Contact: Adrian Thorne, Ext: (01962) 847526, email: [email protected] Rea Mattocks, Ext (01962) 847200, email: rea.mattocks@hants.gov.uk

1. Summary

1.1. This report is the second budget monitoring of the financial year. It covers the first five months and indicates although an encouraging reduction in the overspend has occurred there is still serious pressure on the Adult Services budget. It also highlights actions that are in place, and the predicted year end out turn given the current information available.

1.2. The following decision is sought:

That the Executive Member note the current budget position and the measures being taken.

2. Reasons

2.1 This report links to the corporate strategy in the areas of; Making Hampshire safer and mores secure for all, Maximising well-being and Enhancing our quality of place by ensuring sound financial information is available.

3 Other options considered and rejected:

3.1 None

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

4.1 None

5 Dispensation granted by the Standards Committee

5.1 None

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

6.1 Not Applicable

Approved by: ...................

Councillor Patricia Banks

Executive Member for Adult Services Date: .......................

Contact: Adrian Thorne, Ext: (01962) 847526, email: [email protected]
Rea Mattocks, Ext (01962 847200, email: [email protected]

1 Summary

1.1 This is the second budget monitoring report for 2006/07, and is based on data to the end of August. The headlines are as follows:

· The total cash limit for the service is £258.1m, the predicted outturn at the end of August 2006 is estimated to be £270.7m, an overspend of £12.6m.

· This compares with an anticipated overspend range of £17.5m up until the end of May 2006 which was reported to the Adult Social Care Executive on 28 July. The following table shows the overall movement on a monthly basis from the last report to Members.

Movement in Overspend on a Monthly Basis

1.2 The £12.6m figure projects the current overspend until the end of the financial year as a snapshot as at the end of August. This does not include any further remedial action being taken. The reduction in the overspend includes the following assumptions:

· There are clear and achievable plans for £5.1m out of the £6.4m savings included in the cash limit. This shortfall is offset by additional savings of £1.2m across the client groups and £0.9m of separate savings in Management and Support.

· A proportion of the reduction also relates to the Financial Recovery plan (Target of £4.5m savings in 2006/07) which has begun to impact on the figures. Savings to the value of £0.5m are included for Younger Adults and the value of savings relating to Older People financial recovery plan is currently being quantified. However given the level of savings made in Older People particularly on Domiciliary Care there is evidence to show that that recovery savings are being delivered and targets met. A prudent estimate of £2m of to take account of these savings for all of Adult Services have been included in the predicted outturn (£2m of financial recovery plans are included in the current budget outturn prediction).

1.3 The department however continues to take actions to reduce the overspend and these are discussed below:

· A review of the outstanding savings already included within the budget with a view making the £6.4m savings included in the budget. This will include reviewing the amber savings to make sure they are achievable as well as those currently classified as red.

· There is a contingency of £3m, which was set aside in the first instance to make repayments of the 2005/06 overspend. In the event, the Cabinet is not requiring any such repayment. At this stage, therefore, this £3m is available to deal with any new pressures arising in the remainder of the year (e.g. additional demand due to clients meeting our eligibility criteria, learning disability clients losing their carers, not being able to agree continuing care disputes with Health or the Daedulus evacuations ). There may also be costs relating the need to review business processes and procedures. In so far as it is not needed for that purpose, it might in due course be able to be offset the contingency against the headline pressures or any failure to make savings, so reducing the projected overspend.

· Plans have been developed for longer term recovery and have been reported to the Adult Services Review Panel. These plans are monitored by the Panel on a regular basis. The Department aims to make the full savings of £4.5m in the current financial year. Also the Department are looking at further proposals which may lead to further savings being achieved, but these are more likely to impact on 2007/08 (initial plans allow for £8.4m savings in the next financial year).

1.4 The predicted overspend is therefore £12.6m (4.9% of the cash limit) as at 31 August, but with prospects for potential improvement in the position to an overspend of £10.1m by the end of the financial year if the remaining £2.5m of savings relating to the Financial Recovery Plan are achieved in full.

1.5 This report links to the corporate strategy in the areas of; Making Hampshire safer and mores secure for all, Maximising well-being and Enhancing our quality of place by ensuring sound financial information is available.

2 Overall position

2.1 The position by client group may be summarised as follows:

Client Group	Budget £m *	Forecast Spend £m	Variance £m	Variance %
Older People	116,983	126,175	9,192	7.9
People with Physical Disabilities	21,929	23,929	2,000	9.1
People with Learning Disabilities	49,267	52,149	2,882	5.8
People with Mental Health Needs	12,366	11,824	(542)	(4.4)
Management and Support Services	21,022	20,093	(929)	(2.6)
Supporting People	32,931	32,931	0	(0)
Other	409	400	(9)	(2.2)
Contingency	3,161	3,161	0	0
Total	258,068	270,662	12,594	(4.9)

Note: There have been adjustments during the period up until the end of August which have increased the budget by £1.189m from the cash limit as at 31 May 2006. Budgeted savings are attributed to the relevant client groups, and the deficit includes those categorised as `red', partly offset by other savings made. Note also that the table above analyses the budget in terms of management responsibility and is not, therefore, the same as the presentation used in the budget book, which follows the external reporting requirements of CIPFA's best value accounting code of practice.

2.2 The tables below set out:

· The movement activity data for July and August compared with the position in March.

· The movements in variances between the client groups.

