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Contact: Erica Meadus, Ext: (01962) 847526, email: erica.meadusmailto:@hants.gov.uk

1. Summary

1.1. This report is the second budget monitoring of the financial year. It covers the first four months and remedial action is being taken to address an overspend and to bring the outturn back in line with the budget.

1.2. The following decisions are sought:

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

· That £0.5m of the £1.5m specifically being held as a contingency to meet operational pressures be utilised to reduce the pressure on operational nursing.

2. Reasons

2.1 This report links to the corporate strategy in the areas of; Making Hampshire safer and more 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: ................................. Date: .......................

Councillor Felicity Hindson

Executive Member for Adult Social Care

Contact: Erica Meadus, (01962) 847526; Email: [email protected]

1 Summary

1.1 This report covers budget monitoring for the first four months of the financial year. The report shows the 2007/08 projected overspend position as at the 31 July to be £3.080m if no further management action is taken between now and the end of the financial year. However, immediate management action has been taken to bring this down to £2.4m and a detailed management strategy is in place to bring the remaining overspend down in line with the budget. An update on progress made will be given in November.

1.2 In order to fund the Adult Services share of the contact centre running costs, the original budget was reduced by £0.866m. At present, savings of £0.639m remain to be identified to meet the original target and are currently included in the forecast as unachievable.

1.3 This is the second budget monitoring report for 2007/08, and is based on data to the end of July. The overspend has increased by £1.2m to £3.1m. The headlines are shown below and explained in paragraph 2.

1.4 The total cash limit for the service at period 4 is £273.307m. An increase of £0.058m from period 2 is due to additional AIDs support grant and SLA adjustment with Children's Services. The predicted outturn based on the position at the end of July 2007 is estimated to be £276.387m, an overspend of £3.080m (excluding immediate management actions).

2 Current Position

2.1 The overall position by business group is summarised as follows:

Notes

*(Total Wellbeing & Community variance is £2.565m)

**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 current overall overspend is £3.080m and major variances are explained below. Also included are the immediate actions being taken to bring the overspend down to £2.4m.

2.3 Director, Deputy Director and Performance & Business Management

2.3.1 The Director, Deputy & Performance & Business Management pressure relates to the agreement to remove Children's Services SLAs which affects Business Information £0.095m, Quality & Audit £0.108m and £0.118m is due to restructuring changes. Immediate management action has been taken to bring down the overspend, in particular, to address the Performance & Business Management overspend (£0.219) to bring it back in line with the budget. Targets have been allocated by the Assistant Director (Performance & Business Management) across his budgets.

2.4 Older People and Physical Disability

2.4.1 The Wellbeing & Community (for Older People and Physical Disability) overspend of £1.903m is primarily due to £1.563m on purchased Residential care and £1.663m on domiciliary care, offset by an underspend of £1.283m on Direct Payments. This assumes the £1m pressure for demographic growth will be fully required.

2.4.2 The pressure on purchased residential care is due to the average package cost being above the average budgeted cost, and an action plan is being devised to address this. Work is also underway in relation to reviewing hospital discharges to residential care. Initial scoping work has already been undertaken, with a workshop arranged for early September and a final paper planned for mid-September. The financial implications have yet to be quantified. It is anticipated that the effects of this management action will impact in the final quarter of 2007/08.

2.4.3 The pressure on domiciliary care is caused by a £2.386m pressure on PD purchased domiciliary care (offset in part by an underspend on OP purchased dom care) due to increasing client numbers (offset by a decrease in in-house numbers in the table below), an increase in average cost per client resulting from clients with low cost packages being replaced by clients with higher cost packages.

2.4.4 The underspend on Direct Payments is a result of a fall in Direct Payment users due to the review of packages and changes in the scheme and the withdrawal of scheme A. The number of clients choosing to manage their care without our involvement i.e. Direct Payments dropped by approximately 17 % in the last quarter of 2006/07.

2.5 Operational Nursing & Residential

2.5.1 The Wellbeing & Community (Operational nursing & residential) overspend £0.662m is mainly due to overspends of £0.996m on nursing, £0.259m on day care and £0.408m on other management & support, offset by residential savings of £1.055m. Immediate action is being taken to reduce the overspend on nursing by using £0.5m from the centrally held contingency for operational pressures. This relates to £1.5m which was specifically put aside as a contingency to meet operational pressures within the budget. An action plan is in place to reduce the remaining nursing overspend.

2.5.2 The pressure on in-house nursing is due to staffing levels required being above the budgeted level to meet levels of care being required, and a reliance on agency staff and overtime due to difficulties in recruiting staff, compounded by reductions in the budget from 2006/07.

2.6 Learning Disabilities & Mental Health

2.6.1 The Learning Disabilities & Mental Health overspend is due to:

- a £0.142m overspend in Mental Health - (Operations) mainly reflecting higher forecast pressure on Early Onset Dementia

- and £0.345m for Learning Disabilities mainly reflecting a higher than budgeted pressure in purchased residential care offset by underspends on purchased homecare.

