Contact: Sheila Little, (01962) 847545; [email protected]

1 Summary

1.1 This report is the regular budget monitoring report for the financial year 2006/07, covering period 7 (end of October). The report also considers the progress made on linking activity data trend information to budget explanation.

1.2 The overall period 7 projected overspend is £2.784m, a reduction of £141,000 over the period 5 projection, the last period reported to the Executive Member. The net reduction is made up of: Schools' Budget (-£22,000), LEA Budget (-£141,000) and the Children's Social Care Budget (+£22,000). The movements from period 5 are summarised in the table at section 3 below.

1.3 The unachievable savings of £340,000 from the Stonham contract, referred to in the October report, are reflected in the above projection.

1.4 The department has developed a recovery plan to the value of £1.483m as up-dated at the October 2006 meeting. Further details are attached in Appendix 1.

1 Up-date on Activity Data

1.1 The service is working to deliver regular activity data reporting as part of the budget monitoring report. This is to give a fuller picture on budget variations. Appendix 2 contains the latest key activity data to the end of October 2006 (where available). By nature of the service, some of the activity data is only available on a termly basis.

1.2 Work is on-going to obtain historical data to ensure meaningful comparisons of the current data and to trends in activity and forecast data. Some trend data is already available and is referred to later in this report. It should be noted that this is only the part of the wider management information available that links to the budget most directly and that, in a number of instances, the overall activity levels mask the high levels of turnover. This turnover is more indicative of the likely movement in budget pressures and is a feature that will be integrated more fully into the activity data in the future. For example, the net increase in the number of IFAs in the year to date is 28, which represents about 20% of the total. However, this is made up of an increase of 63 less a reduction of 35, and the total placement turnover is 98 or about 70%.

2 Revenue Budget Monitoring 2006/07 as at 31 October 2006 (Period 7)

2.1 Based on forecast outturn projections received from service managers and budget holders across all Children's Services at the end of period 7 (October), there is a forecast projected year end overspend of £2.784m (£0.513m relating to Schools Budgets, £0.244m LEA Budget and £2.027m Children's Social Care Budget). This compares to a projected overspend of £2.925m in period 5.

2.2 The original cash limit has been adjusted to incorporate the following technical adjustments:

· Further agreements regarding Adult and Children's services budget disagregation work

· Corporate adjustments required to the original cash limit.

A reconciliation of the adjustments is at Appendix 4.

2.3 The achievement of the recovery plan will be monitored by identifying any movement in variation against the individual target areas and reported to the Executive Member meeting in January 2007. In the meantime Appendix 1 summarises the recovery plan actions.

2.4 The overall department position is set out in Appendix 3, the main areas with variations are summarised in the table below and the explanations then follow in the rest of this section.

	Adjusted Original	August 2006	October 2006	Movement
	Budget	Variation	Variation
Cash limited expenditure	2006/07
	£'000	£'000	£'000	£'000
Schools Budget
Out-County	7,357	+480	+480	0
Statemented Pupils	7,454	0	-400	-400
Inter LEA Recoupment net	634	0	+225	+225
EOTAS (excl Basingstoke School Plus)	5,611	0	+150	+150
School Catering	133	-6	-6	0
LMS contingency	3,376	+61	+64	+3
Total Schools Budget		+535	+513	-22
LEA Budget
Home to School / College Transport	21,439	+539	+417	-122
SEN Audit moderation	54	-24	-24	0
Interest on school balances	-853	-104	-127	-23
Youth Service	5,946	0	-25	-25
Recharges to support services	27,531	+165	+154	-11
Unallocated budget adjustment	115	-174	-115	+59
Other continuing education	512	-8	-27	-19
Training and Curriculum Development (LEA Budget)	6,017	-9	-9	0
Total LEA Budget		+385	+244	-141
Children's Social Care Budget
Commissioning and social work	17,862	+156	+434	+278
Children looked after	31,423	+1,971	+1,909	-62
Family support services	6,461	+502	+502	0
Youth justice	2,346	-44	-72	-28
Other children and families services	5,969	-593	-562	+31
Management and support	-338	+13	-184	-197
Children's fund	1,946	0	0	0
Total Children's Social Care		+2,005	+2,027	+22
Total Children's Services		+2,925	+2,784	-141

Schools Budget

Out County Special Schools +£480,000

2.5 The projected overspend is 6.5% of the cash limit of £7.357m There is no change from period 5. However, it should be noted that budget remains vulnerable to the outcome of tribunals.

