Contact: Gordon Shinn, (01962) 847545; [email protected]

1 Summary

1.1 This is the fourth revenue budget monitoring report for the financial year 2007/08, showing a forecast year end underspend of £1,173,000 as at 30 November 2007 (Period 8). This is made up of a forecast underspend of £1,173,000 on the Schools Budget and a forecast balanced budget on non-schools budgets (after applying one-off funding totalling £624,000, explained in paragraphs 1.3 and 4), as shown in the tables below:

	Period 7	Period 8	Change
	£000	£000	£000
Performance & Resources	-619	-861	-242
Education & Inclusion	+89	-108	-197
Children & Families	-27	-125	-98
Total (rounded)	-557	-1,094	-537
Less: Additional one-off funding (balance of £624,000):	-508	-79	+429
Net forecast overspend (+) or underspend (-)	-1,065	-1,173	-108
Schools/Non-schools split:
Schools	-1,190	-1,173	+17
Non-schools	+633	+79	-554
One-off (non-schools)	-508	-79	+429
	-1,065	-1,173	-108

1.2 Period 7 (October) figures were reported to the Executive Lead Member for Children's Services on 10 December 2007.

1.3 The non-schools budget would show a forecast £624,000 overspend were it not for the one-off funding that is being applied to achieve the balanced position. £116,000 of this was allocated for specific purposes at the start of the year. £429,000 of the remaining £508,000 has also now been incorporated into the cash limit. This leaves a balance of £79,000. As this is one-off funding in 2007/08 only, it means that there is an ongoing pressure in 2008/09 and this is being dealt with within the three year budget proposals (see separate paper on this agenda).

1.4 Non-schools' budget pressures continue to be managed down in order to minimise the impact on 2008/09. This is being achieved through management actions such as reviewing grant-related expenditure (where grant rules may also be used to carry forward to 2008/09), the impact of work targeted at reducing high cost children looked after placements and closer scrutiny of all commitments. Further savings are likely as a result of difficulties in staff recruitment.

1.5 £208,000 (reduced from £370,000 as at the end of October) of the Schools Budget forecast underspend relates to the Schools element of the `Combined Budget' where Schools Forum has agreed an allocation of £1.6m in 2007/08 (`combined' with another £1.6m of Education Welfare Service budgets where there is also a reported underspend). Should this underspend materialise, Schools Forum on 26 September 2007 agreed it could be considered for carry forward into 2008/09 to meet full year pressures. A more detailed report on this will be considered by Schools Forum on 24 January 2008.

1.6 There is a potentially significant underspend (£1.5m) on Children's Centres and Early Years. The Department is looking to maximise the use of grants available and any carry forward to 2008/09 will be via Dedicated Schools Grant (DSG) for which Schools Forum approval is being sought. This carry forward will also help to meet the significant pressures in 2008/09 onwards.

1.7 Any savings or costs arising from the Contact Centre implementation will impact on the department's bottom-line position (as the savings have been achieved through top-slicing budgets).

2 Recommendation

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

1 Agree the current financial issues that are being addressed within the 2007/08 budget.

3 Revenue Budget Monitoring 2007/08 at 30 November 2007 (Period 8)

3.1 Cash limits have been updated to reflect the latest position, which incorporates the inclusion of one-off items of £429,000 of the total £508,000 (leaving £79,000 still to be allocated) and other known changes such as specific grant adjustments and amounts carried forward from 2006/07. The full analysis of the current adjusted cash limit and variances is shown in Appendices 1 (a) and 1 (b), with 1 (a) showing the analysis between the Schools Budget and non-schools budgets. The following are the reported variances by Branch:

3.2 The following paragraphs provide explanations for the forecast variances.

Performance and Resources Branch Budget

Standards Fund
Cash Limit £34,113,000 Variance -£64,000 (-0.2%)

3.3 This underspend relates to a specific grant of £94,000 for `General Duty for Sustainable Travel', which was announced during the year.

LMS (Schools) Contingency
Cash Limit £4,087,000 Variance -£555,000 (-13.6%)

3.4 The reduction in underspend of £147,000 since Period 7 is the result of the additional budget share allocations to schools. The significant underspend is mainly due to the budget being increased with unallocated Dedicated Schools Grant (DSG) arising from underspends in 2006/07. This was agreed for carry forward but subsequently omitted when the 2007/08 budget was prepared. Schools Forum has agreed that this should be kept centrally to offset pressures which may arise.