Movement in Client Numbers

The table shows an overall reduction in client numbers of 274 and there has also been an overall reduction in the average cost of packages. However not all client groups are reducing in terms of average costs, notably Learning Disabilities .

Movement in Variances between Client Groups from Period 2 to Period 5

2.3 A fuller breakdown of variances by care type for each client group and client numbers is given in Appendix 1.

2.4 The main reasons for the projected level of overspend variance from the last monitor are:

· Savings relating to the Older People client group are for reductions in estimated expenditure for purchased residential care, nursing and domiciliary care. However conversely these are the areas with the largest pressures.

· There is a small reduction for the Physical Disability Group with the same pressure areas as for Older People.

· For the Learning Disability client group the overspend has increased by nearly £1m. The overspend increase is primarily due to pressures in residential, domiciliary and day care with the biggest factor being the costs of transition clients from Children's Services (including the full year costs from 2005/06). The true costs of these clients were more expensive than the original estimates that were calculated during budget preparation for 2006/07. A major factor in this is the ongoing difficulty with obtaining continuing care for qualifying clients from the PCTs. There are currently approximately 30 Continuing Care cases in dispute with Health. The budget position could improve if various specific continuing care and s28a disputes were successfully resolved (£0.765m). In addition detailed liaison is planned with Children Services to examine transition costs from Children's to Adults to ensure best value for money.

· The reduction for the Mental Health Client Group is primarily due to ongoing vacancy management, an under spend in day care which is partly offset by overspends in operational budgets (nursing, supported accommodation, domiciliary care and direct payments).

· For Management and Support Services and Other the increase relates to the double counting of an efficiency saving for Training in the Period 2 report.

3 Progress in Implementing Budget Savings

3.1 At the start of the financial year a `Red / Amber / Green' system was implemented for monitoring progress in achieving the £6.4m of savings included in the 2006/07 budget. In summary the position for implementing budget savings in comparison with the previous monitor and April 2006 is shown below:

3.2 Although the position has improved since the end of April the value of savings in red and amber is still too high. However there have been a number of offsetting savings identified by the Department (Older People £0.983m, People with Physical Disability £0.106m and People with Learning Disability £0.191m, totalling £1.280m) which can be partly offset against the red savings. Management action is still required by the Department immediately to review all projections in the red and amber areas as part of the budget process with a view of ensuring the £6.4m saving within the budget is achieved. The assumption is that amber projects included will be achieved, but clearly there is some risk here, too, which impacts particularly on Learning Disability, as this has the majority of the amber saving category. These relate to challenging savings targets set for review of Day Services and Residential Respite. The Residential Respite savings have been delayed by the need for public consultation and difficulties in recruiting properly skilled personnel required to generate the savings. It is now recognised that the review of Day Services was a longer term project than first thought requiring dedicated project resources which are currently being identified.

3.3 There are also detailed financial recovery plans in place for both the current financial year and 2007/08. The current year plan and savings made to date are shown below:

As mentioned earlier the savings for Older People are being quantified before being included but they are likely to be substantial given the reduction in the overspend since Period 2. This can be supported by reduction in domiciliary care which relates to £2m of the financial recovery plan in the current financial year, however at this stage a prudent estimate of £1.5m has been included for the end of year prediction.

3.4 To summarise the position the following table projects the likely range of possible outturns for the rest of the financial year. The out turn does rely on the full range of savings being made and will become firmer as the saving plans become more robust

4 Actions and Conclusions

4.1 All red and amber savings be investigated by the Department with a view to meeting the initial targets set to each client group within their cash limit relating to the £6.4m savings.

4.2 The Financial Recovery savings made, particularly in relation to the Older Persons client group need to be quantified as a matter of urgency so all savings can be banked

4.3 The Department needs to continue to closely monitor demand and costs of packages on a weekly basis.

4.4 The Department closely examine the current increasing overspend in Learning Disabilities particularly relating to transitional costs and outstanding disputes with Health.

5 Recommendations

That the executive member note the current budget position and the measures being taken.

OR

Section 100 D - Local Government Act 1972 - background documents

The following documents discuss facts or matters on which this report, or an important part of it, is based and have 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.

(Quote list of documents here: either "none" if 1 or 2 above apply; or list the relevant letters, memos, etc. and their location)

Appendix 1

Details of Variances Across Client Groups and Client Order Numbers

Older People

For Older People the overspend is primarily due to the significant pressures within the budget for purchased services for residential, nursing and domiciliary care as shown below:

In addition the table below shows changes in total client numbers (including in-house provision) for the main services during the financial year to date. Overall they have decreased. Further work is being undertaken as part of the recovery plan to reduce demand, and this is expected to show in future figures.

People with a Physical Disability / Sensory Need

For People with a Physical Disability / Sensory Need the overspend is primarily due to pressures within the budget for domiciliary care and nursing care as shown below:

The forecast is of a similar scale to 05-06 outturn budget. Physical Disabilities are looking to recruit a Care Manager to undertake specific review of Residential / Nursing.

In addition the table below shows changes in total client numbers during the financial year to date:

People with Learning Disability

For People with Learning Disability the pressures are across the service areas, as shown below:

In addition the table below shows changes in total client numbers during the financial year to date.

Examples of management action being taken include:

· Review all high cost placements and 1:1 support

· Review direct payments

· Contract remodelling with domiciliary care provision in SW Hampshire

People with Mental Health Needs

For People with Mental Health Needs there is a small under spend which is shown below:

In addition the table below shows changes in total client numbers during the financial year to date.