Contact: Gordon Shinn, Head of Finance ext 7526, e-mail: [email protected]

1 Summary

1.1 This report summarises the Social Services spending in 2003/04.

1.2 It recommends that the final accounts for 2003/04 be approved.

1.3 Decisions on Social Services revenue expenditure and capital programmes impact on the financial resources available to this service that contribute to the following corporate strategy aims:

i) Aim 1 - Maximising life opportunities - through the provision of, and support for, high quality services for vulnerable people and their carers

ii) Aim 5 - Improving services - through the development of new ways of working that meet the changing needs of service users

iii) Aim 6 - Developing councillors and staff - through investing in human resources

1.4 Overall there is a £784,000 (-0.3%) underspend against the 2003/04 adjusted revised revenue cash limit of £272.2m. A potential overspend of £1.3m was reported to the Executive Member on 20 February 2004, although it was envisaged that continued actions to manage down the pressures would keep the spend within cash limit. The principal causes of the underspend have been holding back spending in some grant-related areas, generation of additional income and the reduction in delayed discharges from hospital leading to a lower-than-expected level of fines to be paid. These factors have more than offset the overspend on children's services.

1.5 The major variations are:

	£'000
Children & Families	2,512
Older People	-1,302
Contingency / Grants	-1,897

1.6 More explanation of the client group variances are given in Part A of the report (below). The underspend on the contingency / grants relates to an unallocated contingency of about £0.8m and other centrally held grant-related amounts that were not fully needed. This includes a sum earmarked for possible payment of fines for hospital discharge delays.

1.7 The County Council's policy is to carry forward into the following year 100% of net overspendings and 50% of net unplanned underspendings. Cabinet decides what use should be made of the other 50% underspending. On this basis £392,000 will be added to the cash limit in 2004/05. It is proposed that this will be used for the replacement of the non-residential charging system, as described in paragraph 3.9. Should the Cabinet decide to allocate the balance of the underspend then, subject to the approval of a business case, this will be used to contribute to the corporate costs of fire safety works required in Social Services establishments, as described in paragraph 3.10.

1.8 As a two star department within an `excellent' authority Social Services has certain freedoms and flexibilities regarding the use of some government grants. This includes the relaxation of ring-fencing rules and the ability to carry forward unspent grant from one year to the next.

1.9 On government ring-fenced grants specific approval is required from the relevant government department to carry forward any unspent grant. Such approvals have been agreed, most notably from the Office of the Deputy Prime Minister for the Supporting People underspend (£361,000) and the Government Office of the South East for the Children's fund (£252,000). These amounts will be added to the 2004/05 cash limit and used for their intended purpose.

1.10 On capital, schemes to the value of £64.252m started in the year and schemes to the value of £2.814m have been approved to be carried forward to start in 2004/05. In total this amounts to the same as the approved cash limit for the capital programme.

1.11 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 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 2003/04 the adjusted amount is £272.2m as set out in Appendix 1.

2.2 The final outturn was an underspend of £0.8m compared with a pressure of £1.3m at the end of December as reported to the Executive Member in February. The overall position is analysed in Appendices 2 and 3. Appendix 4 includes a more detailed statement of variations from the revised budget.

2.3 The final position for 2003/04 compares with the outturns in recent years as set out in the following table.

	Variations from Revised Budget
	£'000	%
2000/01	1,490	0.9
2001/02	-295	-0.2
2002/03	-72	-0.03
2003/04	-784	-0.3

Comments on main issues

2.4 The Social Services department has achieved a small underspend for the third year in succession. The additional resources have been used very effectively and sound financial management has contributed to some significant achievements during the year. This has been recognised by the department being rated `two stars' for the second time in a row in the Government's performance ratings, and with improvement in performance compared to the previous year.

