service budget monitoring reports are submitted to Executive Members to review whether any action is required to contain spending within cash limits and ensure that resources are utilised effectively.

3. Other options considered and rejected - Not applicable

4. Conflicts of interest declared by the decision maker or a member or officer consulted - Not applicable

5. Dispensation granted by the Standards Committee - not applicable

6. Reason(s) for the matter being dealt with if urgent - not applicable

Approved by: (signature) Date: (date of decision)

Councillor T K Thornber

Contact: Nick Gibbins, ext 7544

1. Introduction

1.1 This report is the second monitoring report for 2003/04 and provides an overview of the position on:

· Policy and Resources own revenue cash limited budgets including a commentary on the implementation of growth proposals

· Policy and Resources business units

· The allocation of the contingency for delayed transfers of care from hospital

· Policy and Resources capital programme

· County Council's capital payments and sources of finance.

1.2 The review indicates a few areas in which revenue spending is likely to differ from the assumptions in the budget and where management action is required but no major issues that require immediate corrective action. Capital payments are likely to be above forecast levels, continuing the pattern of recent years with much reduced levels of project slippage. A review is currently in progress to ensure that any additional payments incurred in 2003/04 will be covered by additional credit approvals or external contributions.

2. Policy and Resources cash limited revenue budget 2003/04

2.1 The latest cash limit for 2003/04 is £38.6m as set out in Appendix 1. Based on monitoring of expenditure up to the end of October 2003, there are a number of emerging budgetary issues on which management action is planned. These are outlined below. With the exception of an underspend on the Leading for Success project, the Policy and Resources revenue budget overall is forecast to be in line with the cash limit.

Chief Executive's Department

2.2 The Cabinet in October agreed an increase in the cash limit for members support costs of up to £127,000 to cover the cost of the recommendations of the Independent Review Panel approved by the County Council in September, which mainly relate to the Local Government Pension Scheme. An overspending of about £30,000 is forecast in other members support costs, mainly travel expenses.

2.3 Insurance fund - legal costs incurred in dealing with insurance claims are continuing to increase and are forecast to exceed the current charge to the insurance fund by £60,000 in 2003/04. A review of the charging basis will be undertaken.

2.4 The Economic Development budget has had to meet unbudgeted costs of around £25,000 in respect of court costs relating to the organisation of Farmers markets.

Personnel and Training

2.5 Leading for Success - this project continues to be successfully delivered but the later than planned start means that the £100,000 growth proposal will be underspent by £75,000 in 2003/04. A request will be made to carry this forward to 2004/05 as a planned underspending specifically relating to the leadership project.

Property Business and Regulatory Services

2.6 Corporate estate security costs - the last monitoring report to the Executive Member in September forecast an overspend in the region of £100,000. This has been revised down to £70,000 and relates to the cost of securing properties being held pending disposal. As this expenditure will assist in maximising the relevant capital receipts, an adjustment to the cash limit from revenue contributions to capital can be justified to accommodate these extra costs.

2.7 Coroners - despite allocating an additional £50,000 to this budget in 2003/04, current case load which is outside the control of the County Council indicates an overspend of £15,000.

Other non-departmental Policy and Resources budgets

2.8 Enterprise - All the costs of the project, including providing support and training to initial users, were capitalised up to 31 August 2003, the end date of the initial phase of development, originally approved in 2000. From that date the cost of hardware and software contracts and of training and support are being met from the Policy and Resources revenue budget. Once the system has been fully rolled-out, running costs and the capital charges generated by the investment will be recovered in charges to users

2.9 Following a successful trial of devolved finance, HR and procurement functionality, these functions are now being rolled-out commencing in September 2003 over a planned fifteen month period, with schools roll-out due to commence in January 2004. 2,000 staff are now using SAP within the County Council.

2.10 There remain some relatively minor elements of the original project scope which have still to be implemented while some extension of the original scope has been necessary to fully secure future benefits. Some additional funding will be required to meet the capital costs, which it is envisaged will be covered either by capital contributions from departmental users or by charges made to users to cover any additional corporate funding. A more comprehensive progress report is being prepared which will address these issues.

2.11 Miscellaneous expenses - the fee from the Newspaper Licensing Agency has increased from £13,200 to £21,100 this year resulting in an overspend of £7,900.

