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

1 Summary

1.1 This report summarises the Social Services spending in 2004/05.

1.2 It recommends that the final accounts for 2004/05 be approved and that the overspending be carried forward to 2005/06 based on current policy and be deducted from the £1.3m contingency approved as part of the 2005/06 base budget.

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

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

ii) Aim 5 - Improving services - ensuring services are inclusive and continuously improving to meet the changing needs of existing and potential service users

iii) Aim 6 - Developing Councillors and staff - ensuring they have the appropriate skills, knowledge and resources

1.4 Overall there is a net overspending of £532,000 (0.17%) against the 2004/05 adjusted revised revenue cash limit of £316.4m. Management action was taken to contain spending within the cash limit while minimising the risk to front line service delivery and performance. This has been successful in containing spending to within £0.5m of the cash limit, after allowing for a virement of almost £0.5m in respect of uncommitted capital resources. This reported overspend is broadly matched by an underspend on Supporting People as described in paragraph 1.8.

1.5 The major variations are:

		£'000
Service Strategy and Regulation		-46
Children and Families		1,428
Older People		1,240
Adults Services		897
Contingency / Grants		-2,987
		532

1.6 An explanation of these variances is given in Part A of the report below.

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 £532,000 will be deducted from the Adult Social Services and Children's Services cash limits for 2005/06. However, a contingency of £1.3m has been set aside in the Social Services budget for 2005/06, which will more than cover this.

1.8 As a `two star' Social Services department within an excellent authority there is some freedom and flexibility with certain government grants that are received, including the ability to carry forward unspent grant from one year to the next. Other government grants are ring fenced and their use is subject to certain constraints. Where these grants are not fully spent on eligible expenditure the remaining balance is carried forward and subject to the approval of the relevant government department can be used for their intended purpose in 2005/06. Such approvals have been received on certain grants, most notably the Supporting People grant from the Office of the Deputy Prime Minister. It should be noted that should the Department have had the same freedoms and flexibilities on this grant as others the department would not have overspent.

1.9 On capital, schemes to the value of £3.519m were committed in the year and schemes to the value of £0.876m have been approved to be carried forward to start in 2005/06. In total this equals the approved cash limit for the capital programme.

1.10 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 2004/05 the adjusted amount is £316.4m as set out in Appendix 1.

2.2 The final outturn was £0.532m more than the cash limit, representing some reduction from the projection of £1.3m reported as likely without further management action in the report to the Executive Member in January. 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 2004/05 compared to the outturns for the previous three years is shown in the table below:

	Variations from Revised budget
	£'000	%
2001/02	-295	-0.20
2002/03	-72	-0.03
2003/04	-784	-0.30
2004/05	+532	+0.17

2.4 The year was another one of great pressures 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

· 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

· Continued focus on improvements in key performance target areas.

2.5 The department received £14.3m of additional funding for growth and £5.4m for inflation in preparing the 2004/05 budget. Additional resources were used as effectively as possible but demand for services across many client groups have resulted in significant pressures in excess of this funding. As a result a small overspend has arisen for the first time in four years.

2.6 The following paragraphs describe in more detail some of the most significant variations across each client group.

Service Strategy and Regulation -£0.05m underspend

2.7 An underspend principally due to lower staffing and other expenditure in relation to the statutory complaints procedure.

Children and Families +£1.4m overspend

2.8 Net expenditure for Children and Families has increased by £4.0m (7.5%) compared to 2003/04. The principal overspend against the budget arose within Children Looked After (£2.1m) which was partially offset by underspends within other Divisions of Service in this area (Commissioning and Social Work -£0.2m, Family Support Services -£0.2m, Youth Justice -£0.01m and Other Children's and Families Services -£0.2m).

2.9 The pressure within Children and Families was principally due to placements made with Independent Fostering Agencies (IFA's) and Non County Residential Placements (NCP's). As in 2003/04 when a similar overspend arose there has been an increase across both IFA placements (60 ended, 82 began, net increase 22) and NCP placements (23 ended, 29 began, net increase 6), with a total net increase of 28. This increase has been minimised by maximising the use of more cost effective in house foster placements, residence orders, kinship care and adoption. The number of these placements increased by 40 in the year (from 874 to 914). In addition whilst the average cost of an IFA is typically about £40,000 per annum (comparable to that a year ago), market capacity issues have driven costs up with NCP's where the average cost is £120,000 against £85,000 in 2003/04. Overall an overspend of £2.7m arose in this area. Approximately £0.5m is from the part year effect of increased IFA placements (22 placements at £40,000 pa for an average of six months), £0.4m from the part year effect of increased NCP placements (6 placements at £120,000 pa for an average of six months) and £1.8m from the increase in prices which on average equate to approximately 15% and additional care requirements of existing placements. Partially offsetting this are savings of £0.3m on in house units due to the closure of Woodend and Cypress Lodge (temporarily closed for the whole of the year) with no significant variation across in house fostering.