2.5 The year was another one of great pressure on the Social Services budget, arising mainly from:

· High service demand levels in terms of volume and increasing dependency

· Considerable price increases above normal inflation expectations e.g. nursing care and domiciliary care prices increased by over 10%

· Market capacity issues i.e. insufficient availability of care to meet all the demands as flexibly and as soon as would be liked

· New pressures that were not envisaged when the original budget was set, particularly on children and families services

· Focus on improvements in key performance target areas

2.6 The Cabinet's decision to provide an extra £7m to Social Services to help meet priority areas on older people (£3.5m for intensive home care and £3.5m for delayed hospital discharges) was most welcome. As a result of this extra investment there has been significant improvement in these areas (see paragraphs 2.18 to 2.23).

2.7 The 2003/04 budget included an additional £15.5m growth, of which over 50% was needed to meet additional inflation costs (particularly on nursing care). The balance of this funding was directed mainly at meeting ongoing demand pressures, particularly on children and families services. Some additional funding was also allocated to other service improvements. For example, there has been a considerable reduction in the time clients have to wait to receive equipment (see paragraph 2.25).

2.8 Regular budget monitoring reports to the Executive Member throughout 2003/04 identified new pressures that had not been included in the original budget and for which funds had to be re-directed from elsewhere. These pressures were most acute on children and families services.

2.9 In achieving a balanced budget actions were taken to restrain expenditure in other areas of the budget and to raise additional income wherever possible. These actions included deferring some expenditure into 2004/05, delaying staff appointments where this would have no impact on front-line service delivery, and ensuring health contributions were maximised under the continuing care agreements.

2.10 In 2003/04 the department became responsible, as administering authority, for the Supporting People programme budget of over £34m. Given the sheer scale of this commitment and the concerns over funding, it is a significant achievement that there was an underspend against the original grant of about £0.4m. This underspend is being carried forward to 2004/05 to help meet ongoing financial commitments.

2.11 The following paragraphs describe in more detail some of the most significant variations and key achievements for each client group.

Children & Families (£2.5m overspend)

2.12 Net expenditure on children's services has increased by £6.0m (12.1%) compared with 2002/03. This increase reflects the increasing demands as a result of the growth in the number of looked after children. As with 2002/03, there has been increase of over 10% in 2003/04.

2.13 The most significant financial impact is the increase in numbers of children placed with independent foster agencies (net increase of 17) and those placed in non-county residential care (net increase of 7). Market capacity issues have driven costs up such that the average cost of an independent foster agency placement is typically about £50,000 per annum now compared with about £40,000 per annum a year ago.

2.14 Additional staff costs of over £300,000 were incurred during 2003/04 on post Climbié (Laming report) work and new Social Services Inspectorate requirements. These resulted in significant improvements in key performance areas, particularly in keeping case files up to date.

2.15 Approximately £600,000 was spent on recruitment and retention initiatives to try and combat the significantly high levels of vacancies in fieldwork posts. These initiatives are being maintained in 2004/05.

2.16 The department was awarded £7.2m over three years in respect of the Children's Fund, an initiative to provide services for vulnerable 5 to 13 year olds and their families and to prevent social exclusion. The government has allowed an underspend of £252,000 against this grant to be carried forward to 2004/05.

2.17 Some other key achievements in children and families services include:

· The department was selected by the Department of Health to form one of the first Children's Trusts in the country under a partnership formed by Hampshire County Council and the county's seven Primary Care Trusts

· Joint work between Social Services and Education in 2003 raised the educational attainment levels of Children Looked After

Older People (£1.3m underspend)

2.18 Net expenditure on services for older people has increased by £14.4m (16.5%) compared with 2002/03. Of the £1.3m underspend £0.5m relates to direct service costs and this is mainly as a result of higher than anticipated income (client contributions). Strenuous efforts are made to ensure income is maximised and the Financial Assessments and Benefits (FAB) service plays a key role in this, including ensuring that clients claim the benefits to which they are entitled, which in turn increases the income available to the Council.

