Contact: Paul Carey-Kent, Deputy County Treasurer ext 7525, e-mail: [email protected], Dave Ward, Assistant Director ext 7259, e-mail: [email protected] and Annal Nayyar, Head of Finance ext 7526, e-mail: [email protected]

1. Summary

1.1 The following decisions are sought:

Approve for submission to Cabinet:

i) The revised budget for 2004/05 (as set out in Appendices 1 and 2)

ii) The base budget for 2005/06 (as set out in Appendix 3)

iii) Proposals for growth and redeployment (as set out in Appendix 4)

iv) Proposals for efficiency savings and improvements (as set out in Appendix 5)

v) The annual review of income and charges (as set out in Appendix 6)

vi) The workforce implications of the proposed budget for 2005/06 (appendix 7)

vii) The detailed budget prepared within the guidelines set by Cabinet (as set out in Appendix 8)

In addition, the executive member:

· Draws the Cabinet's attention to the pressures to be dealt with and recommends that, given this context, the `mid' and `base' budget options should not not pursued; and

· Requests use of a bridging loan of £1.7m during 2004/05 - 2005/06 in order to enable capital programme pressures to be met through use of expected capital receipts.

2. Reasons

2.1 Cabinet has requested that:

· Service budgets be prepared in consultation with Executive Members within the provisional budget guidelines for consideration by Policy Review Committees, and approved by the Executive Member for submission to the Leader and Cabinet in February 2005

· Executive Members identify cashable efficiency savings of at least 1.25% on the basis that these savings could be used in final decisions to absorb pressures within the service or elsewhere, or to reduce the council tax.

· Executive Members report back on their annual review of charges and maximisation of income.

· Executive Members report back on the workforce implications of their proposed budgets as part of the process of linking workforce and financial planning.

2.2 The Social Services revenue budget for 2005/06 supports the County Council's corporate aims and its four priorities by focusing financial resources on areas such as improving the quality of life of children in need, vulnerable adults and older people.

3. Other options considered and rejected

None

4. Conflicts of interest declared by the decision maker or other Executive member consulted

None

5. Dispensation granted by the Standards Committee

None

6. Reason(s) for the matter being dealt with if urgent

Not applicable

Approved by Date:

Councillor Felicity Hindson

Contact: Paul Carey-Kent, Deputy County Treasurer ext 7525, e-mail: [email protected], Dave Ward, Assistant Director ext 7259, e-mail: [email protected] and Annal Nayyar, Head of Finance ext 7526, e-mail: [email protected]

1 Introduction

1.1 This report sets out the proposed Social Services revenue budget for 2005/06 and reports on the revised budget for 2004/05. This report has been prepared in consultation with the Executive Member for review by the Policy and Review Committee, before the budget is considered formally by the Executive Member. It will be reported to the Leader and Cabinet on 12 February 2005 to make final recommendations to County Council on 25 February 2005.

1.2 The Social Services revenue budget for 2005/06 supports the County Council's corporate aims and its four priorities by focusing financial resources on areas such as improving the quality of life of children in need, vulnerable adults and older people.

1 Budget strategy

1.1 The Cabinet has set a provisional budget strategy based on the following guidelines:

· For Education non-schools budgets, Environment, Policy and Resources and Recreation and Heritage services, the guidelines are at the level of the base budget, adjusted for inflation on the same assumptions made in previous budget forecasts - pay increases at 2.95% to reflect national agreements, prices at 2.5%, together with an allowance of 1.5% increase in the employers' contribution to the Local Government Pension Scheme

· Schools formula spending share increase will be fully passported, matched by Government grant, as constrained by the Secretary of States' reserve power to require this outcome. Schools will be required to meet all cost pressures, demands, contingency, new pressures and priorities within these cash limited resources

· The Social Care Executive Member is required to prepare separate budget proposals for children's services and other client groups. Options will be considered based on full, part and no passporting of the increase in formula spending share. The Executive Member will ensure that separate efficiency savings targets set by Government for Supporting People be achieved without additional cross subsidy elsewhere, or additional council tax support i.e. by dealing with the pressure within whatever allocation is given to Social Services.

· All services (other than schools) are required to identify cashable efficiency savings of at least 1.25% (including the firm plans already made for SAP benefit realisation savings) on the basis that these savings could be used in final decisions to absorb pressures within the service or elsewhere, or to reduce the council tax (or any combination of these).