2.10 Lower staffing and associated costs in relation to assessment and care management led to an underspend of £0.2m within the Commissioning and Social Work division of service. A similar level of saving has occurred within the Family Support Services division of service across family and day centres arising from small underspends in several expenditure headings.

2.11 Youth Justice showed a small underspend of £10,000 due to lower expenditure at Swanwick Lodge Secure Unit.

2.12 The department participates in a Children's Trust for the provision of Children's and Adolescent Mental Health Services (CAMHS). In 2004/05 there was an underspend against its contribution of £0.255m of which £0.147m has been made available to the Trust for use in 2005/06. The Other Children's and Family division of services underspent fundamentally due to this lower contribution.

2.13 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. An underspend of £0.1m on this grant has been carried forward to 2005/06.

Older People +£1.2m overspend

2.14 Net expenditure on services for older people increased by £16.3m (16.0%) compared to 2003/04. In addition to pay and price inflation, growth of £5.8m was allowed for in the budget to target the key areas of reducing delayed discharges, helping people live at home and increasing nursing and residential care provision (including in house nursing care) but pressures in excess of this have resulted in an overspend.

2.15 One of the key drivers of costs has been the reimbursement regime, which impacted fully in 2004/05 and gave the sector reduced flexibility around spending and performance. The Department paid £0.85m in delayed transfers of care fines, enabling reinvestment into direct services of £1.05m of the total grant for reimbursement of £1.9m. This has ensured that the delayed discharges which are the responsibility of Social Services have remained at a reasonably constant level during the year.

2.16 Demand and activity has risen during 2004/05 particularly on domiciliary care. As of December 2004 (last available statistics since implementation of SWIFT) the sector had purchased care for an additional 332 clients, of which 203 was an increase in the number of `C28', intensive care cases (resulting in a pressure of almost £1.1m). PAF indicator C28, the number of households receiving intensive home care per 1,000 population aged 65 or over, is a key indicator on helping people live at home and is expected to show a small improvement during the year.

2.17 The ENHANCE project is a £60m development in partnership with the strategic health authority to provide 500 nursing beds, scheduled to be opened during 2004/05 and 2005/06. The first residents were admitted in March. However only one home was opened by the year end against three anticipated at September 2005. This gave little time to achieve the budgeted savings from the increased capacity available, although there were some 'in year' savings on the implementation costs on the project as a result of this. In addition to the net effect of this there was pressures on the income budgets for external nursing care which resulted in a pressure of £0.2m.

2.18 An underspend of £0.3m on Assessment and Care Management costs have partially offset the pressures above and reduced slightly the pressure this client sector has had.

Adults Services +£0.9m overspend

2.19 For Adults with a Physical Disability or Sensory Impairment overall activity and consequently net expenditure has been maintained at a similar level compared with 2003/04. As a result of this an underspend of £0.3m is reported against a cash limited budget of £23.3m.

2.20 Demand for OT equipment has increased with typically 5,800 items now being supplied monthly (compared to 4,000 at the start of the year) to help clients to live at home, which has resulted in a pressure of £0.1m. An underspend of £0.4m on Assessment and Care Management costs have offset this and ensured that this client sector has remained within budget.

2.21 Developments during the year include the introduction of the Sensory Early Intervention Service and the ongoing success of OT Direct, which now resolve 40% of referrals within the service centre allowing qualified OT staff to concentrate on more complex cases.

2.22 For Adults with Learning Disabilities net expenditure has increased by £3.7m (after adjusting for a one off virement in relation to health funding) compared to 2003/04, an increase of 8.9%.

2.23 Total client numbers for Adults with Learning Disabilities rose by 99. The success in increasing the number of Direct Payment recipients by 30 to 100 clients during 2004/05 created a small pressure of £0.2m. Although client activity has changed during the year, with 20 (3%) additional residential placements compared with 2003/04, the principal reasons for the remaining variance comes from higher costs from service providers due to increased client needs and support and also cost pressures that have arisen from the need to replace statutory services no longer supported by Supporting People (£0.9m) or Health funding.

2.24 For Adults with Mental Health Needs net expenditure has increased by £2.4m compared to 2003/04. The overspend across this service area is broadly £0.4m ,however £0.5m of under spending budgets have been reported against other divisions of service expenditure lines as stipulated by CIPFA's Accounting Code of Practice resulting in an adjusted overspend of £0.9m. This variance is due to higher placement costs from service providers resulting in a pressure on the residential and nursing placement budgets of £0.7m and one off costs in relation to a refund of client contributions received from a Section 117 client in previous years (£0.2m).

2.25 Supported Employment net expenditure decreased by £0.1m (6.8%), due principally to the cessation of trading of one of the service providers to give an underspend of £0.1m.