2.6 Overall the main factor underlying this pressure is fee increases in 2006/07 which have ranged from 5% to 17%. Placements and expenditure are closely scrutinised by the County Placement Group.

Other SEN -£400,000

2.7 Based on updated pupils at the beginning of the Autumn Term, a -£400,000 saving (5.4% of the cash limit of £7.454m) is now forecast. This is in line with the outcome for the 2005/06 low incidence statement budget, which was not identified until after the budget for 2006/07 was set.

Inter LA Recoupment +£225,000

2.8 The budget of £634,000 reflects the net cost of the movement between Hampshire and other Local Authorities for special school and special unit places. The variation represents 35% of the net budget or 8% of gross payments (approximately £2.8m).

2.9 The pressure is caused by a combination of reasons:

· Late notification of pupil movements in 2005/06, +£100,000. The cost pressure would have still existed if they had been notified at the correct time, but it would have been included in the 2005/06 accounts

· Above inflation charge increases for 2005/06 by other local authorities. Charges by Local Authorities (including Hampshire) have risen by more than the 2.5% inflation in the budget, +£110,000

· Southampton, Dorset and Isle of Wight are disputing their liability to pay for post 16 pupils living in their areas who received hospital tuition at Leigh House Hospital. The regulations, albeit not clear, seem to support their case, +£45,000

· Despite the above, more income has been received in respect of hospital recoupment than had been budgeted for, saving -£50,000

· A different mix of need for recoupment pupils in 2006/07, +£20,000.


EOTAS (excluding Basingstoke School Plus) +£150,000

2.10 There is an increased overspend of +£150,000 on a cash limit of £5.6m (2.7%). Long term sicknesses causing a need for additional supply cover account for +£61,000 of this. A further +£80,000 is as a result of supply cover and contracted services to meet pupils needs through individualised packages, and £9,000 from a number of other small variations.

Catering -£6,000

2.11 This is a minor change to the June reported figure and reflects an adjustment to the expected saving is the result of an anticipated increase in income from milk sales.

LMS Contingency +£64,000

2.12 An overspend of +£20,000 had previously been reported in respect of the need to make adjustments for temporary classroom rentals relating to 2005/06, and +£41,000 for extra 2006/07 costs associated with the decisions to allow extra pupils to be admitted to Elvetham Heath Primary School. A further +£3,000 is now identified in respect of retrospective pupil number claims for special schools. The overspend is 1.9% of the cash limit of £3.376m.

LEA Budget

Home to School/College Transport +£417,000

2.13 This forecast represents 1.9% of the cash limit of £21.439m and is a reduction of -£122,000 on the figure reported at the end of period 5, the change relating to an update in the forecast based on the September 2006 pupils.

The overall variation is explained by:

· Increased Contracted Hours for Escorts +£60,000. Net effect of changes to routes, and an increase in the number of escorts for set routes, e.g. need for solo transport for pupils with behavioural difficulties

· Increased Contract costs +£841,000. This is a combination of inflation, catchment schools being full, net effect of pupil movements, and complex needs, offset by spend to save savings.

· Season tickets and income +£33,000. A £7,000 pressure on season tickets, and £26,000 less income from other LAs.

· Applying the HTST contingency -£517,000.

SEN Audit Moderation -£24,000

2.14 The projected underspend is 44.4 % of the cash limit of £54,000. There is no change from period 5. The SEN Audit for which this budget is intended has stopped, hence this estimated saving.

Interest on School Balances -£127,000

2.15 An increase in schools' balances (of £3.378m) at the end of 2005/06 and the August interest rate rise caused £102,000 of the increased income, as previously reported. The increase in rates, announced in November mean that a further £23,000 will now be earned on the higher balances. The projected underspend is 14.9% of the cash limit of -£853,000.

Youth Service -£25,000

2.16 This variation, which equates to 0.4% of the cash limit of £5.946m, has occurred as a result of a £15,000 under spend on grants and a £10,000 saving due to staff vacancies

Recharges to Support Services +£154,000

2.17 This projected overspend is 0.6% of the cash limit of £27.531m and is mainly due to a combination of Change for Children project costs and other minor variations.