· Extra contingency provision will be made to match the commitments on waste management from new infrastructure costs, increases in volumes and effect of landfill tax on the private sector contract

1.2 In arriving at the base budget Executive Members are required to ensure that:

· Income will be increased at least in line with inflation

· Any proposals for spending above the budget guideline are matched by efficiency savings or redeployment of resources.

· All proposals for additional spending, however financed, need to be accompanied by a summary business case containing clear financial and performance data setting out how performance will be improved and value for money achieved, and it links to the key aims of the Corporate Strategy

· Staffing implications of proposed budgets are consistent with the service's workforce plan.

1.3 Preliminary guidelines have also been set for 2006/07 and 2007/08 in order to provide services with a medium term financial planning framework within which to formulate 2005/06 budget proposals.

2 Budget guidelines

2.1 The budget guidelines were considered by the Cabinet on 13 December 2004. For Social Services separate guidelines were proposed for services to children and to other client groups. Although three levels of funding have been proposed based on full passporting, base budget only or mid way between the two, only the full FSS passporting option is split in that way in these papers. For this service, the provisional budget guideline at full FSS passporting for 2005/06 is £13.5m.

It is worth putting these options in the context of recent changes in the Social Services budget:

Supporting People Other Total Increase in other

£m £m £m %

2002/03 0.6 209.4 210.0 16.7

2003/04 34.0 238.0 272.0 13.7

2004/05 34.4 264.0 293.4 10.9

2005/06 (base) 32.4 274.1 306.5 3.8

2005/06 (mid) 32.4 277.6 310.0 5.2

2005/06 (passport) 32.4 281.1 313.4 6.5

2.2 This report sets out the Social Services Executive Member's responses to the guidelines. In accordance with the budget guidelines, the report sets out the implications of the three possible cash limits. It does this by setting out first what could be delivered under the `passport' option, and then assesses the potential impact were the `mid' or `base' option applied. In doing so it has been assumed that the department has the freedoms and flexibilities to use the above grants in a way that supports the overall package of pressures rather than areas dictated by the specific grant. Guidance on the use of 2005/06 grant allocations will become available over the coming weeks The paper

· Reviews the revised budget for 2004/05 (as set out in Appendices 1 and 2)

· Reviews the 2005/06 base budget which totals £306.5m (as set out in appendix 3)

· Identifies growth of £14.2m arising from the use of the FSS cash increase and an increase in specific grant and reinvested cashable efficiencies. This is summarised as follows:

	Social Care	Supporting People	Total
	£m	£m	£m
FSS passported increase	13.5	-	13.5
Increase in grants	8.3	-2.0	6.3
Total available resources	21.8	-2.0	19.8
Adjusted for:
Corporately assumed inflation	-6.6	-	-6.6
Inflation on grants in base	-1.0	* -	-1.0
Cashable efficiencies	3.2		3.2
Cashable efficiencies reinvested	-3.2		-3.2
Supporting people savings	-	2.0	2.0
Available growth	14.2	-	14.2
* Given the cash reduction for Supporting People, no inflation adjustment has been applied on the grant

The increase in FSS of £13.5m (6.4%) is made up of three components:

Children +6.6%

Older People +7.5%

Other Adults +6.7%

· Identifies efficiency savings of £3.2m , being over 1% of the base budget (as set out in Appendix 5) which are reinvested to fund identified pressures.

· Proposes the redeployment of £3.2m of resources (as set out in Appendix 5)

· Reviews the charges made by this service (as set out in Appendix 6)

· Sets out the broad potential impact were the `mid' or `base' options to be pursued.

3 Revised Budget

Revenue

3.1 The cash limit for the revised budget is £299.2m. The calculation is shown in Appendix 1.

3.2 A summary comparing the revised budget with the cash limit is set out in Appendix 2. The principal reasons for the variations are summarised below:

· Children and Families: The reallocation of centrally held balances at the start of the year to areas of planned expenditure in (£1.0m). A technical adjustment relating to a change in accounting methodology for Wessex YOT (£1.3m).