3.5 The balance of £41,000 mainly relates to the net effect of adjustments to individual schools' budget shares as a result of updated information following initial allocations.

Other Supply Cover

Cash Limit £482,000 Variance +£200,000 (+41.5%)

3.6 This is mainly due to the increased number of staff who have been suspended from duties and an increasing complexity in individual cases. There is no change since Period 7.

Home to School Transport

Cash Limit £22,206,000 Variance +£207,000 (+0.9%)

3.7 The pressure of £207,000 is as reported in Period 7 and is made up as follows:

	£'000
Escorts	+77	CRB checks deferred to 2007/08, Salary costs
Contracts	+662	Price rises, increase in no. of contracts
Season Tickets	+9
Income	-24
Contingency	-517	Offset against above pressures
Total	+207

3.8 This budget includes a new grant of £115,000 for extended school transport rights for primary school children from low income groups aged eight to eleven. This came into effect from September 2007 and provides this group with the right to receive free transport to their nearest suitable school more than two miles from their home (compared with the previous three mile limit) and can be applied to the overall budget whilst take-up is growing.

3.9 The total number of contracts is currently 1,302, compared with 1,332 previously reported in July and 1,290 a year ago.

3.10 The increased costs are mainly associated with children with Special Education Needs (SEN), the largest element of this relates to the Education Inclusion service.

Interest on Schools' Balances

Budget -£1,004,000 Variance -£231,000 (-23.0%)

3.11 This underspend (increased income) is the result of schools' balances and interest rates increasing since the budget was prepared in autumn 2006. Interest rates increased from 4.75% in October 2006 to 5.75% in July 2007 and have reduced by 0.25% to 5.5% from 6 December 2007. This accounts for the reduction of £20,000 since Period 7.

Support Services

Cash Limit £13,248,000 Variance -£33,000 (-0.2%)

3.12 This is a reduction of £62,000 arising from savings in staff costs that have enabled the previously reported pressures of £46,000 on Information Services to be absorbed. There is also an underspend of £43,000 in the Training budget.

Premature Retirement
Cash Limit £2,787,000 Variance -£100,000 (-3.6%)

3.13 This is based on the latest review of commitments against the budget. No change since Period 7.

Education and Inclusion Branch Budget

Payments for 3 and 4 year olds

Cash Limit £24,548,000 Variance -£150,000 (-0.6%)

3.14 This budget relates to 3 and 4 year olds in Private, Voluntary and Independent Schools. The position after the autumn payments remains unchanged with the underspend of £150,000. No change since Period 7.

Education and Inclusion Management Budget

Cash limit £5,688,000 Variance +£16,000 (+0.3%)

3.15 This budget covers central recharge for the business unit core services as well as the strategic management of education related services. The overspend relates to increased staffing costs.

Education Inclusion Service

Cash limit £7,813,600 Variance +£180,000 (+2.3%)

3.16 This forecast has reduced by £92,000 since Period 7 - £62,000 on Basingstoke School Plus and £30,000 relating to the planned transfer of the Virtual Learning Team being deferred.

School Improvement Services (Standards Funds)

Cash limit £7,291,100 Variance +£48,000 (+0.7%)

3.17 This represents the 50% match funding requirement of the Primary Intensifying Support Programme (ISP) Standards Fund grant, for which no budget provision was made. This is a reduction of £49,000 on Period 7 as the total budget is £97,000 and the grant element should previously have been taken into account.

Education for Children Looked After

Cash limit £932,000 Variance -£113,000 (-12.1%)

3.18 The team is currently undergoing a review which will result in a significant restructure of the staffing. The team is currently carrying one teaching post vacancy and 1.25 education support worker vacancies resulting in a projected underspend of £106,000, an increase of £20,000 since August. The situation regarding staffing levels will continue to be monitored on a monthly basis and given the current status of the review of the service, which is now due to be implemented in April 2008, it is likely that further one-off savings will occur during this financial year.

Secondary Exceptions - Pupil Support

Cash Limit £305,000 Variance -£39,000 (-12.8%)

3.19 An underspend of £39,000 is forecast against this budget due to lower than anticipated expenditure on school uniform grants. This is a reduction in underspend of £4,000 compared with Period 7.