2.12 Audit Fee - the budget for 2003/04 was reduced by £43,000 and whilst the level of fee is uncertain, a further reduction may result from lower grant claim audit costs due to the removal of ringfencing of grants in 2003/04 due to the Council's excellent status.

Summary

2.13 In summary the main pressures are:

2.14 This represents 0.2% of the cash limit and may be offset by a reduction in the audit fee. Given the scale of the projected overspending and the potential for other savings to emerge prior to the year end, no immediate corrective action is required.

3. Progress in implementing 2003/04 growth proposals

Chief Executive's Department

3.1 Regionalism (£15,000) - Continuing communication and research remains crucial to the regionalism debate in Hampshire, the South East and nationally. The government have said they will take into account research to inform their decision on whether to hold referendums. Following the announcement of referendums in the north we will need to maintain the flow of evidence and publicity in response to the government's `Your say' campaign and to the potential `empowering' Bill likely in the next Queen's speech.

3.2 Comprehensive Performance Assessment (CPA) (£5,000) - Our `excellent' ranking needs to be at the heart of our internal and external communications. Research shows that internally there is still work to be done in explaining the outcome to staff (over 60% have little or no knowledge). Publicity will be required shortly to announce the results of our annual refresh. In addition research will be required to support the Comprehensive Performance Assessment action plan to meet the Audit Commission's recognition of the importance of evidence based decision making in its assessment of local authorities.

3.3 The potential outcome of both these pieces of work is clearly demonstrated through research.

3.4 Health Scrutiny (£100,000) - This has enabled the appointment of a Health Review Manager (June 2003) and allocation of other staff support to this area of work. The County Council has actively taken up its statutory power of health scrutiny of health trusts in Hampshire - through the new Health Review Committee - and is actively involved in responding to issues of NHS substantial change.

3.5 Corporate Performance Work (£30,000) - This has enabled the appointment of one extra Policy and Performance Officer who will concentrate on improving performance indicator (PI) collection (a Best Value Performance Plan issue raised by the Audit Commission) and ongoing support of the CPA work. The outcome has been improved PI collection to meet Audit Commission concerns and work to maintain `Excellent' status - the results of which are expected shortly.

3.6 New Milton Information Centre (£47,000 in 2003/04 and £33,000 recurring) - Staff were appointed with effect from 14 July 2003. The Centre opened in October providing a new local 'one-stop shop' facility for Hampshire County Council, New Forest District Council, New Milton Town Council and the Citizens Advice Bureau covering New Milton and the surrounding area.

3.7 Policy and Research Officer (£50,000) - a new officer was appointed with effect from 7 July 2003 to strengthen the policy unit's capacity to undertake research.

Personnel and Training

3.8 Long service awards (£27,000) - staff in receipt of this award this year are being paid at the newly increased level of £200 capital bond plus gift.

3.9 Pay and benefits (£50,000) - this has enabled continued resourcing of the project team and consultancy input into the development and implementation of pay strategy.

County Treasurer's Department

3.10 The main purpose of the budget growth was to enable the finance function to keep pace with the growing demands of the County Council and to create the capacity to deal with the increasingly complex financial environment brought about by recent Government initiatives. In addition, four measurable outcomes were identified:

· movement from `good' to `excellent' in the finance aspects of the Comprehensive Performance Assessment.

· improvement in the CPA score for prompt payment from the current one out of four to at least three and possibly four.

The outcome of these will not be known until the Council's overall `refreshment' is complete.

· successful implementation of SAP, together with realisation of the associated benefits - the initial tranche of savings to be achieved during 2004/05 is included in 2004/05 budget planning.

· ending of the Council's contract to send out advertising material with payslips to reduce the use of paper as part of the Council's action to improve sustainability - the contract has been terminated.

Property, Business and Regulatory Services

3.11 Regulatory services - £60,000 has been committed to deal with the new legislation and regulatory powers introduced to issue "Stop Now" orders, new animal feedstuff regulations and additional work relating to under age alcohol sales whilst maintaining Fair Trading and other services.

Other budgets

3.12 Additional funding for other budgets was given to cover increased costs of existing services.

4. Business units' anticipated trading position

4.1 The 2003/04 budget anticipates net surpluses of £288,000 for Property, Business and Regulatory business units. Higher surpluses than budgeted in 2002/03 were achieved and surpluses in 2003/04 are expected to at least meet the levels included in the budget.