· Older People: The reallocation of centrally held balances (in particular residential allowances) at the start of the year to areas of planned expenditure (-£3.1m)

· Adults with a Physical or Sensory Impairment: Principally technical changes between Assessment and Care Management and Net Cost of Services as a result of the recommendations of a Best Value Review

· Adults with Learning Disabilities: The reallocation of centrally held balances (in particular residential allowances) at the start of the year to areas of planned expenditure (£1.1m)

· Adults with Mental Health Needs: technical adjustment relating to a change in accounting methodology for substance misuse services (-£0.1m)

· Other Adult Services: technical adjustment relating to a change in accounting methodology for substance misuse services (£0.1m)

· Support Services and Management costs within all Divisions of Service have changed as a result of a review of the apportionment of costs to ensure it more closely reflected actual activity

3.3 The last monitoring report to the Executive Member of Social Care, on 24 September 2004, highlighted a potential underspend of £0.7m but against a backdrop of a number of potential pressures particularly in services for children and families and for adults with learning disabilities. Unfortunately these potential pressures have become real and currently the department is predicting a £1m net pressure. This comprises of £2m within Children and Families (paragraph 4.4 to 4.6), and £1.9m within People with Learning Disabilities as reflected in paragraph 4.7, offset by the unallocated contingency of £2.9m.

3.4 The Children & Families service is currently reporting a £2m overspend which is fundamentally as a result of increases in non-county placements and Independent Foster agency placements (£1.3m) as reflected in the table below:

3.5 In addition demand for respite care has increased and currently stands at 52 clients, a net increase of 12 clients since the beginning of April. This has resulted in a net pressure of £0.060m.

3.6 The balance of the pressure of approximately £0.7m has arisen from both changes in the needs of children who were looked after as at 1 April i.e. changes in the length of stay and transfers to more expensive placements.

3.7 The Learning Disability division of service shows an overspend of £1.9m, principally due to an increase in client activity (net increase of 23 clients at average cost of £0.050m) and a Supporting People pressure of £0.730m.

3.8 The above pressures of £3.9m are partly offset by the availability of the unallocated contingency of £2.9m, thus leaving a projected net £1.0m pressure.

3.9 The department will continue to implement appropriate management action with the aim of delivering a breakeven budget at the year end whilst minimising the risk to front line service delivery and performance.

3.10 In view of the above pressure it may be necessary to use a substantial proportion of the £1.3m contingency proposed within the 2005/06 budget to repay any overspend in 2004/05.

Capital Programme

3.11 The current cash limit for 2004/05 is £4.587m, including funds carried forward from previous years. Schemes to the value of £3.381m have started or are contractually committed whilst schemes valued at £2.936m are currently under development giving a total of £6.317m, which can be summarised across the main areas of activity as follows:

3.12 It was known in constructing the Social Services Budget for 2004/05 that there would be shortfalls in the funding available to cover IT projects. The original strategy to deal with this was to make a business case for prudential borrowing by the County Council on the basis that IT spend would lead to cashable efficiencies in future and that this would enable the Social Services revenue budget to cope with repayment of the revenue effects of that unsupported borrowing. Accordingly, the Executive Member for Social Care agreed on 23 January 2004 that the Cabinet be asked to agree (subject to submission of the appropriate business case) an unsupported credit approval of £1m to fund the SWIFT development.

3.13 Since then, the position has changed somewhat:

· the Gershon review has led to separate pressure to make revenue savings of the type envisaged. It is doubtful whether the savings potential could sensibly be expected to cover both targets. Moreover

· it now appears likely that the efficiency gains from SWIFT investment will be primarily of a non-cashable type, ie improved delivery against performance indicators and/or the ability to absorb rising workloads without commensurate increases in staff numbers. At the same time

· the expected full cost of SWIFT implementation has increased somewhat

· the cost of ensuring that e-Government targets can be met for Social Services has also increased

3.14 The result, as set out above, is a total shortfall of £1.7m for the completion of SWIFT and essential e-government development work. The main reason for carrying out this work is that it is unavoidable if the mainframe is to be switched off at the end of 2004/05 - as has been planned for some years - and Government requirements are to be met. The case is therefore one of business necessity rather than invest to save.

3.15 That in turn requires a different funding approach. In the absence of realisable savings to cover the cost of any unsupported borrowing, capital receipts are preferred. Substantial potential has been identified through the closure of Woodend Children's Home and the associated accommodation at Copsehill, disposal of part of the Glen House site and Social Services' 25% share of the corporate receipt due from sale of Winton House. The Social Services share of these receipts is expected to total at least £1.5m, and it would be reasonable to plan on the basis that £1.7m might be obtained.

3.16 However, there is a timing issue. It is, therefore, recommended that as part of her 2005/06 budget submission that the Executive Member (Social Care) request that the Cabinet approve a bridging loan under the prudential guidelines on the understanding that repayment will be made once the properties identified above have been sold. This does not require the same type of business case, simply that the spending is necessary and that Social Services will be able to repay the loan.

3.17 This leaves a gap of £1.730m which will have to be funded from the future generation of capital receipts supported as necessary by a bridging loan.