2.19 Of the additional £14.4m spend, £8m relates to additional funding agreed by the Cabinet to target on the key priorities of increasing intensive home care and reducing the number of delayed hospital discharges. The majority of the balance of the increase was needed to meet increased costs of purchasing care, particularly nursing accommodation.

2.20 Included within this funding was a government grant of £1.2m to help deal with delayed discharges and in preparation for managing a system of `reimbursement' or `fines' to be paid to acute hospitals for delays that are the responsibility of Social Services. This funding was used to make suitable arrangements - care management and systems - and to pay for the fines themselves.

2.21 Regular reports to the Executive Member have detailed the progress made during 2003/04 in reducing the number of delayed hospital discharges (PAF indicator D41). The number of delayed discharges that are the responsibility of Social Services, reduced from 116 (52% of the total) at March 2003 to 33 (20% of the total) at March 2004. This means that, whilst there has been considerable success in reducing the number of Social Care delays, the number of Health responsibility delays has not reduced. The D41 indicator includes all these delays.

2.22 From 5 January 2004 following a three month `shadow' period, a system of `fining' for these delays was introduced, although not all Social Services delays incur this fine (£100 per day). Approximately £100,000 was incurred in fines for the period of 5 January to 31 March i.e. an average of about 12 patients per day. Had the total number of delays stayed at the levels of March 2003 then the fines would have amounted to about £1m.

2.23 The additional investment in intensive home care services has improved the Performance Assessment Framework (PAF) indicator C28 from 6.5 (households per 1,000 of relevant population) at the end of 2002/03 to about 8.1 at the end of March 2004. This falls short of the target of 10 as a result of high levels of turnover, lack of market capacity and the demographic changes (increasing elderly population). The Revenue Budget 2004/05 report, considered by the Executive Member of 23 January 2004, made reference to the Public Service Agreement (PSA) target of 18 but stated that the target for 2004/05 would remain at 10. From the experience of the demand and market capacity, this revised budget figure would be seen as a good outcome, which should be achievable.

Adults with Physical Disabilities (£83,000 overspend)

2.24 Expenditure has increased by £1.8m (8.7%) compared with 2002/03. Demands have increased as a result of more complex and higher dependency needs and young people moving into adult services. Overall client numbers have increased by about 4.5%.

2.25 Successful new developments during 2003/04 included the OT Direct Service, Electrical equipment testing and the joint equipment store. Since the introduction of the OT Direct Service in November 2003 the waiting list has decreased by 26.5% (303 cases).

Adults with Learning Disabilities (£189,000 underspend)

2.26 Net expenditure has increased by £2.5m (6.6%) compared with 2002/03. As with physical disabilities services, budget provision was made for the following pressures:

· Increasing complexity and higher dependency clients

· More young clients reaching adulthood

2.27 Some initiatives have been developed under the `Valuing People' agenda, including a `person centred planning' team. Successful partnership work includes the joint Social Services / Health appointment of a team manager in the Eastleigh & Romsey area.

2.28 There have been significant increases in the number of clients receiving domiciliary care (19%) and those receiving direct payments (27%).

Adults with mental health needs (£195,000 overspend)

2.29 There has been an increase of £0.8m (8.2%) in net expenditure compared with 2002/03. Some key achievements during the year include:

· A Section 31 Agreement was secured between Hampshire County Council and West Hampshire NHS Trust (now known as the Hampshire Partnership Trust) to support the completion of the integration of line management arrangements in Adult Mental Health services - providing a single line management of Community Mental Health Teams

· Within Adult Mental Health Services, seven additional carers support workers were recruited in 2003 (doubling the provision) to support those who care for relatives with serious and enduring mental health problems

Supporting People

2.30 The Social Services Department is the administering authority for the Supporting People programme in Hampshire. There are approximately 1,200 schemes in place and about 26,000 people.