4.2 IT Services budgeted to make a surplus in 2003/04 sufficient to eliminate the accumulated deficit that had built-up during the period of investment in the IT2000 network. Given the outturn for 2002/03, to meet this target will require IT Services to make a surplus of around £400,000 in 2003/04. As reported to the Executive Member in September, this will be a difficult target to achieve. There are a number of pressures facing the business unit, particularly in matching the timing of investment with cash flows from customers. The latest forecast is a surplus of £250,000 which will reduce the deficit brought forward from previous years to less than £200,000.

5. Contingency for delayed transfers of care

5.1 The Cabinet in October agreed a business case for the allocation of the contingency of £3.5m in the 2003/04 budget to Social Services to support the action taken in reducing delayed transfers of care from hospital. It was agreed that the phased release of the contingency would be approved by the Policy and Resources Executive member in line with commitments and improved performance.

5.2 The business case approved by the Cabinet in October is attached as Appendix 3. Its main elements are:

· reducing delays in discharging people aged over 75 from hospital is both a local and national priority, supporting the aims within the corporate strategy of enabling older people to live more independent lives and improving their life opportunities. The local public service agreement includes a target for reducing the proportion of older people with a delayed discharge by 2005

· the proposed introduction of charges payable by Social Services authorities from 1 January 2004 for delayed discharges related to delays in the availability of social care, provides a new financial incentive to reduce the level of delayed discharges

· a continuation of the level of social care related delays at the level of 30 March 2003 would require the County Council to make payments of £4.2m per annum to the NHS, towards which the Government have allocated only £1.9m in a full year in specific grant

· the investment in social care packages required to achieve a reduction in delayed hospital discharges also supports improvements in the health of elderly people as the capacity of the NHS to treat more patients also benefits elderly people. However this results in the number of additional care beds that need to be financed exceeding the reduction achieved in delayed hospital discharges.

5.3 Continued improvements in performance have been achieved over this financial year, as indicated in the table below, in the lead-in to the implementation of charging for delayed discharge from 1 January 2004.

The data does confirm that significant improvements have been achieved and that the County council's investment in Social Care placements has been the main determining factor.

5.4 The costs associated with the improvement have been significant, with total commitments costing £4.3m or approximately £56,000 for each reported reduction. The cost per reduction is as high as this because many of the beds freed up will be occupied by elderly people, who will then require additional social care on leaving hospital.

5.5 £3.0m of the contingency will be allocated to meet the cost of additional care packages and the remaining £0.5m to establish the necessary business process arrangements for the prescribed reimbursement regime, including improvement of staffing resources in acute hospital settings in order to make the placements required.

6. Policy and Resources capital programme

6.1 Appendix 2 summarises the 2003/04 capital programme. Additional capital grant of £301,304 and credit approval of £71,530 has been awarded by the Department for Constitutional Affairs in respect of the Hampshire and Isle of Wight Magistrates' Courts Committee and it is recommended that the capital programme be increased by these amounts. Taking account of this increase, carry forwards from 2002/03 and recent virements, the capital programme totals £42.1m.

6.2 Schemes to the value of approximately £14.1m had started by the end of October, mainly within the capital repairs programme and giving priority to completion of the 2002/03 New Deal for Schools programme by 31 August 2003.

7. Overall capital payments and sources of finance

7.1 The capital financing plan which was approved by the Cabinet in February is based on projected capital payments of £140m being incurred in 2003/04 on projects committed in previous years or started during the current financial year.

7.2 Capital payments to 31 October 2003 totalled £77.4m and using profiles based upon previous years' capital payments, payments are forecast to be at least £3m above the original forecast for the year. A detailed scheme by scheme review of capital payments and resources is being carried out to confirm the extent to which higher payments than originally forecast in 2003/04 could be anticipated as a result of additional government approvals and third party contributions.

7.3 Inclusive of in and out schemes, capital receipts of £11.2m were allowed for in 2003/04 in the original capital financing plan. Subsequently when the capital programme was reviewed by the Cabinet in June, additional capital receipts of £5.2m were forecast in 2003/04 although the capital payments they will be required to finance are likely to arise mainly in future years. Capital receipts received by 31 October 2003 totalled £4.2m and in addition a deposit has been received for a large disposal, the timing of which is critical to the achievement of the revised target level of receipts.

Recommendation

1. To note the current position on the monitoring of the revenue budget and capital programme and the action being proposed.