4 Budget 2005/06

4.1 A base budget has been prepared which contains the current financial policies of the Council, in order to provide a starting point from which decisions can be made. The base budget for this service is £306.5m at outturn prices (£61.8m Children and Families, £244.7m Other Services) and the fully passported budget is £313.4m.

4.2 Appendix 3 shows the make up of the budgets categorised by service area.

4.3 Overall, the base budget includes a net increase in expenditure at constant prices of £4.5m. The main variations are:

· The transfer of £7.1m from specific grants to FSS, which has no impact on the cash limit

· Transfer of the HR function and other virements (-£1.8m)

5.4 There is an estimated net cash increase above corporate inflation assumptions of £17.4m ( cash increase of £14.2m plus assumed efficiency savings of £3.2m see paragraphs 3.1 and 3.2) made up of:

£m

Balance of FSS passported 6.9

Net increase in government grants 7.3

Reinvested cashable efficiencies 3.2

Total 17.4

The passporting of FSS and changes in government grants are discussed in more detail in sections 7 and 8 below.

5.5 Proposed allocation of the cash increase is summarised below:

£m

Children and Families 2.9

Older People 7.6

Adults 4.8

Management and Support 0.8

Contingency 1.3

Total 17.4

Children and Families (£2.9m)

5.6 This increase is approximately 5% of the base budget, as set out in Annex 4 to Appendix 3. The proposed allocation is:

5.7 This level of funding of £1.9m will maintain services at their current levels, by funding the estimated full year impact of the cost of new placements made in 2004/05.

5.8 It is estimated that the corporately assumed general inflation provision within the base budget will not be sufficient in 2005/06 and thus an additional amount has been earmarked.

5.9 The department has been keen to further develop its Fostering Service. In 2004/05 it was agreed to introduce a pilot scheme before the end of March 2005, which would employ `professional' or specialist foster carers, who would care for children who have been identified as highly dependant or present a specific challenge, and who would otherwise be living in residential care, or in independent foster care placements away from Hampshire. The part year cost falling into 2005/06 is £0.16m.

5.10 Each local authority is required to maintain a 10 year local teenage pregnancy strategy. Part of the funding available has been via a government grant, however there is an estimated shortfall likely in 2005/06 and therefore additional core budget of £0.089m has been ear marked.

5.11 Hampshire County Council's vision for CAMHS over the next three years is to develop and promote a fully integrated child centred service where agencies take collective responsibility for service delivery to children and their families. Therefore requirement to maintain existing CAMHS service provision and continue the funding of posts agreed during 2004/05.

5.12 Kinship Care is the first choice of placement for a child, whose needs have been assessed as not being able to live with his/her birth parents. Funding had previously been via a Public Service Agreement, this will cease from 2005/06 and will now need to financed from core budget.

Older People (£7.6m)

5.13 The provision of an extra £7.6m (6.6% of base budget) is proposed to be allocated as follows:

5.14 Additional demand for nursing care is being met by the creation of an extra 500 nursing beds. This demand will be met by independent sector purchasing or direct provision via a £60m capital project involving the development of County Council homes and the use of health properties. Although part funding was approved in 2004/05, an additional sum of £3.5m to meet running costs of operating these homes opening in 2005/06 is now required.

5.15 In recent years there has been substantial increases in domiciliary, residential and nursing care prices. Therefore an additional provision of £1.4m has been made on the basis of increases in both nursing and residential home placements as well as an increase in domiciliary care.

5.16 An extra £2.5m is required to meet the full years costs of 2004/05 care packages (domiciliary and residential and nursing placements) and to help maintain the impetus of improving performance in the number of people helped to live at home.

5.17 A budget provision of almost £0.2m has been included to fund delayed discharge fines for Sundays. From 1 April 2005 it is proposed that fining for Sundays and bank holidays will occur for patients in hospital. There is no current provision in the budget for this expenditure.

Adults (£4.8m)

5.18 An extra £4.8m representing an increase on the base budget of about 6% is proposed.

5.19 One of the fundamental pressures included in the above £4.8m is £1m arising from the review of Supporting People contracts. Whilst it is envisaged that the department will not pick up all expenditure, arising from the overall fall in the Supporting People grant allocation, there will invariably an impact on the social care budget. This area of the budget will be closely monitored during the 2005/06 budget monitoring cycle.

5.20 A budget provision in the region of £2.6m has been identified to meet pressures resulting from increased numbers of clients from all categories coming into the service and the full year effect of placement made during 2004/05.