Unallocated Budget Adjustment -£115,000

2.18 This represents the full balance of the budget and is a reduction of £59,000 from period 5, as a result of this amount being used for the accelerated Pay and Benefits realisation plan. The remaining contingency will be used to offset overspends elsewhere within the Children's Services Department.

Other Continuing Education -£27,000

2.19 A saving of £8,000 is in respect of costs related to enhanced pensions for Further Education and Higher Education staff for early retirements when they were part of the County Council (prior to the changes in 1989 and 1993).

2.20 A further saving of £19,000 will arise in relation to careers and guidance because South Central Connexions Partnership will not be charging for the assistance it provides to young people with SEN making applications. The overall underspend is 5.3% of the cash limit of £512,000.

Training and Curriculum Development (Standards Fund) -£9,000

No change from period 5.

2.21 This saving is 0.1% of the cash limit of £6.017m and reflects a small number of roundings and minor adjustments made to the base budget.

Children's Social Care Budgets

2.22 The following paragraphs give explanations for the increased variation from cash limit in August (period 5) to October (period 7) for Children's Social Care by +£22,000 from £2.005m to £2.027m.

Commissioning and Social Work +£434,000

2.23 The projected over spend of £434,000 is on a cash limit of £17,862,000 (variance 2.4%) and represents an increase of +£278,000.

2.24 The reasons for this increase include a reduction in the original cash limit of -£61,000, to reflect the proportion of the Corporate savings target on staffing (total £500,000), and an increase in the forecasted expenditure of +£48,000 to reflect the on-going cost of the seconded Data Quality Project Officers until March 2007.

2.25 Further movements have occurred as a result of the on-going review of the forecasts, reflecting the recruitment of new staff against vacancies.

2.26 This overspend also reflects the net effect of pressures from staff being appointed above the budgeted midpoint on the pay scales, recruitment bonuses and market supplements.

Children Looked After (CLA) +£1,909,000

2.27 This overspend is made up of the following:

CLA Service	August 2006 Variation	October 2006 Variation	Movement in Variation
	£'000	£'000	£'000
NCPs	+803	+734	-69
IFAs	+654	+716	+62
Residential children's homes	+288	+116	-172
Fostering	+306	+356	+50
Other	-80	-12	+68
Total	+1,971	+1,909	-62

2.28 There has been a decrease in the number of Children Looked After of 19 since August, from 1091 to 1070. The graph below shows how the number of Children Looked After has changed in the last three years.

2.29 The numbers of children on the Child Protection Register has risen steeply in the first six months of the financial year by 71 to a total of 529. The graph below shows this increase as part of the changes in numbers on the register since September 2002. The graph also shows that the current number of children registered is the highest level in the last three years.

Note:. The above graph shows data on a quarterly basis and does not, therefore, include a figure for October 2006

2.30 Further work on identifying those activity trends which link directly to expenditure patterns is being developed with a view to improving the scope for forecasting likely future trends in expenditure.

NCPs +£734,000

2.31 NCPs are currently projecting an overspend of +£734,000 on a cash limit of £8,754,000 (8.4% variance). This is a decrease in forecast expenditure from period 5 of £69,000.

2.32 Since August, a further four new NCP placements have been made, and six have ceased, resulting in the overall activity reducing by two placements from 64 to 62.

2.33 Of these ceased placements, three were CWD who have since turned 18 years old and who have now transferred to Adult Services. These were therefore planned placement ends, and as a result achieved no further financial savings.

2.34 Further to the initial analysis of NCP placement turnover in the South-West of the County (reported on 12 October), more work is being undertaken to compare the current placement costs across the County with previous years. This work currently indicates that the proportion of children within higher cost placements has increased since 2004/05 and 2005/06, supporting the understanding that the increasing cost of NCPs reflects the growing complexity of needs.

2.35 In view of this it continues to be difficult to link the absolute activity data numbers directly to expenditure levels. This is because placement costs can fluctuate and can cause projected expenditure to vary without corresponding activity changes.

IFAs +£716,000

2.36 IFAs are currently projecting an over spend of +£716,000 on a cash limit of £5,503,000 (13.0% variance). This is an increase of +£62,000 over the period 5 projection. The number of IFAs has increased by 28 since the start of the financial year with 63 new placements being made, and 35 placements ending.

2.37 Since August, a further 16 IFA placements have been made, and 18 have ceased, resulting in the overall activity reducing by two placements from 141 to 139.