Children and Families Branch Budget

Statemented Pupils

Cash Limit £7,827,000 Variance -£385,000 (-4.9%)

3.20 This forecast underspend consists of:

	£'000
Provision of additional support for SEN pupils, mainly with low incidence needs (as written into statutory statements) - lower spend than anticipated.	-78
Payments and receipts arising from inter Local Authority recoupment for the cost of additional support to SEN pupils with statements.	-293
Specialist equipment for SEN pupils attending main stream schools (PD/HI/VI).	-14
	-385

3.21 The number of mainstream low incidence statements has reduced from 902 as at April 2007 to 858 as at September 2007. This is in line with previous year (861 statements as at September 2006).

3.22 There is a reduced level of inter-authority recoupment payments and increased receipts reported during 2007/08 as shown below. The underspend has increased by £174,000 on this area since Period7 as a result of final figures for 2006/07 being obtained.

	Sept 2006	April 2007	Sept 2007
Other LA pupils in Hampshire Schools	130	137	127
Hampshire pupils in other LA schools	190	195	203

Inter-authority Recoupment +£35,000 (+6.0%)

3.23 This is an increase of +£35,000 since period 7 and is due to the delayed notification of placements for recoupment.

Out County Special Schools

Cash limit £8,281,000 Variance -£290,000 (-3.5%)

3.24 This variation consists of:

	£'000
Out County Special School Placements	-440
Pre-School placements for 3 and 4 year olds	+150
Total	-290

3.25 The activity for out County special schools has reduced compared with original budget forecasts. This forecast underspend has increased by £60,000 since Period 7 as a result of updated information. The following table shows the comparison with last year's numbers:

Term	2007/08	2006/07
Summer (April)	228	237
Autumn (September)	214	220
Spring (January)	TBC	214

3.26 The £150,000 relates to SEN pre-school attendance, for which a new flexible entitlement is being piloted by the authority. This position reflects the forecast after payments for the Autumn term.

Pupil Support (Primary & Secondary)

Cash Limit £88,000 Variance -£28,000 (-31.8%)

3.27 This relates to clothing grants and pocket money allowances for SEN pupils in residential special schools both in and out of county. This estimate is based on commitments to date. There is no change since Period 7.

Inclusion

Cash Limit £13,089,000 Variance -£60,000 (-0.5%)

3.28 This budget has now been broken down over the following headings:

	Budget	Variance
	£000	£000
Combined Budget (Schools element)	1,600	-208
Combined Budget (EWS)	1,623	-124
Educational Psychology and Behaviour	4,439	+1
Special Education Needs (SEN) & Specialist Teacher Advisers (STA)	5,257	+391
Family Group Conferences	158	0
Other	12	0
Total	13,089	+60

3.29 The underlying variance between Period 7 and Period 8 is a reduction of £283,000, arising primarily within the SEN budget following a review of former grant-related project budgets. The £391,000 overspend was previously £719,000, reflecting the former Vulnerable Children grant that was absorbed into the Children's Services Grant and was offsetting pressures in Family Support (see below).

3.30 Following a review of spending plans the underspend on the Combined Budget for Common Assessment Framework and Locality teams has reduced from £370,000 to £208,000. This is Schools Budget and, therefore, DSG funded, so will not be available to offset pressures arising within other County Council funded budgets. A detailed report on progress in this area was submitted to Schools Forum on 26 September 2007. In summary, the underspend has arisen primarily from two areas - staffing and IT. Most of the cost of the locality teams is associated with staffing, and the under spend arises from having to re-advertise some posts to ensure that sufficient and appropriate staff are in place in the teams set up so far. Some delays were experienced in receiving some references and CRB checks.

3.31 A further paper will be submitted to Schools Forum on 24 January 2008 providing more detail on progress and requesting carry forward of this underspend to 2008/09.

Commissioning and Social Work

Cash Limit £12,479,000 Variance - £ 281,000 (-2.3%)

3.32 This position reflects the difficulties in recruiting to a number of posts (both in-house and via agencies. Recruitment to the various fieldwork teams is also being considered as part of a countywide review of social work teams (spans of control etc) and the impact of the implementation of Hantsdirect.

3.33 The underspend has reduced by £44,000 since Period 7 as a result of agency staff being appointed. However, a review of assumptions on about filling posts in some areas are being reviewed as it is proving difficult to fill vacant posts even through agency appointments. This is likely to result in savings being identified.