5.21 As with other client groups, price increases for the provision of care are expected to be above the corporately assumed level. Therefore an inflation provision of almost £1.2m has been allocated.

Management and Resources (£0.8m)

5.22 Almost £0.5m has been allocated to IT to cover Information for Social Care Support & management, E-Government, Network connections, expansion of Hantsnet to 38 sites and to allow the smooth implementation of SWIFT.

5.23 A budget provision of £0.2m has been provisionally allocated to meet the cost of unsupported borrowing (see 4.12 above) which should be secured at the end of the 2004/05 financial year. The first year repayment will occur in 2005/06, and thereafter cease and it is anticipated future capital receipts will eradicate the need for the continuation of the budget after 2005/06.

5.24 A budget of almost £0.1m has been set aside to meet costs arising from the Freedom of Information Act.

Contingency (£1.3m)

5.25 A contingency of £1.3m has been set aside to meet the possibility of 2004/05 overspend, new pressures and also to meet any shortfall arising from proposed efficiencies not being met in full during 2005/06.

5 Passported increases in the Social Services Formula Spending Share

6.1 The passported Social Services Formula Spending Share (FSS) increase is 6.4% which amounts to a cash limit increase of £13.5m. However this increase still represents the second lowest FSS per head of population of all the 34 Shire Counties reflecting the governments view of Hampshire's comparatively low need to spend.

6.2 Part of the Older People's (£3.9m) and Other Adults (£2.9m) specific grant is to be transferred back into FSS from 2005/06. This has no effect on the overall budget.

6.3 After allowing for corporate inflation assumptions for pay (2.95% plus increased pension contributions ) and non pay (2.5%) and other minor base adjustments there is approximately £6.9m available from the passported FSS increase to meet new pressures in 2005/06.

7. Government Grants

7.1 Overall there is a net increase of approximately £7.3m in government grants which can be used to meet the department's 2005/06 pressures, ie £8.3m cash increase in grants of which £1m is needed to allow for inflation pressures on grant-funded spending. Current estimated figures for specific and formula grants are shown in Appendices 8 & 9. The most significant changes, explained in more detail in the following paragraphs, are :

· Increase in the Access and Systems capacity Grant of £2.5m to make £11.4m in total

· Increase in Carers grant of £1.1m

· Increase in Adoption & Choice Protects grant of £0.5m

· Increase in Training/Human Resources grants £1.6m

· Increase in the CAMHS grant of £0.3m to £1.2m

7.2 The Access and Systems Capacity Grant has been increased nationally by £100m more than originally planned. This increase is seen as non-recurrent and the Councils share of this is £2.5m. Overall the department's revised allocation for 2005/06 is £11.4m. This grant has been allocated to enable local authorities to build up the stock of community based social services and promote older people's independence, reduce delayed discharges and meet targets for assessments.

7.3 The increase in the Carers grant reflects central governments drive to increase provision to allow carers to take a break in keeping with the 2001 Carers and Disabled Persons Act.

7.4 The Adoption & Choice Protects grant is to provide continued support to develop adoption services in line with the Adoption Support Services Regulations 2003 and the forthcoming Special Guardianship Regulations that are planned for 2005. Furthermore, as in 2004/05, the Choice Protects element of the grant should be used to meet the needs of the local population of looked after children via the introduction where feasible of more effective strategies for planning and commissioning provision for looked after children. Any such work should take into account the importance of a detailed assessment of the need of both the current and anticipated future population of looked after children and the importance of a multi-agency approach in delivering provision.

7.5 The increase in the Training & Human Resource grant continues to reflect the focus on staff training and development so that social care staff and the staff of the independent organisations that provide social services on their behalf have the correct knowledge and skills for the work that they undertake. Staff are required to met the training and qualifications standards with the relevant National Minimum Standards that the National Care Standards Commission are using to regulate care services.

7.6 The Child and Adolescent Mental Health Services (CAMHS) grant is intended to be used to improve CAMHS services, in accordance with local needs and priorities, as set out in the CAMHS Development Strategy. This service will include mental health promotion and early intervention. Joint commissioning arrangements and /or Health flexibilities should be used wherever possible.

7.7 It has been assumed in these papers that the department has freedoms and flexibilities to use the above grants in a way that supports the overall package of pressures rather than areas dictated by the specific grant. However in practice the department has incurred expenditure at greater levels than the allocated grants. Guidance on the use of 2005/06 grant allocations will become available over the coming weeks.