2.38 In view of the high turnover within these placements, work is currently being undertaken to establish the proportion of placements which are being made for shorter periods, and the reasons for these. Further information on this work will included in the next report.

2.39 The shortage of in-house foster carers in the North of the County continues to be an issue. Of the new placements made since the beginning of the year, 32 of these were in the North. The overall number of general in-house foster carers within the County has remained static at 303 since last month. However, this is masking that there have been some movements within the three districts. Of these general foster carers, only 45 are in the north of the county. This is a net increase of one carer since period 5. The current number of carers within each district is summarised below:

North	South-West	South-East	Total
45	138	120	303

2.40 This has meant a number of children continue to be placed in IFAs who would be suitable for in-house care if it was available.

2.41 The increase in demand has been coupled with carers requiring respite, which has resulted in alternative provision being found. In addition some children have, during this year, had to be moved to a more expensive provision for safeguarding reasons.

Provision	Client numbers at March 2006	Client numbers at October 2006
Non-County Placements (NCP)
· Non-disability	19	18
· Children With Disabilities (CWD)	50	44
Total NCP	69	62
Independent Fostering Agency (IFA)
· Non-disability	100	128
· Children With Disabilities (CWD)	11	11
Total IFA	111	139

Residential Children's Homes +£116,000

2.42 In-house residential homes currently show a pressure of +£116,000 against a cash limit of £7,951,000 (variance 1.5%). There is a decrease on expenditure from period 5 of -£172,000.

2.43 The majority of this reduction, -£130,000 relates to a more detailed review of the financial commitments of Firvale, the new partnership arrangement with Health which is operating a joint programmed care unit providing CWD respite and day care provision. In addition work has been on-going within the non-CWD residential units to also review their commitments, prompted as a result of issues identified within previous reports.

2.44 An analysis of where costs have increased since the previous financial year suggest that a significant amount is due to reduced occupancy levels during 2005/06, as a result of some homes operating with a reduced number of beds, partly due to staff vacancies and sickness during the year. An increase in pay costs has occurred as a result of many staff vacancies now being recruited to, with homes now operating to their full bed capacity.

Fostering Service +£356,000

2.45 The in-house Fostering service currently shows a pressure of +£356,000 an increase of +£50,000 over the period 5 projection. A significant proportion of this pressure is within the Family Placement teams, +£198,000. The authority's desire to increase in-house foster care capacity leads to further pressure within these teams as they try to recruit to all vacancies in order to maximise support and capacity for the in-house carers, therefore reducing dependency on external providers. However, this is not being managed within existing budgets.

Other Residential -£12,000

2.46 Other Residential services currently show an under spend of -£12,000 against a cash limit of £380,000 (variance -3.2%).

2.47 The cost of accommodation for Children Looked After within the care leavers team is included within this heading. The forecasted under spend has reduced by +£68,000 since August, but continues to be offset by an increase in the under spend which exists within the heading of "Other Children's Services" which includes the costs of the accommodation for former Children Looked After.

Family Support Services (Direct Payments, Day Care, Under 8s, Home Care, equipment and adaptations) +£502,000

No overall movement since the period 5 forecast.

2.48 The pressure of +£502,000 is on a cash limit of £6,461,000 (variation of 7.8%).

2.49 Most of these budgets are used to support children with disabilities. The main variations relate to an increase in projected expenditure through Direct Payments (£190,000), home care services (£202,000), and other preventative family support services (£185,000) offset by various smaller decreases, as summarised below:

Service	August 2006 Variation	October 2006 Variation	Movement in Variation
	£'000	£'000	£'000
Direct Payments	+196	+190	-6
Day Care	-72	-22	+50
Under 8s	-14	-22	-8
Home Care	+328	+202	-126
Equipment and adaptations	-71	-30	+41
Other Family Support	+136	+185	+49
Total	+502	+502	0

2.50 In particular there has been a reduction in the amount of expenditure forecasted to be spent on home care services of -£126,000. This has resulted following a continuing review of packages, based upon the revised estimated usage for the remainder of the year, based on costs incurred as at period 7.

2.51 However, this reduction has been offset by increases in forecasted expenditure on Day Care (+£50,000), Equipment and Adaptations (+£41,000) and other Family Support (+£49,000). Other Family Support includes preventative and supportive costs such as Kinship Care payments, which had not previously been accurately forecasted until the end of the financial year.