2. That the planned underspending of £75,000 in the Leading for Success programme be carried forward to 2004/05.

3. To approve the release of the £3.5m contingency for delayed transfers of care from hospital.

4. To approve an addition of £373,000 to the capital programme in respect of building works for the Hampshire and Isle of Wight Magistrates' Courts Committee, financed from capital grant and credit approvals from the Department for Constitutional Affairs.

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:

Published works.

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

TITLE FILE

None.

Appendix 1

Policy and Resources Revenue budget - latest 2003/04 cash limit

Appendix 2

Policy and Resources 2003/04 capital programme

Appendix 3

Release of the £3.5m contingency for delayed transfers of care

1. Purpose of Report

1.1 This report outlines the business case for the release of the £3.5m contingency for delayed discharges for hospitals.

2. Current Performance

2.1 Social Services has invested heavily to reduce delayed transfers of care from acute hospital beds.

2.2 For the week ending 30 March 2003 the total number of delays reported for Hampshire was 225, however only 116 of these were `Social Care Waits'. For the week ending 7 September 2003 the figures were 160 and 51 respectively. These much lower figures reflect the impact of the additional investment by the County Council and further improvements are anticipated by 1 January 2004.

2.3 However, because of throughput issues (i.e. reducing the Sitrep figures by one, may involve between one and five moves) the projected cost of halving the social care waits will have cost Hampshire (current spend plus commitment basis) £4,021,596 or approximately £60,000 for each reported reduction. Following this theoretically indicated that to clear the Sitrep list at current rates would cost Hampshire in excess of £8m, assuming capacity in the private sector.

2.4 The most common reason for delay is nursing home placement. Although this is being addressed in the future by Hampshire's County Nursing Home Strategy, there is an interim time lag before this additional capacity will be operational. Therefore the next twelve to eighteen months will be very difficult in respect of capacity.

2.5 Securing available care is essential to continue to reduce delayed transfers. New capacity does not become available at short notice, so it is important to maintain purchasing activity, and ensure the baseline of delayed transfers is as low as possible. The current spending and activity level have been based on the assumption that the £3.5 million contingency is available on an ongoing basis this year.

3. Reimbursement

3.1 Councils with Social Service responsibilities will need to make reimbursement payments for eligible and appropriate cases following notification from 5 January 2004. The implementation of shadow systems have been put in place from 1 October 2003 to provide a 3 month lead-in period.

3.2 The release of the contingency funds for delayed transfers of care is needed to minimise the risks of being subject to financial penalties and contribute towards the local public service agreement target:

"To provide high quality pre-admission and rehabilitation care to older people to help them live as independently as possible, by reducing preventable hospitalisation and ensuring year on year reductions in delays in moving people over 75 on from hospital"

3.3 This will be achieved through:

· continued attention to improving delayed discharge performance through activity and service developments to ensure necessary capacity is available, with £3m spend on additional care packages/placements.

· establishment of the necessary business process arrangements, including improvement of staffing resources in acute hospital settings, to meet the requirements of the prescribed reimbursement regime with the remaining £0.5m.

3.4 The current expected cost associated with a delayed transfer following the introduction of the reimbursement legislation in January 2004, is £100 per person per day. The estimated full year cost therefore of the activity level of delays of the 65 as at 3 August 2003 would be over £2.2 million.

3.5 The delayed transfer grant allocation that is proposed to offset these costs is £1.2 million for Hampshire, the highest allocation nationally in 2003/04, to cover 1 October to 31 March. This grant is expected to rise to about £2 million in 2004/05.

3.6 Comparing current discharge processes with the `ideal' (reimbursement) discharge process is underway at present. A review of the operational demands of the proposed regime has shown that there will be a need for additional staff at hospital sites to augment existing hospital arrangements for carrying out service user assessments and to prevent hospital admissions or delayed hospital discharges. This will include Saturday working as this falls within the notification period covered in the Bill.

3.7 The workforce plan (2003/04) details the requirements and the associated costs of these posts of approximately £600,000 full year effect. This will be allocated to recruit up to 21 full time equivalent qualified social worker/care managers. The estimated costs in 2003/04 are approximately £400,000 with over half of the posts already filled at the time of writing.

4. Conclusion

4.1 To safeguard its principles in respect of service users, corporate priorities and also its current performance status, it is one of Social Services imperatives to continue to invest in reducing the number of delays.