Supporting People (£32.4m)

7.8 As members will be aware the Supporting People Programme funding is external to the core budget of the department and as the Government revealed on 31 August, national funding will fall from £1.805bn this year to £1.72bn for 2005 and then £1.7bn in 2006/07 & 2007/08. Consequently Hampshire County Council as an administering authority has now received its 2005/06 grant allocation which shows a fall of 5.6% (£2m reduction). Work is ongoing to align service delivery to the allocated resource position.

7.9 This service alignment needs to also incorporate future years reducing resources. Although it is true to say that 2005/06 could have been slightly worse, the outlook for 2006/07 onwards is bleak. The guarantee we have received is that our budget, as we progress towards the new means of grant distribution, will be reduced in the region of 5% cash per year, which will prove increasingly difficult to cope with. Any reduction in the Supporting People programme may in some areas become a pressure on the Social Services core budgets. This would occur if services of a social care nature are inappropriately funded by the Supporting People Programme but Social Services have a statutory responsibility to provide them. Any such pressures have been reflected in unavoidable pressures of £23.7m as highlighted in paragraph 11.

8. Redeployment proposals, efficiency improvements and cost pressures

8.1 The Cabinet requires all services to consider and report on:

· efficiency improvements achieved in absorbing pressures and costs within the budget guidelines

· the redeployment of any resources required to offset any new spending priorities, or inescapable budget pressures, or legislative requirements which otherwise cannot be met within their budget guidelines

· the annual review of charges and the maximisation of income.

8.2 Details of redeployment proposals of £3.2m and cost pressures absorbed of £3.2m are included in Appendix 5.

Comments of the Director of Social Services

8.3 My comments in previous budget reports have focused upon growing pressures on social care services, arising both from new government requirements and demands from individual consumers, and the need for growth in the resource base to match. Fortunately, significant budget increases have been made available in recent years and these have allowed the volume of services to be increased commensurately, the quality of those services to have been improved and the Social Services Department's performance has continued to be judged as good by the Commission for Social Care Inspection despite increased demands thus contributing to the County Council's overall excellent rating.

8.4 My comments this year are no different in outline. The current financial year has seen increased levels of activity and, given demographic trends and the continuing flow of new government requirements, it is highly probable that next year will see further increases. Labour market conditions in South-East England, where unemployment is exceptionally low and female economic activity rates exceptionally high, mean that we continue to struggle to secure a workforce of sufficient size to meet all the care demands presented. These difficulties are converted into financial pressures because of the need to pay market supplements to the staff in occupational groups, such as qualified social workers in the Children and Families sector, home carers and residential care staff, where recruitment problems are most severe and because independent sector care providers (from whom the largest part of our care provision is commissioned) face the same difficulties. This leads to increased costs and, therefore, increased prices.

8.5 The recent past has seen increased demands on services for children and their families. The national Children in Need census last carried out in Feb 2003 revealed that in the sample week 3,240 children were receiving a service (12 per 1,000 people aged 0-17) - an increase of 10% over the number discovered by the previous such census carried out in September 2001 when 2,945 children were receiving a service (10 per 1,000 aged 0-17). The number of children looked after by the County Council increased by 2% between 31 March 2003 (when there were 1,033) and 31 March 2004 (when there were 1,053). A further Children in Need census is to take place next month.

8.6 The number of children and young people in Hampshire's population is not increasing. However, a variety of national studies, published last year, suggest that their needs for services are. For example: child poverty was found still to be a major problem with 3.6 million children in poverty; 26% of young people in mainstream education were found to have committed a crime while 60% of excluded young people had offended; the level of unauthorised school absences was on the increase; 25% of 10-11 year old males drank alcohol while 27% of the 14-15 year old males were `fairly sure' or `certain' that their friends carried weapons for protection. These statistics are indicative of a spectrum of need and behaviour difficulties amongst children and young people the extreme end of which frequently requires Social Services' intervention.

8.7 Services for adults and older people are experiencing volume increases as well as shifts in the nature of the care on offer. Residential and nursing care will always have to be an option where the capacity of individuals to care for themselves, or their communities to care for them, is at its lowest. However, priority is given, wherever possible, to supporting people in their own homes. Accordingly, the number of people in receipt of community care services rose in the twelve months from September 2003 to September 2004 from 6,887 to 7,363 - a 7% increase. In addition, many more people are now in receipt of the kinds of equipment that enable them to retain their independence or to be cared for within their own home. The County Council's Joint Equipment Store in Basingstoke delivered and collected 12,000 items in 1996/97 and this increased to over 51,000 in 2003/04. The projected activity for 2004/05 is that over 80,000 items will be delivered and collected. The Supported Housing Commissioning Plan, approved by the Executive Member for Social Care in September 2004, is another aspect of our drive towards this end, as is our engagement with the Managed Care and Assistive Technology pilot projects.