Supporting People

2.26 Supporting people showed an underspend of £0.532m against the grant received from the Office of the Deputy Prime Minister (ODPM) of £34.183m.

2.27 The Supporting People team have developed a long term financial strategy to ensure a viable programme is maintained against the background of loss of funding from the ODPM. This strategy is dependant on current underspends against the grant being used to temporarily fund expenditure in future years until the financial savings from service reviews have an impact. £0.532m of the grant has been carried forward in accordance with the financial strategy after the use of £0.284m in 2004/05 to provide transitional assistance for those service areas affected by the service reviews.

Comments from the Director of Social Services

2.28 In my comments in the forward budget report to the Executive Member, Social Care, on 23 January 2004 - Revenue Budget 2004/05 - I stated that `the coming financial year undoubtedly is going to be an extremely challenging one with a range of Government targets to meet, substantial growth in the numbers of people needing social care services and significant change in prospect.' I stressed the importance of the performance agenda, with priority having to be given to sustaining Social Services' two-star position and drew attention to three other priority areas - delayed transfers of care, support for older people in their own homes and services for children and families. While welcoming the passporting of an additional £14.3m of Government money, I pointed out that `most of these additional funds will have to be used for maintaining the status quo, with little provision available for developing services either quantitatively or qualitatively.'

2.29 In the event, it has proved to have been an extremely challenging year. I feel that an overspend of 0.17%, given all the pressures that were predicted and did materialise, is a good result. Demand and cost pressures, particularly on Children and Families budgets, were present in the previous year and inevitably carried forward. Cuts in Government funding of Supporting People had a serious knock-on impact on Learning Disabilities budgets and similarly fines for delayed transfers of care had an impact on Older People budgets.

2.30 However, despite severe financial pressures, there were notable achievements in the priority areas I had identified at the outset:

· Two-star status was retained in the Autumn of last year. Although, the Commission for Social Care Inspection's judgement on 2004/05 performance will not be announced until November, I feel confident of this remaining the case and hopeful of improvement.

· Staffing levels were improved, largely thanks to the additional funding made available by the County Council for market supplements. These were well received by staff and enhanced front-line service capacity thereby enabling the kinds of improvements noted below.

· Delayed transfers of care reduced, though they were not eliminated. There were 41 reimbursable patients at the end of March 2004 and this number had fallen to 32 (-22%) by the end of March 2005

· The proportion of older people helped to live at home (Performance Assessment Framework (PAF) Indicator C32) improved markedly over the year. This stood at 75.8 per 1,000 older people in 2003/04, we planned for 80 in 2004/05 and actually achieved 84.6 - an improvement of 11.6% (over 2,000 people) over the 2003/04 position.

· In addition to this, there was a 3.7% increase in the number of older people receiving intensive home care - from 8.1 per 1,000 older people in 2003/04 to 8.4 in 2004/05 (PAF indicator C28).

· Many more items of mobility and self-care equipment which enable older and disabled people to live independently are being supplied than hitherto. On average, 4,000 such items were being supplied monthly in 2003/04 and this figure rose to 5,800 in 2004/05 - a 45% increase.

· The number of Direct Payments recipients per 100,000 population increased from 68.2 in 2003/04 to 102 in 2004/05 (an increase of 50%), the absolute number growing from 751 on 30 September 2004 to 1,130 on 31 March 2005 - a 50% increase over this six month period.

· We were able to offer a greater proportion of the children looked after by the County Council a positive experience of family life. In 2003/04, the proportion looked after in foster placements stood at 77.7% and fostered by relatives or friends at 16.9%. These proportions increased to 80.3% and 18.2% respectively in 2004/05.

2.31 These achievements are the products of the combination of member support and a dedicated and hard-working staff group who are committed to service improvement. The statistics conceal much of their fine-grained and developmental work: the impact of the new OT Direct service, for instance; the innovations such as Telecare and Managed Care enabling more older people to remain in their own homes and prevent hospital admissions; the wealth of partnership working with the Health Service and the independent sector; progress with person-centred planning and the CAMHS Trust; the roll-out of new computer systems to support all aspects of the Department's work. All of these developments will stand the Department in good stead during the coming reorganisation and will provide the platform for continuous improvement in the future.

3 Part B - Capital expenditure 2004/05

3.1 The outturn for 2004/05 is set out below with details of the total resources and of the individual schemes committed in the year appearing in Appendix 6.

3.2 The total programme limit for 2004/05 originally amounted to £4,855,000 but after the virement from the capital programme limit to the revenue budget (shown in Appendix 1) of uncommitted capital resources totalling £460,000 it reduced to £4,395,000. Schemes to the value of £3,519,000 were committed in the year, leaving capital resources of £876,000 available to fund schemes carried forward to 2005/06.