Children Looked After

Cash Limit £30,664,000 Variance +£604,000 (+2.0%)

3.34 A model has been developed to monitor actual activity against planned activity. This captures unit cost information and is used to revise forward projections.

3.35 The graph below shows the recent trends and that the total number of children looked after at the end of July fell to its lowest level since January 2005 of 997 in September 2007. There has been an increase to 1020 in November 2007, primarily in foster care placements. A breakdown of these figures is provided in Appendix 2.

3.36 The overall forecast outturn is broken down as follows:

Purchased Residential Care (Non-County Placements) +£405,000

3.37 This represents +4.7% of the cash limit of £8,557,000, which is an increase of +£223,000 compared with period 5. Average numbers (about 60) have been slightly higher than budgeted (57) but nonetheless represent an overall reduction in numbers and costs compared with 2006/07 (total cost £9.2m, average of 65 placements).

3.38 The number of children placed in NCPs has remained at 56 (excluding block and respite placements), with three new placements and three having ended.

Independent Fostering Providers (IFPs) +£100,000

3.39 This represents +1.5% of the cash limit of £6,451,000. This is an increase in forecast expenditure of £5,000 since period 7.

3.40 There has been a net increase of seven children placed within independent fostering provider placements since period 7, from 138 placements to 145. Within this net increase, 14 new placements have been recorded, and seven have been confirmed as ceasing.

3.41 There has been an overall reduction of two in the number of children and young people placed in NCPs, and a net reduction of seven IFP placements since the start of the financial year. This is illustrated within the following table:

Residential Children's Homes -£41,000

3.42 This represents an underspend of -0.6% on a cash limit of £6,462,000, a reduction of £20,000 since period 7. The savings mostly relate to staffing costs at three homes.

Fostering Service +£234,000

3.43 This is an overspend of +2.7% on the cash limit of £8,812,000 and is a increase of £22,000 compared with period 7.

3.44 The breakdown of the overspend compared with period 7 is as follows:

	October 2007 Variation £'000	November 2007 Variation £'000	Movement Oct - Nov £'000
Family Placement Teams (Staffing)	0	0	0
Family Placement (Skills Fees)	-32	-18	+14
Fostering Allowances and other payments	+244	+252	+8
	+212	+234	+22

3.45 Based on the number of payments going through SAP to foster carers, the average number of children placed with HCC foster carers is 558 at the end of November. This means an overall increase of 17 since 31 March 2007. Further details are provided in Appendix 2. Comparison of average numbers over the last two years:

Year	Ave no. in foster care
2006/07 year average	569
2007/08 to date	539

3.46 More detailed work is in hand to understand the reasons for the net increase in fostering allowances. Some of this work has transferred between staff and, as a result of initial reviews, some revisions of previous forecasts have taken place e.g. exclusion of expenditure in relation to holiday, birthday and religious festival payments.

Other Residential -£94,000

3.47 This represents a projected underspend of -24.5% on a cash limit of £383,000. This an increase in underspend of £24,000 since period 7.

3.48 The majority of this expenditure relates to care leavers who are placed in supported lodgings and other accommodation.

Family Support Service

Cash Limit £6,408,000 Variance -£336,000 (-5.2%)

3.49 There has been an underlying reduction in underspend of £58,000 since period 7. This is after adjusting for £719,000 SEN project spend that was previously shown under this heading and is now reflected in the Inclusion budget (see above). This variance and movement from period 7 is broken down below:

3.50 The number of children receiving direct payments has increased by eight since the end of March 2007, from 129 to 137, a reduction of three since October. Whilst the recent growth allocations to Direct Payments budgets have improved the reported variance against this budget heading since 2006/07, a pressure continues to be reported. This is partly as a result of the increasing use of this scheme.

3.51 The increase reported in day care reflects changes which have been made to within two of the `family centre' premises forecasts in relation to running costs.

3.52 Further to last month's report additional work has been completed by teams to review the accuracy of home care packages, resulting in a net reduction in forecasts of -£24,000.