8.8 By contrast, the number of people supported by the County Council in residential or nursing care (5,500) has stayed fairly constant for some time. However, it is important to note that there is a trend towards higher dependency (and, therefore, higher cost) residential and nursing placements: 61% of people were placed in these categories in September 2003, a proportion which had risen to 63% by September 2004. In part, this trend has been driven by the well-known demographic changes, with a growing very elderly population. Undoubtedly, this will continue as the County Council's population forecasts lead us to expect that there will be an additional 5,700 people aged 85 or over in the next six years.

8.9 Many new responsibilities to have come into play in recent months, the most dominant of which have been enshrined in The Children Act 2004 which received royal assent on 15 November 2004. This will have a profound effect on the County Council's Social Services and Education departments, other local authority services for children and their families and those provided by the health service and other public sector bodies. Reports have already been made to Cabinet, executive members and policy review committees and others will be coming forward in the near future, making recommendations for action.

8.10 However, several other new social care responsibilities which will have an impact in the coming financial year and beyond have come the way of the County Council. Prominent amongst these are:

8.11 The Multi-agency Public Protection Arrangements (MAPPA) which place a duty on the police and the National Probation Service to assess and manage risks posed by offenders. Other agencies, including local authority social services departments, have a statutory duty to co-operate with the arrangements.

8.12 A duty under section 26A of the Children Act 1989 to provide advocacy services for children and young people making or intending to make representations (including complaints) under certain sections of that Act.

8.13 `Removing barriers to achievement: the government's strategy for SEN'. This strategy sets out the government's vision for enabling children with special educational needs to realise their potential and to improve provision for children with disabilities and special educational needs. It builds on the proposals for integrating children's services in Every Child Matters. Action is proposed in four key areas, including early intervention to ensure that children who have difficulties with learning receive help as soon as possible and that parents have access to suitable childcare. This is expected to need greater co-ordination between health, education and social services in dealing with young children with SEN and disabilities.

8.14 Single Assessment Process (SAP): the requirement for health and social care agencies to co-operate in providing a seamless, integrated assessment process for older people.

8.15 Research Governance: arrangements for ensuring that research carried out in social care is ethical and effectively conducted.

8.16 The Adoption and Children Act 2002 Section 118 amends Section 26 of the Children Act 1989 (Review of cases of looked after children) . The Review of children's cases (amendment)(England) regulations 2004 require all local authorities to have Independent Reviewing Officers to chair the statutory review meetings of all looked after children.

8.17 The Protection of Vulnerable Adults (POVA) list started to be implemented on a phased basis from June 2004. Care workers who have harmed a vulnerable adult, or placed a vulnerable adult at risk of harm, will be banned from working in a care position and will be placed on the POVA list.

8.18 The Carers (Equal Opportunities) Act 2004 received royal assent on 22 July 2004. The Act builds on existing carers legislation and carers' support. It is intended to: ensure that carers know they are entitled to a needs assessment; ensure that local authorities consider a carer's other interests (e.g. work, study, leisure) when carrying out an assessment; and promote better co-operation between health and social services to make sure that carers' support is more coherent and there is less duplication of effort.

8.19 National minimum standards for adult placement schemes took effect in August 2004.

8.20 The National Service Framework for children, young people and maternity services - setting out the government's expectations for health and social care for these services - was published in September 2004.

8.21 A revised post-qualifying framework for social work education and training has been introduced.

8.22 Guidance on the National Assistance Act 1948 (choice of accommodation) directions 1992 and National Assistance (residential accommodation) (additional payments and assessment of resources) (amendment) (England) regulations 2001 (treatment of tops-up) was issued in October 2004. This has a potentially significant effect on the fees paid by local authorities for the care of residents supported in residential accommodation.

8.23 This combination of new responsibilities, growing demands, a performance culture which has, year-by-year, become of greater significance and a difficult labour market present a major challenge for the coming financial year. On top of this, cuts in Government funding of Supporting People and uncertainties about the future of Children's Fund projects will have to be managed.