2.6.2 An urgent review is being undertaken of the projected demographic pressures and mitigating action will be taken where possible to reduce or delay the impact.

2.7 Contingencies & Centrally held

The contingencies and centrally held budgets are underspent largely because some risks that were provided for by provisions raised at year end 2006/07 were less than anticipated. It is proposed to use £0.5m to reduce the Nursing pressure. This releases £0.5m of £1.5m specifically set aside to meet operation pressures within the budget. At this stage of the year most of the contingency needs to be kept intact to cover winter pressures, as well as shortfalls in financial recovery.

2.8 Client Activity

2.8.1 Since October 2006 (the numbers on which the budget was set) client numbers across the main clients have fallen by 957 (5.3%), a small decrease of 31 since last reported (May 2007 position).

2.8.2 The fall in domiciliary care and day care client numbers is due to several factors. The introduction of more rigorous panel processes and service reviews has improved demand management in terms of numbers. The general trend has been that more reviews result in an increase to the package than result in a decreased package The relatively mild winter of 2006 meant that the demand management actions were not disrupted.

2.8.3 The move towards reablement has also started to manage the pressure by reducing the length and size of care packages beyond the reablement period. Over the period May 2006 to July 2007, 714 in-house domiciliary care clients had their care packages closed after reablement. Underlying this is the growth in the level of need and consequently the size of care packages.

2.8.4 The movement in the individual client groups is summarised below and detailed in Appendix 1.

						Diff. b/w Oct 06 & July 07
Care Type	Oct-06	Mar-07	Jun-07	Jul-07
Nursing Care	1,777	1,769	1,846	1,879		102
Residential Care	3,533	3,422	3,439	3,438		-95
Domiciliary Care	8,095	7,638	7,491	7,509		-586
Day Care	3,676	3,498	3,442	3,467		-209
Direct Payments	814	625	680	687		-127
Other	241	207	198	199		-42
Total	18,136	17,159	17,096	17,179		-957

2.8.5 Given the reduction in the client numbers it could have been expected that there may have been an under spend, but this is not the case and is due to the impact of financial recovery (see 2.9 below) and the average package cost being above the budgeted level. Further work is underway jointly by Performance & Business Management and the Finance Unit to determine the reasons for the increase in average package cost, but initial work suggests it may be due to demographics and the increasing needs of clients, for example an increase in the number of clients with dementia.

2.9 Financial Recovery Update

The budget contains proposals as part of the financial recovery plan to meet the challenges of the drivers and pressures set out above. Planned savings of £12.957m are included in the estimates. So far, savings of £3.857m have been achieved, a further £7.132m are in progress and a further £0.643m are planned. The exceptions, £1.325m, relate mainly to a rescheduled Day Care modernisation programme and better housing solutions project, and income shortfall. Additional work is being undertaken to fund this from alternative sources. Appendix 2 summarises the overall financial recovery position to date.

2.10 Other Factors

2.10.1 Contact Centre

2.10.2 The original Adult Services budget was reduced by £0.866m to fund a share of the contact centre running costs. At present savings of £0.639m remain to be identified to meet the original target and are currently included in the forecast as unachievable.

2.10.3 Also, the delay in the contact centre will mean additional costs being incurred by Adult Services. Following several planning workshops, a detailed project plan has been developed and agreed with the Hants direct team and work continues to identify the full financial impact which will include additional costs associated with phased implementation and additional resources that have been allocated to the project.

2.10.4 Pay & Benefits

2.10.5 Pay & Benefit Realisation costs will also be an added pressure. The budget has been reduced by £0.690m for this.

2.10.6 The latest pay offer for Local Government offers all staff 2.475% with lower paid staff offered 3.4%. The existing budget provision allows for 2.25%. This will put an added pressure on the budget.

2.11 Summary of Management Actions

2.11.1 Immediate steps have been taken to bring the Performance & Business Management budget back into line (para 2.3).

2.11.2 The nursing pressure is being addressed by utilising £0.5m from the centrally held operational contingency and an action plan is in place to reduce the remaining overspend.

2.11.3 The above actions bring the overspend down by £0.7m to £2.4m as shown in the next table. A detailed management strategy is in place to address the remaining overspend and to bring the budget into line. A full monitoring report will be given in November with progress made.

Impact assessment

It is not considered that proposals in this report have a discriminatory impact.

Recommendations

1.That the current budget position for 2007/08 and measures proposed be noted.

2.That £0.5m of the £1.5m specifically being held as a contingency to meet operational pressures be utilised to reduce the pressure on operational nursing.

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.

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Appendix 1

Note: Basis of CMA stats reporting is being changed. The above analysis shows the figures on the old basis. It is expected that the new basis will be available for the next monitoring report and all figures will be presented on the new basis. The new basis has a tighter authorisation check (which reduces the client numbers re orders not properly authorised) and removes derived end dates for overlapping orders (this increases the numbers for nursing and residential care only, as partially cancelled orders were causing correct open orders to be disregarded)

Appendix 2