3.3 Schemes started during the year included Alton Day Services, a new build scheme to provide specialist purpose built facilities to replace outdated premises for adults with learning disabilities in the Alton area (£1.1m) and a replacement non residential charging system required as part of the mainframe decommissioning.

3.4 Schemes approved to be carried forward to start in 2005/06 include minor works in residential and day care premises and furniture and equipment in residential and day care premises and office bases. The list of schemes committed and carried forward are included in Appendix 6.

3.5 The combined value of schemes which were committed in 2004/05 and those carried forward to start in 2005/06 is £4,395,000 which is equal to cash limit and the balance of the cash limit can also be carried forward to 2005/06.

3.6 In accordance with the County Council's Financial Procedures, the final costs of capital schemes controlled on a starts basis completed in 2004/05 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 2004, but the final payment was only made in 2004/05.

3.7 The final cost of the schemes completed in 2004/05 is £1,158,000, the same as the latest approved estimate for those schemes charged to the service's capital cash.

4 Part C - Departmental assurance statement

4.1 From 2003/04 the Code of Practice on Local Authority Accounting in the UK requires the County Council within its Statement of Accounts to publish a Statement of Internal control signed by the Leader and the Chief Executive. 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 Governance Committee. Appendix 7 contains the statement relating to Social Services and concludes that Social Services has an effective framework of control which provides reasonable assurance regarding the effective, efficient and economic achievement of the County Council's objectives.

5 Part D - Partnership Accounts

5.1 Appendix 8 shows the income and expenditure account for 2004/05 of the Wessex Youth Offending Team (YOT).

5.2 The Wessex YOT is funded through a combination of 16 partner agency and contributions and Youth Justice Board grants. Hampshire County Council contributed approximately £1.880m (£1.563m from Social Services and £0.317m from Education), representing approximately 30% of the total income.

5.3 The surplus that has arisen in 2004/05 (approximately £17,000) will be added to the balance held at the 31^st March 2004 (approximately £73,000) as a contingency against future costs that cannot be contained within the partners contributions.

Recommendations

1 That the final acounts for 2004/05 be recommended for approval by the Executive Member for Children Services.

2 That £0.532m of the overspending in 2004/05 be carried forward and offset against the contingency of £1.3m contained within the 2005/06 budget.

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

Summaries of actual spending 2004/05

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 2004/05 not included in the cash limit

6 Capital expenditure 2004/05

7 Departmental assurance statement

8 Partnerships

Appendix 1

Social Services

Revenue expenditure 2004/05

Construction of cash limit

In the revised budget revenue expenditure under the service's direct control was subject to a cash limit set by Cabinet of £297.5m. Variations in the cost of business rates are managed centrally because the level of business rates on the County Council's own properties could not be determined precisely when the revenue budget was set, because of the effect of revaluations and transitional arrangements. Actual expenditure on rates is £7,000 higher than was provided for in the revised budget and the cash limit has been adjusted accordingly.

Further adjustments to the cash limit have also been made in respect of the following:

* Approval to carry forward this grant has been received from the Office of the Deputy Prime Minister

The adjustments referred to above are incorporated in the table below which summarises the position for the service in the year:

Appendix 2

Social Services

Final Accounts 2004/05

Summary of Revenue expenditure

Appendix 3

Social Services

Revenue expenditure 2004/05

Analysis of cash limited expenditure over services

Appendix 4

Social Services

Revenue expenditure 2004/05

Major variations in cash limited expenditure - underspending/overspending of £532,000

Appendix 5

Social Services

Revenue expenditure 2004/05 not included in the cash limit

1 Capital charges (£6.584m)

Capital charges are made to services for capital assets used in the provision of services. The actual charges are £1.364m more than the budget due principally to deferred charges arising on additional IT systems that have been acquired during the year not included within the budget. However, this will have no direct effect upon the overall budget requirement 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 (£9.827m)

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 exercised on a functional rather than service basis, but actual costs are allocated to the relevant service.

3 Adjustment for pension and early retirement costs (£3.026m)

This adjustment includes:

a) the difference between the cash value of employers' 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 2004/05, as assessed by the County Council's actuary. This adjustment is required by the Code of Practice on Local Authority Accounting in the UK and 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. The value of this adjustment was not known when the budget was set and therefore not included.

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 in the final accounts, on the basis that the cost relates to past service.

4 Corporate and democratic core (recharge £0.187m)

Corporate and democratic core covers management and support costs that relate to member support and advice, but are under the control of this service and thus are included within the service's cash limit. However the Best Value Accounting Code of Practice requires these costs to be aggregated and separated from the cost of providing front line services.

Appendix 6

Social Services

Capital expenditure 2004/05

Appendix 7

Social Services

Department assurance statement for the year ended 31 March 2005

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 have also been required to sign a more general statement of internal control. To support this process, 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 2004/05