8.24 If the budget is increased to reflect the FSS increase (in addition to the Corporate support for market supplements, for which I am most grateful) then the increase in resources available to Social Services department would be considerable. This would enable all the pressures which have been quantified to date to be dealt with at the level required to maintain adequate services. Nonetheless, a note of caution is in order:

· Efficiency savings target of £3.2m (plus the need to absorb increments of £0.9m) will be very challenging, and if not achieved will place further pressure on the budget

· There are no proposals to take forward new service developments or invest to save schemes or to make "desirable" rather than "essential" responses to new pressures

· There are also some changes for which it is hard to assess whether there will be a financial impact in the coming year, in particular new regulations on top-up payments for placements in residential care, the extension of the bed-blocking fines regime to cover community hospitals and any costs not covered by corporate budgets associated with implementation of the Children Act.

· In the light of that savings target, the potential for an overspend in 2004/05 and the likelihood that new pressures may emerge, a contingency of £1.3m offers only the minimum cover needed

For those reasons, very tight budget management will be required under the "passport" option. If the "mid" or "base" options are to be implemented, they will require rapid action to make the necessary service reductions combined with a very severe approach to budget management.

9. Review of charges

9.1 The service's 2005/06 revenue budget includes income of approximately £70.7m (excluding government grants). Approximately £20.2m is received from health (PCTs) and other local authorities. About £50.5m relates to fees and charges. £16.7m of this relates to fees and charges set by the department and details of the material headings are included in Appendix 6.

9.2 There are some mandatory and national charges that the County Council is not able to vary. Some charges, most notably residential accommodation for adults and older people, require financial assessments based on nationally determined guidelines. The charges detailed in Appendix 6 relate to the use of County Council accommodation. However, clients placed in independent sector accommodation are subject to the same financial assessment process.

9.3 Discretionary charges are reviewed annually except when they are subject to agreements which cover longer periods when the review takes place at the end of the period of the agreement. Examples of those charges reviewed annually are the provision of meals for adults and older people and parental contributions for children in care.

9.4 Charging for residential care has been governed by CRAG (Charging for Residential Accommodation Guide) since 1992, which provided a high level of consistency between local authorities. Charging for non-residential care on the other hand has been much more variable. Therefore there is much greater scope for increasing income on the non-residential side, which, due to the government's push to support a greater proportion of the population at home , is also a growing area of activity.

9.5 The likely pressures on the department's budget in this and future years are such that it would be appropriate to consider and consult on options for increasing income: possible proposals will be brought in due course.

10. Other expenditure

10.1 The budget includes some items which are not counted against the cash limit. This includes budgets for central department support services, except where they have been given to service departments to buy services, and repair and maintenance of buildings. It also includes costs of member support within Social Services budgets that are rechargeable to Policy and Resources for corporate and democratic core services.

11. Alternative options

11.1 The changes to the `passport' option which would be required by the other options can be summarised as follows:

11.2 Given the unavoidable pressures of £23.7m identified, it will be apparent that both these reduced budget options would require substantial savings action beyond the already ambitious level of efficiency savings required under the `passport' option. This would inevitably require significant service reductions and increases in charges:

12. Workforce levels and costs

12.1 The workforce implications of the proposed budget are set out in Appendix 7. The 2005/06 base budget supports a planned workforce of 3791 full time equivalent (FTE) staff . This compares with the original estimate for 2004/05 of 3463 which is an increase of 328. The principal variations are as follows:

· Revised estimated for Domiciliary care staff in 2004/05 not initially recorded in 2004/05 (+105)

· Increase in residential and nursing care staff in order to ensure full compliance with National Care Standards legislation and for new nursing homes (+161)

· Increase in posts that are grant funded (Children's Fund, Youth Justice Board etc.) (+21)

· Planned increase in internal Domiciliary Care provision (+20)

· Increase in Field and Care staff approved in the work force plan (+21).

13. Recommendations

It is recommended that the Executive Member recommends to the Cabinet the approval of:

· The revised budget for 2004/05 (as set out in Appendices 1 and 2)

· The base budget for 2005/06 (as set out in Appendix 3)

· Proposals for the absorption of cost pressures through the use of effeciency savings (as set out in Appendix 5)

· The annual review of income and charges (as set out in Appendix 6)

· Proposals for the use of additional funds (as set out in Paragraph 5.5) under the `passport' option, together with the broad split between childrens and other services

And that she:

· Draws the Cabinet's attention to the pressures to be dealt with and recommends that, given this context, the `mid' and `base' budget options should not not pursued; and

· Requests use of a bridging loan of £1.7m during 2004/05 - 2005/06 in order to enable capital programme pressures to be met through use of expected capital receipts.

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