2.52 The overall budget variation is explained through a combination of factors:

· There are over 800 children with disabilities, many with profound or severe disabilities, who receive support from the disability teams and the costs of packages they receive can be very high. Services are designed to enable them to be managed at home, without recourse to more expensive residential services, and the number of NCPs for this group has remained stable. All packages are to be reviewed and other arrangements put in place for acquiring new packages.

· One of the biggest pressure is in `other family support', which includes Kinship Care. The Kinship care policy has been very successful and the numbers of children cared for in this way have increased steadily over three years. In total there have been 111 children who have received kinship care. Of these, 7 have been brought out of the care system and the remaining 104 have not become looked after. As at the end of October there were 61 children in kinship care, of which 36 were being provided with financial assistance. The level of assistance varies depending on the carers' financial circumstances but currently varies between about £16 and £140 per week. Tax credits and child benefit are taken into account as part of the financial assessment. Costs have doubled on last year with an additional £200,000 forecast to be paid in allowances this year. This is considered to be good value to the authority (and better outcomes for children) because the alternatives, assuming all of these children would have become looked after, are much more expensive

· It has been recognised by CWD team managers that an increase in Direct Payments has occurred through an increase in the number of families making use of this facility to purchase their children's care needs. Also, a national promotion of the availability of this service has been undertaken which is anticipated would increase the use of the direct payments facility.

Youth Justice -£72,000

No change over period 5

2.53 The under spend of -£72,000 is on a cash limit of £2,346,000 (variation of -3.1%), and is made up of the following:

Swanwick Lodge (Unit Expenditure) - £88,000

Swanwick Lodge (Income) +£13,000

Other Youth Justice expenditure including Wessex YOT +£38,000

2.54 Swanwick Lodge continues to anticipate a reduction of its expenditure on agency staff compared to last year, and the overall under spend reflects the use of more casual staff and the continued reduction in long term sickness.

Other Children's Services -£562,000

2.55 The under spend of -£562,000 is on a cash limit of £5,969,000 (variation of -9.4%). This compares to a period 5 projected under spend of -£593,000, an increase in forecasted expenditure of +£31,000. The underspend largely reflects three areas where budgets were set up at the start of the year that need to be re-allocated (Youth Justice, Quality Protects and Asylum Seekers).

2.56 The table below shows the elements comprising this revised projected under spend:

Service	August 2006 Variation		October 2006 Variation		Movement in Variation
		£'000		£'000		£'000
Care leavers		+13		-35		-48
Youth Justice		-207		-207		0
Quality Protects		-200		-200		0
Asylum seekers		-163		-163		0
Adoption service		-26		+10		+36
Other		-10		+33		+43
Total		-593		-562		+31

2.57 Youth Justice under spend of -£207,000 was created by increasing the income budget at Swanwick Lodge to more accurately reflect the last two years income levels. An expenditure budget of an equivalent amount was created, pending final budget allocations. This now needs to be re-allocated.

2.58 Currently there is a £200,000 Quality Protects budget which is not allocated. This relates to the balance of a former specific grant that was held centrally on an annual basis.

2.59 The asylum seekers under spend of -£163,000 is due to be re-allocated. This reflects the amount of grant that is now expected to offset the associated costs.

Management and support -£184,000

2.60 The projected under spend of -£184,000 is against a current cash limit of £7,350,000, representing a reduction of -£197,000 on the period 5 projection.

2.61 The original cash limit for Management and Support has been increased by +£148,000 in respect of a corporate allocation to offset the cost of expenditure incurred following the Children Act Implementation. This additional £148,000 cash limit is offsetting the forecasted expenditure position, resulting in an increased under spend being reported against management and support.

2.62 Management and Support includes the budget for legal services of £766,000, against which £903,600 is currently forecasted to be spent (an overspend of £137,600). This is a decrease from period 5 of -£8,400.

3 Impact assessment

3.1 The proposals contained in this report are not considered to be discriminatory although work will be developed to ensure that the implementation of the recovery plan does not have an adverse impact.

Recommendations

The Executive Lead Member for Children's Services is recommended to:

1 Note the projected outturn position for 2006/07 for the department

2 Receive a further report on the progress towards achieving the recovery plan at the meeting of the Executive Lead Member for Children's Services in January 2007.

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. - none

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