Contact: Sheila Little, Education Finance Unit (01962 847545) ([email protected])

1. Summary

1.1 This report is the first monitoring report for the financial year 2005/06. It up-dates on the budget strategy for 2005/06 and explains how the budget will be balanced. It also reports progress with the efficiencies identified in the budget and reflects the position after the first two months of the year. As such the implications are indicative at this stage.

1.2 As the year progresses regular budget monitoring reports will be submitted to the department management team and Members to keep them fully informed and ensure appropriate management action can be taken early if necessary

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

· maximising life opportunities

· achieving economic prosperity

· improving services

1.4 In addition the Education service contributes to the five keys aims of the Children Act and during 2005/06 it will be essential to use the six priorities established in in the Annual Performance Assessment (APA) to establish the key performance indicators underpinning the financial strategy. The six priority areas are:

· To establish comprehensive, well co-ordinated preventative services to promote the safety and development of all children and young people and their families within their local communities, drawing on the resources of all stakeholder organisations.

· To effect faster improvement in 61 less effective schools across the phases - those which do not hit floor targets and those which do not add enough value.

· To support children and young people with special needs, together with their carers, by integrating service management to ensure timely, accessible information and assessment, with high quality education, social care and health services.

· To challenge and support schools and early education settings so that vulnerable individuals and groups at risk of not achieving the 5 outcomes, for example under-performing children from some BME backgrounds, are better helped to succeed.

· To secure the stability and life-chances enjoyed by our children looked after, by the additional support needed to improve Hampshire's residential and foster care services: reducing placement movements, increasing the skills of carers, maximising opportunities for permanence, and ensuring access to high quality health services and education, in particular reducing the number of children looked after permanently excluded from school.

· To continue the reduction of permanent exclusions from schools and improve attendance

1.5 By December 2005 the priorities to be set out in the draft Children and Young persons Plan will be known and they must be a key determinant when considering budget priorities for 2006/07 and beyond. The Plan will be developed across all agencies and will help to align priorities and resources including the pooling of resources facility identified in the Children Act. Further details will be included in future reports.

1.6 Race and equality impact assessment has been considered in the development of this report and no adverse impact has been identified.

2. Cash Limit 2005/06

2.1 Since the cash limit for 2005/06 was agreed by the County Council in February 2005 as £690.469m, further work has progressed to determine the strategy for complying with this cash limit both in terms of filling the budget gap and ensuring that the assumed efficiencies are delivered.

2.2 The table below sets out the size of the budget shortfall and the strategy for filling the budget gap so that a balanced budget is agreed for 2005/06:

Description	£000
Budget `gap' as at February 2005	620
Less: County Council central growth allocation	-200
Shortfall following Full County Council Feb 2005	420
Adjustments:
Reinstatement of HTST after school activity subsidy	76
Youth Offending Team (YOT) 2005/06 pressure to maintain existing services	157
Reduction in Hampshire Web Interface (HWI) charges due to 2004/05 payment (HWI allows schools access electronically to the financial, procurement and personnel system and provides the school management team and governing body with data essential to strategic resource management)	-84
Other minor adjustments	29
Adjusted budget `gap'	598
Use of 2004/05 carry forward (to fund YOT)	157
Use of general contingency	220
Reduction in SEN out-county cash limit	200
Service efficiency	21
Net budget `gap' 2005/06	0

2.3 In addition to delivering on the above strategy it is essential that the savings, totalling £200,000, which were built into the cash limit position for 2005/06, are delivered if a balanced outturn is to be produced. Specifically the savings built into the base are:

Saving identified	£000
Inclusion - mainly to reflect reduced demand for some specialist services	92
Support functions, including school training(2,000), compensation for relocation (£8,000), postage (£20,000), school conference allowances (£5,000), drama and sports bursaries (£12,000)	47
Reduction in service demands, including Further Education Awards (£22,000), uniform allowances (£6,000), Adult Education subsidies (£8,000)	36
Brimley Frith study centre: alternative funding options will be explored as a result of withdrawal of National Grid financial support	25
	200

2.4 Management action in place to deliver these savings and progress will be reported later in the year.

2.5 It is also implicit that all other budgets remain within cash limit during 2005/06 and section 3 below highlight the main risk areas as identified at this early stage in the year.

2.6 Full County Council in February 2005 made a further £250,000 available for the Youth service subject to submission to Cabinet of the business case for use of these funds. The business case is attached in Appendix 1.

3 Forecast Outturn 2005/06 up-date

3.1 Although it is too early in the year to conclude that a final forecast outturn variation could occur, there are a number of high-risk demand led budgets. The following paragraphs set out the actions being taken to minimise the risk of over spending in these areas.

Home to School Transport

3.2 This budget is historically difficult to forecast due, in particular, to the unpredictable nature of the contract price re-negotiation outcome. Although a specific contingency of £210,000 exists for 2005/06 this is small against a cash limit of £20.82m. Inflation pressures are currently predicted to exceed the inflation levels allowed and this could result in an over spend. Further spend to save initiatives are being developed to ensure that past success in containing cost pressures above inflation is maintained.

Inclusion and Behaviour (Special Education Needs)

3.3 This includes out-county placements (cash limit £7.231m), statements (cash limit £6.753m), Education Otherwise Than At School (EOTAS) (cash limit £6.608m) and inter-authority recoupment (cash limit £618,000).

3.4 Even in the light of the experience of successful policy implementation, planning and controlling expenditure on demand-led budgets for pupils with special needs continues to be a challenging management task. All these budgets will continue to be monitored carefully and managers are seeking ways to further improve budgetary forecasting and control. Further support for this area has been identified as a major element in the work of the new SEN Scrutiny Committee.

Early Years

3.5 Following payments for the Summer term, made during April/May, the take-up for places by 4 year olds has exceeded our predicted target of 8,060 by 106 as well as many of them taking up the full 5 sessions. However, it is too soon to predict a final outturn position because many of these 4 year olds will begin school in September and it is not possible to predict how many 3 year olds will enter the system. Further up-dates will be provided in the Autumn when a clearer picture of the trend will be known.

3 Legal Implications

3.1 There are no legal implications of this paper.

4 Personnel Implications

4.1 There are no personnel implications of this paper s

Recommendation

1. That the approach to filling the budget `gap' be recommended for approval to the Executive Member for Education

2. That the business case for the additional growth money for the Youth Service be passed to the Executive Member for Education for submission to Cabinet for approval.

3. That the budget monitoring report and an early identification of costs pressures is noted

Section 100 D - Local Government Act 1972 - background papers

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

NB the list excludes:

1. Published works.

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

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