v7.985

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

1. Summary

1.1 This report is the second monitoring report for the financial year 2005/06 but the first that brings together all the new Children's Services Department services. It sets out the projected outturn position at the half year stage separately for Education related services and Social Care services. There is a projected over spend on both services, (£264,000 and £2,255,000 respectively) but management action is continuing to manage the budgets to reduce this overspend to nil by the year end. In addition there is expected to be a one-off under spend on the Sure Start grant of around £2,500,000 at the end of 2005/06.

1.2 Decisions on Children's Services 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

1.3 Also, Children's Services contribute to the five keys aims of the Children Act and during 2005/06 it will be essential to use the six priorities established in the Annual Performance Assessment (APA) to set 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 five 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 who are permanently excluded from school.

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

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

Cash Limit 2005/06

2.1 For Education related services the original cash limit for 2005/06 was agreed by the County Council in February 2005 as £690.469m. Since that date amendments to the cash limit have been approved to reflect changes in grant levels and other issues relating to the strategy for filling the budget gap and relating to the closing of 2004/05 accounts, giving a new total of £717.985m. Details are set out in Appendices 1(a) and 1(b).

2.2 This total includes an additional allocation of £250,000 made available by full County Council in February 2005 for the Youth service. Use of these funds was subject to Cabinet approval of the business case, which was achieved in July 2005. Refer to para 3.6 below for an up-date on progress.

2.3 For Children's Social Care Services, the original cash limit for 2005/06 was £51.312m. Amendments since then mean the revised total is £52.268m, as set out in Appendix 1 (c).

3 Education Related Services Forecast Outturn 2005/06 up-date

3.1 The following paragraphs outline those areas where the projected outturn is significantly different from the cash limit for Education related services. (A positive figure denotes an over spend pressure, a negative figures denotes an under spend or additional income).

Inclusion and Behaviour (Special Education Needs) +£340,000

3.2 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).

3.3 At the half-year point, the budget strategy for 2005/06 which involved reducing the out-county cash limit by £200,000 to reflect the success in 2004/05 of managing placements, appears to be on target for delivery.

3.4 Work continues to minimise the pressure on the EOTAS budget and the development of Basingstoke School Plus. Pressure around this latter area of the County Council's work is mainly due to difficulties in staffing (resulting in the employment of a high level of supply staff) and the need to provide education for a significant number of young people at KS4. In addition, the accommodation for KS4 is less-than-appropriate which means outside providers are being employed to lessen this deficiency, but there is an inevitable financial impact. Current indications are that these pressures will result in an overspend of £340,000.

Interest on School Balances -£200,000

(Non-delegated schools - miscellaneous)

3.5 Extra interest on school balances is projected as a result of increased primary and special school balances. This will equate to additional income to the LEA Budget of £200,000 in 2005/06.

Home to School Transport +£284,000

3.6 This demand-led budget (cash limit £20.82m), is historically difficult to forecast due, in particular, to the unpredictable nature of the outcome of contract price re-negotiation. A specific contingency of £210,000 exists for 2005/06. Higher than anticipated contract prices due to above-inflation fuel and transport wage increases between February and October 2005 have resulted in a projected outturn over spend of around £284,000 (net of contingency). Further spend to save initiatives are being developed to ensure that past success in containing cost pressures above inflation is maintained.

Youth Service £0

3.7 Overall the Youth Service is projecting a balanced budget at the end of 2005/06.

3.8 Cabinet approved the business case for use of the additional allocation of £250,000 made available by full County Council in February 2005 for the Youth Service, in July 2005. £200,000 is allocated to district youth work teams to support an increase in outreach and detached youth work and profiled to be spent this financial year. The allocation supported additional activities throughout the summer and the employment of extra detached youth workers in each district. The additional £50,000 is allocated to improve provision at RAF Odiham. The final details for the scheme are still under negotiation and should be agreed shortly.

Early Years -£2,345,000

3.9 A combination of more 4 year olds taking the full 5 sessions a week and those on fewer weekly sessions attending for more weeks has increased the full time equivalent number of 4 year olds in private, voluntary and independent settings by 194 (to 3979 from 3785) above the budgeted level. This additional take-up is the main reason for the projected outturn over spend of £155,000.

3.10 In addition the County Council has had £15m Sure Start Grant to spend between 1 April 2004 and 31 March 2006 and current estimates project an under spend of approximately £2.5m against this allocation. This is because of lower than anticipated take up rates for grants (for out of school places, new childcare places, training grants) and bursaries offered. However, as an excellent authority this grant can be used flexibly and we are exploring which budget areas might be appropriately supported with Sure Start Grant. This would deliver potential flexibility to address some of the 2005/06 pressures and to allow planned carry forward to invest in future priorities, in particular the Change for Children Programme.

Change for Children Costs +£83,000

3.11 During 2005/06 there are projected costs of £83,000 for beginning to shape the Children's Services Department that relate to services to schools and support. (There are further costs associated with Children's Social Care as discussed in para 4.5).

