Contact: Jon Pittam, (01962) 84 7400; [email protected]

1 Introduction

1.1 The Cabinet in July received a report on the 2006/07 budget position which identified:

· potential spending levels in excess of the budget in both Adult and Children's Services

· vigorous management action being pursued to identify compensating savings

· that firm action plans were already in place for approximately £8.7m of the £10.7m savings included in the 2006/07 budget.

1.2 This report reviews the latest service budget monitoring position against the current 2006/07 cash limits. The addition to balances in 2006/07 agreed in July was designed to cover the risk of higher spending of £13m on Adult Services, but was based on the assumption that other services would be able to achieve the savings assumed in the 2006/07 budget and contain spending within the cash limit.

1 Monitoring of service budgets

Adult Services

1.1 The report to the Executive member for Adult Social Care in October confirmed that the downward trend in the Adult Services spending projection in 2006/07 has continued with a projected overspending of £12.6m based on August data, compared with £17.5m based on May data. There is a further small reduction based on September data to £11.9m. The position could improve further if the planned savings of £4.5m in the Recovery Plan are achieved in full in 2006/07 and if the £3m contingency within the budget is not required in its entirety to offset new spending pressures in the remainder of the year. Management action is being taken to achieve all of the planned savings of £6.4m included in the budget, though £1.3m of the planned savings still require some further action. Nonetheless there have been some further savings of £1.3m identified in addition to those included in the recovery plan, which provide an alternative means of achieving the target savings in the budget.

1.2 Current monitoring therefore suggests that there remains a significant gap between current care commitments and the 2006/07 budget, requiring further savings to be achieved from the recovery plan in 2007/08. Nonetheless the trend in the first half of 2006/07 has been in a positive direction and suggests that the additional spending should be containable in 2006/07 from within the additional balances budgeted in 2006/07.

Children's Services

1.3 A potential overspend of £1.6m on Children's Services was reported to the Cabinet in July based on initial monitoring of the 2006/07 budget. Action was requested to bring the projected overspend back within the budget by the year end.

1.4 However since July the extent of identified spending pressures particularly relating to children's social care has increased due to increased numbers of looked after children and a larger increase in the numbers of those children in independent fostering agency placements. Based on the end of September data, Children's Services spending was projected to be £2.6m above the cash limit, inclusive of £2m on children's social care. In addition a significant element of the planned savings in the children's social care budget from the implementation of a contract for the provision of supported lodgings has not so far had the planned impact in reducing non-county placements and use of bed and breakfast provision. This adds a further £0.3m to the budget pressures affecting Children's Services in 2006/07.

1.5 The Director of Children's Services has developed a recovery plan for 2006/07 to the value of £1.6m, leaving further savings of £1.3m to be found. A further budget monitoring report will be submitted to the Executive member for Children Services in December considering the options for the use of uncommitted 2006/07 General Sure Start grant, which it would be desirable to carry forward to 2007/08 to provide revenue funding for children's centres, if the Government's targets for the delivery of new centres are to be met. The DfES are not allowing the carry forward of General Sure Start grant to 2007/08, and so options for transferring the underspend to DSG and carrying it forward for that purpose are being considered. There may also be scope to use the grant in 2006/07 as the full balance is not required for Children's Centres in 2007/08. Further as £0.4m of the overspending relates to non-devolved spending within the Schools Block and subject to the approval of the Schools Forum, it may be possible to meet this overspend and the full year effect in 2007/08 with DSG.

1.6 A report elsewhere on the agenda considers proposals for use of Children's Services £1.6m share of LPSA reward grant. In view of the scale of spending pressures in 2006/07 it is proposed to delay committing £0.6m of service development spending proposed to be funded by the reward grant, until it is clearer whether it will be possible to contain spending within the cash limit without use of any of the LPSA grant.

Environment

1.7 The latest Environment budget monitoring report indicates that spending is expected to be contained within the cash limit and that there may be an opportunity to carry forward a planned underspending to 2007/08, when the revised budget is approved in January.

Policy and Resources

1.8 The monitoring report considered by the Executive member for Policy and Resources in September identified a range of budget pressures affecting Human Resources and Property and Regulatory Services in particular, which will require continuing management action during the remainder of the year. The savings identified in the 2006/07 budget are expected to be achieved and vacancy management policies are being adopted to achieve the employee savings targets agreed by the Cabinet in July.

Recreation and Heritage

1.9 The monitoring report considered by the Executive member for Recreation and Heritage in September identified a potential overspending of between £0.4 and £0.6m before the impact of management action, mainly as a result of higher spending and lower income in Libraries, and lower visitor numbers at Milestones Museum during the summer. Management action is being taken to recruit to vacant posts only where essential and to make temporary appointments where possible as well as to maximise income.

2 Conclusion

2.1 Since the previous budget monitoring report in July, some identifiable progress has been made in bringing Adult Services' spending closer to the budget, in line with the assumptions made in July in increasing the level of balances in 2006/07. However there has been a continuing upward trend in cost and activity levels relating to children's social care. Though a recovery plan has been developed there remains a projected overspending in 2006/07 but by delaying committing the use of £0.6m of the LPSA reward grant until the spending position is clearer, it should be possible to contain Children's Services spending within the budget in 2006/07 unless new and unforeseen spending pressures emerge. Further management action will be required in the remainder of the year to contain spending on Policy and Resources and Recreation and Heritage services within the respective cash limits.

2.2 Monitoring of progress in achieving the savings of £10.7m planned in the budget indicates that the majority of savings are being achieved in the areas targeted, but that alternative savings have needed to be sought for both Adult and Children's Services to the value of £1.7m because some of the savings are proving more difficult to achieve than originally assumed.

2.3 Employee budgets were reduced by £0.5m (approximately 0.2%) in July as part of the package of measures to increase balances in 2006/07 and in anticipation of the savings that will be required from 2007/08 to contribute to the cost of the new pay structure. Plans to achieve employee savings in 2006/07 are primarily based on the active management of vacancies and non-school workforce numbers have reduced by 0.3% between June and September, or by 0.8% after allowing for the recruitment of additional staff due to the opening of additional nursing beds from the implementation of the ENHANCE programme.

3 HR implications

3.1 The savings targets within the 2006/07 budget will have some impact on the overall level of the County Council's workforce.

4 Impact assessment

4.1 Monitoring of the budget has been conducted within the context of the County Council's financial management policy. Compliance with the policy ensures consistent financial management decisions across all services.

5 Recommendation

5.1 That the actions outlined in the report in developing and implementing recovery plans for Adult and Children's Services, and in achieving budgeted savings across all services, be approved.

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.