2.31 The primary objective in the first year of this programme was to maintain services that were formerly resourced through other means, primarily transitional housing benefit. However, Hampshire's Supporting People team was very successful in attracting a high level of additional funding for new schemes. Consequently 15 new schemes started during 2003/04 and a further 6 are due to open in 2004/05.

2.32 The final grant allocation for 2003/04 was £34.5m (including £0.8m for the administration grant). Net spend was £361,000 less than originally planned and the balance of grant of this amount is being carried forward to 2004/05 in accordance with the flexibility agreed by the Office of the Deputy Prime Minister. This will help meet the significant funding pressure in 2004/05 (see 2004/05 budget report elsewhere on this agenda).

3 Part B - Capital expenditure 2003/04

3.1 The outturn for 2003/04 is set out below with details of the total resources and of the individual schemes started in the year appearing in Appendix 6.

3.2 The total starts limit for 2003/04 amounted to £67,066,000 and schemes to the value of £64,252,000 were started in the year.

3.3 The £60m project to provide 500 new nursing beds started during the year. As at 31 March 2004 development work at three of the sites had started - Ticehurst, Fleming House and Hawthorne Court (formerly Coldeast).

3.4 A major refurbishment scheme at Malmesbury Lawn Older persons home started in 2003/04 and is due for completion in the near future. Schemes approved to be carried forward to start in 2004/05 include Alton Day Services, which is being relocated to a new, specialist, purpose-built facility in the town centre. The list of schemes started and carried forward are included in Appendix 6.

3.5 The combined value of schemes which started in 2003/04 and those carried forward to start in 2004/05 is £67,066,000 which is equal to the cash limit and the balance of the cash limit can also be carried forward to 2004/05.

3.6 In accordance with the County Council's Financial Procedures, the final costs of capital schemes completed in 2003/04 are listed in Appendix 6. "Completed" in this context means when the final payment has been made. Some of these schemes may have been in operation prior to April 2003, but the final payment was only made in 2003/04.

3.7 The final cost of the schemes completed in 2003/04 is £1,136,000 the same as the latest approved estimate for those schemes charged to the service's capital cash limit.

3.8 The Capital Programme 2004/05 to 2007/08 report, considered by the Executive Member on 23 January 2004, made reference to a number of systems developments that were still unfunded, many of the larger ones subject to possible consideration under the new prudential framework. Such proposals will be brought to the Executive Member in due course.

3.9 That report also identified the need to find funding to replace the non-residential charging system in order to avoid the loss of income of over £3m per year. The estimated cost of this is £300,000 (previously £200,000) and it is proposed that this be funded in 2004/05 by the carry forward of revenue underspend.

3.10 A number of social services establishments require significant corporate investment particularly on fire safety, to bring them up to the latest required standards. It is therefore proposed that, subject to the approval of a business case, the balance of any revenue underspend allowed to be carried forward by the Cabinet, will be the Social Services contribution to those costs.

4 Part C - Departmental Assurance Statement

4.1 From 2002/03 the Code of Practice on Local Authority Accounting in the UK has required the County Treasurer to sign a statement on the system of internal financial control as a note to the published accounts. From 2003/04, the Leader and Chief Executive will also be required to sign a more general statement of internal control. As part of this process the Chief Internal Auditor is required to provide an independent opinion on the adequacy and effectiveness of the system of internal control operating in each department and in the County Council as a whole. These opinions are reviewed by the Standards Committee. Appendix 7 contains the statement relating to Social Services and concludes that the service has an effective framework of control which provides reasonable assurance regarding the effective, efficient and economic achievement of the County Council objectives.

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 services' accounts. Appendix 8 whos the income and expenditure account for 2003/04 in respect of the Wessex Youth Offending Team (YOT).

5.2 The Wessex YOT is funded through a combination of 16 partner agency contributions and Youth Justice Board grants. Hampshire Social Services contributions to this in 2003/04 was approximately £1.5m, representing about 28% of the total costs. This is included within the main set of accounts.