Proposed Strategy for Education Services

3.12 The table below summarised the main variations which show that, excluding the significant under spend on the Early Years Sure Start grant, there is an overall over spend projected of around £264,000 (net of general contingency). The strategy will be to continue to manage the budgets to reduce this overspend to nil by the year end.

Budget Description	December 2005 Variation from cash limit
	£'000
Education Otherwise than at School	+340
Interest on School Balances	-200
Home to School Transport	+284
New Early Years Placements	+155
Change for Children	+83
Total pressure	662
To be funded by: General Contingency Budget Procurement savings	-263 -135
Net pressure	+264
Less: Sure start Grant under spend	-2,500
Net under spend	-2,236

3 Children's Social Care Forecast Outturn 2005/06 up-date

3.1 The following paragraphs outline those areas where the projected outturn is significantly different from the cash limit for Children's Social Care services.

Non-County Placements (NCP) / Independent Fostering Agency (IFA) +£1,535,000

3.2 There are three major elements which have impacted on the budget despite that there has been no significant overall change in the number of children placed under these arrangements:

· The number of NCPs has increased (from 69 as at 1 April 2005 to 75 currently), with a high proportion of the increase being Children With Disabilities (CWD). At the same time, although the number of the Independent Fostering Agency (IFA) placements have reduced (from 125 to 114). These are less expensive than the NCP placements. The change in mix is estimated to add £450,000 to the total cost.

· As well as the above, four very expensive placements during the year, equate to total additional costs (above an average cost) of £380,000.

· Existing commitments at the start of the year exceeded the budget cash limit by approx £500,000, a continuation of the pressure from 2004/05.

Additional Legal expenses +£226,000

3.3 The projected overspend reflects the continued increasing requirement for external professional advice at the levels experienced in 2004/05, together with increased need for in-house support from the Chief Executive's Legal Practice, by way of a service level agreement. This growth arises now as a result of the findings of the Climbie inquiry, with an increased workload in the Chief Executive's Department and increased need to use outside experts to support our in house solicitors.

Family Support Services +£388,000

3.4 Family Support Services aim to provide early intervention support in order to minimise the need for placement of children outside of the family. This is especially relevant in the area of increasing complexity for children with disabilities, where the majority of this additional expenditure is being incurred. However, the plan to reduce the overall budget imbalance includes specific targets for this area of expenditure and an in depth review is being undertaken.

Change for Children Costs +£117,000

3.5 During 2005/06 there are projected costs of £117,000 for beginning to shape the Children's Services Department that relate to services to Children's Social Care Services and are in support of the framework set out in para 3.11 above.

Proposed Strategy for Children's Social Care Services

3.6 The table below summarises the overall position, which represents a projected outturn over spend of £2.2m and sets out the developing strategy that is in place to manage the budgets to reduce this overspend to nil by the end of the year.

Budget Description	December 2005 Variation from cash limit
	£'000
Non County Placements (NCP) / Independent Fostering Agency (IFA)	+1,535
Legal expenses	+226
Family support services	+388
Change for Children	+117
Other minor variations	-11
Total pressure	+2,255
To be funded by:
Procurement savings	-50
Staff savings from specific posts	-50
CAMHS planned savings	-75
Relocation of NCP to Linden Avenue	-100
Sale of additional beds at Swanwick lodge	-120
Vacancy management from turnover	-100
Target savings - for Care Leavers	-100
Target savings - for Children with Disability support	-100
Net pressure	+1,560

4 Education Business Units

4.1 Based on the latest business projections, indications are that in total the education business units will increase the cumulative surplus to £1,526,800. They started the year with balances at £1.32m. The increase relates mainly to higher than anticipated demand from schools for hardware installation, training and support reflecting the increasing importance of ICT to schools and the complexity of systems now in use. However this part of the business unit environment remains very volatile as evidenced by previous reports which set out the need to revise the ICT support to schools from April 2005.

5 Education Capital

5.1 The Education Capital Programme for 2005/06 is summarised below, although in practice it is often supported from Policy and Resources mainly in respect of repair and maintenance elements.

5.2 Resources totalling £90.714m have been allocated to the starts programme in 2005/06 (see table below). Of this total £25.139m relates to block allocations for School Devolved Formula Capital, Schools Access Initiatives, Furniture and Equipment, Contingency and Retained Capital Receipts, leaving £65.575m for specifically identified schemes.

6 Legal Implications

6.1 There are no legal implications of this paper.

7 Financial Implications

7.1 The financial implications are as set out above and will be further reported at the next meeting.

8 Personnel Implications

8.1 There are no personnel implications of this paper.

Recommendation

1. That the budget monitoring report and an early identification of cost pressures is noted.

2. That the proposals for management action to address the overspend variations are 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 that disclose exempt or confidential information as defined in the Act.

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