5.3 The YOT had to draw on its accumulated balances in order to fund the deficit in 2003/04. The deficit was due partly to a reduction in income from the national probation service. The balance held in reserve at 31 March 2004 is about £73,000 and a revised partnership agreement is in place for 2004/05 to ensure a more stable funding position.

Recommendations

1 That the final acounts for 2003/04 be approved.

2 That £392,000 of the underspending in 2003/04 be carried forward and added to the 2004/05 budget and used in the first place to fund the replacement of the non-residential charging system.

Section 100D - 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 None

Summaries of actual spending 2003/04

Appendix Contents

1 Construction of the cash limit

2 Summary of revenue expenditure

3 Analysis of cash limited revenue expenditure over services

4 Major variations in cash limited expenditure

5 Revenue expenditure 2003/04 not included in the cash limit

6 Capital expenditure 2003/04

7 Departmental assurance statement

8 Partnerships - Wessex Youth Offending Services

Appendix 1

Social Services

Revenue Expenditure 2003/04

Construction of Cash Limit

Appendix 2

Social Services

Final Accounts 2003/04

Summary of Revenue Expenditure

Appendix 3

Social Services

Revenue Expenditure 2003/04

Analysis of Cash Limited Expenditure over Services

Appendix 4

Social Services

Revenue Expenditure 2003/04

Major variations in cash limited expenditure

Appendix 5

Social Services

Revenue Expenditure 2003/04 not included in the cash limit

1 Capital charges (£5.030m)

Capital charges are made to services for capital assets used in the provision of services. The actual charges are £0.129m more than the budget. However, this will have no direct effect upon the overall budget requirements of the County Council as the capital charges are replaced by actual financing costs in the central asset management revenue account.

2 Central support services, repairs and maintenance of buildings (£9.228m)

These items are within the control of Policy and Resources. Support services are apportioned to services in accordance with the level of services provided and office accommodation occupied. Control of the budget for repairs and maintenance of buildings is by the nature of work and where it is most required rather than by service.

3 Adjustment for pension costs (£0.314m)

This adjustment includes:

a) the difference between the cash value of employer's contributions to the Local Government Pension Scheme (LGPS) (included within the service's cash limited expenditure) and the current cost of pension benefits earned by members of the LGPS during 2003/04, as assessed by the County Council's actuary. This adjustment is required by the Code of Practice on Local Authority Accounting in the UK. A Statement of Recommended Practice (2003) (SORP) with effect from 1 April 2003. The adjustment is calculated in accordance with Financial Reporting Standard 17 (FRS 17) Retirement Benefits. It relates only to "defined benefit" schemes, including the LGPS, where the assets and liabilities of the scheme can be attributed to individual employers on a consistent and reasonable basis.

b) the costs arising from early retirement decisions and the granting of compensatory added years. These are within this service's cash limited expenditure, but are excluded from the cost of services, on the basis that the cost relates to past service.

4 Corporate and democratic core (recharge £0.182m)

Corporate and democratic core covers management and support costs that relate to member support and advice. They are within the control of Policy and Resources and so are charged against that service's cash limit. But they are then recharged to other services outside of the cash limit as the Best Value Accounting Code of Practice requires these to be included in the cost of services.

5 Non distributed costs (recharge £0.423m)

These relate to the costs arising from early retirement decisions and the granting of compensatory added years (CAY) in the year of account. These are within this service's cash limited expenditure, but are recharged to "non distributed costs" as the Best Value Accounting Code of Practice requires them to be excluded from the cost of services, on the basis that the cost relates to past service.

Appendix 6

Social Services

Capital Expenditure 2003/04

					£'000
1	Construction of total resources
	Original programme limit per 2003/04 budget book				1,244
	Cash limit brought forward from 2002/03				3,728
	Changes approved during the year:
	- MH SCA				286
	- Nursing Homes Project				60,000
	- P&R draw down for OP Homes Strategy				1,334
	- Performance Fund				174
	- Cash for change grant				300
	Total resources:				67,066
2	Schemes started during 2003/04
	Malmesbury Lawn				1,808
	Social Care Information System				1,110
	Information Management System				380
	Information Technology for looked-after children				135
	Minor Works in Residential and Day Care Premises				198
	Furniture and Equipment in Residential and Day Care Premises				97
	Furniture and Equipment in office bases				13
	Information Technology Equipment				20
	Nursing Homes Project				60,000
	MH Supplementary Credit Approval				491
	Total schemes started during 2003/04				64,252
3	Schemes carried forward
	Schemes already approved by the Cabinet to start in 2004/05				0
	Other schemes to be recommended to the Cabinet to be carried forward to start in 2003/04
	- Alton Day Services				1,124
	- Social Care Information System				524
	- Information Management System				5
	- Information Technology for looked-after children				1
	- Minor Works in Residential and Day Care Premises				250
	- Furniture and Equipment in Residential and Day Care Premises				202
	- Furniture and Equipment in office bases				137
	- Information Technology Equipment				213
	- Supported Housing				260
	- Uncommitted balance and contingency for inflation				98
	Total				2,814
4	Summary of 2003/04 capital programme:
	Total resources				67,066
	Schemes started during 2003/04				64,252
	Balance of cash limit as 31 March 2004				2,814
	Schemes carried forward to 2004/05				2,814
	Net balance of cash limit remaining to meet inflation costs				0
	Cash limit carried forward to 2004/05				2,814
5.	Final costs of capital schemes completed in 2003/04
Scheme		Final cost	Funded from external contributions	Net cost chargeable to capital cash limit	Latest approved cost	Variation
Construction projects:		£'000	£'000	£'000	£'000	£'000
Information Management System		380	0	380	380	0
Supplementary Credit Approval		491	0	491	491	0

Appendix 7

Social Services

Department assurance statement for the year ended 31 March 2004

1 Introduction

1.1 The Accounts and Audit Regulation 2003 require the County Treasurer to maintain an adequate and effective system of internal audit.

1.2 From 2002/03 the Code of Practice on Local Authority Accounting in the UK has required the County Treasurer to sign a statement on the system of internal financial control as a note to the published accounts. From 2003/04, the Leader and Chief Executive will also be required to sign a more general statement of internal control. To enable them to do this, the Chief Internal Auditor is required to provide an independent opinion on the adequacy and effectiveness of the control environment, comprising risk management, control and governance for each department and the County Council as a whole.

2 Responsibilities

2.1 It is a management responsibility to develop and maintain the internal control framework, and to ensure that resources are properly applied in the manner and on the activities intended. It is the responsibility of Internal Audit to form an independent opinion, based on reviews during the year, on the adequacy and effectiveness of the system of internal control.

3 Basis of opinion

3.1 The strategic and annual internal audit plans were prepared by the Chief Internal Auditor to take account of the characteristics and relative risks of the activities involved and were approved by the County Treasurer. The internal audit plan has been delivered in accordance with the Code of practice for internal audit in local government in the United Kingdom, issued by CIPFA.

3.2 Work has been planned and performed so as to obtain all the information and explanations which were considered necessary in order to provide sufficient evidence to give reasonable assurance that the internal control system is operating effectively. However, this assurance can never be absolute. The most that the internal audit service can do is to provide reasonable assurance that there are no major weaknesses in the system of control.

4 Opinion

4.1 In my opinion the Social Services department has an effective framework of control which provides reasonable assurance regarding the effective, efficient and economic achievement of the department's objectives. Audit testing has shown that the controls are generally working in practice.

Ejner Knudsen

Chief Internal Auditor

Appendix 8

Wessex Youth Offending Team

Income and Expenditure Account 2003/04