3.53 Within Other Family Support the forecast position is an underspend of £414,000, an increase in forecast expenditure of +£90,000 since period 7. This increase can be broken down into the following service headings:

· Unqualified staffing (SSA) budget forecasts, -£8,000

· Residence Order, SGO and kinship care allowance forecasts, +£64,000

· Non-CwD preventative and supportive forecasts, -£8,000

· CwD preventative and supportive forecasts, +£42,000

3.54 Various small changes within the unqualified staffing forecasts, account for the reduction of -£8,000.

Youth Justice

Cash Limit (combined) £449,000

Secure Unit (Swanwick Lodge) Variance -£82,000 (-96.5%)

3.55 This remains unchanged from Period 7. The savings are being achieved through reductions in the use of agency staff and overtime, together with an increase in income from spot selling of beds.

Other Variance +£ 89,000 (+15.5%)

3.56 This overspend relates to secure remand and escort costs and is an increase of £10,000 compared with period 7. These costs are often difficult to predict or control, as they are not planned and are unavoidable.

Other Children's Services

Cash Limit £5,528,000 Variance +£ 472,000 (+8.5%)

3.57 This variance is broken down below:

	October 2007 Variation	November 2007 Variation	Movement Oct - Nov
Service	£'000	£'000	£'000
Adoption Services	-4	+23	+27
Leaving Care Services	+197	+216	+19
Other Children's Services	+78	+233	+155
Total	+271	+472	+201

3.58 The increase within adoption services is partly due to additional costs of £40,000 for inter-agency adoption arrangements. This has arisen due to external agencies being used for seven children.

3.59 The overall number of care leavers being supported by this service has grown significantly over the last twelve months from 414 as at November 2006, to 473 as at November 2007. This growth had not been anticipated for within the budget setting process for 2007/08.

3.60 The increase in other Children's Services costs relates mainly to additional transport costs. Contracts are being reviewed.

Management and Support

Cash Limit £3,338,000 Variance -£4,000 (-0.1%)

3.61 This is a reduction in forecast underspend of £16,000 since period 7 and is based on current commitments.

Contribution to Wessex YOT

Cash Limit £1,828,000 Variance -£9,000 (-0.5%)

3.62 The underlying pressure of £49,000 on the Behaviour Support element of the Wessex YOT contribution has been partially offset this year by grant carry-forward from 2006/07 of £36,000and a reduction of £22,000 in the main contribution.

4 Unallocated one-off adjustments

4.1 £624,000 was available in 2007/08 on a one-off basis. £116,000 of this was allocated at the start of the year, leaving a balance of £508,000. All but £79,000 has now been incorporated into the cash limit, as follows:

	£'000
Source of funds:
LPSA Funding set aside to repay 2006/07 overspend	233
Business Unit balances	79
Grant c/fwd from 2006/07	312
	624
Allocations:
Lights Theatre Grant	-40
Wessex Way Lease	-40
YOT Contribution	-36
	-116
Balance	508
Further unspecific allocation	-429
Balance still to be allocated	79

4.2 The 2008/09 budget process picks up the ongoing commitments within these allocations.

5 Grants Monitoring

5.1 The Department's Management Team receive a monthly detailed breakdown of grant-related expenditure. Commitments against all of these are being reviewed and, where there is scope within the grant rules and to achieve most cost-effective use of the funds on highest priority areas, savings are being sought in order to reduce the pressure on this year's budget position and with a view to the longer term impact.

5.2 This has already led to a reduction of over £300,000 on some project budgets (see SEN budget commentary above). Some of these may be carried forward to 2008/09 where the grant rules permit this. From 2007/08 several grants are pooled together under the Local Area Agreement (LAA). The total of the Children's Services grants included in this is £5.4m (of a total £9.9m), made up as follows:

	£
Children's Services Grant	3,064,073
KS3 Behaviour and attendance	183,300
KS3 Central Co-ordination	461,494
Primary Strategy Central co-ordination	478,824
School Travel advisers	165,000
School Development Grant (SDG)	1,093,000
Total Children's Services	5,445,691

5.3 In 2008/09, several other grants will become pooled into the LAA grant (re-named Area Based Grant), including Connexions, Children's Centres and the Children's Fund plus a number of Standards Fund grants. The impact of this is being addressed in the three year budget report also to this meeting.

6 Partnerships

6.1 The County Council is seeking to further develop best practice in terms of financial reporting. In part this involves ensuring significant partnerships are regularly reported. Within Children's Services there are two partnerships that fall within this category - Wessex Youth Offending Team (YOT) and the CAMHS Children's Trust.

Wessex YOT

6.2 The total budget for Wessex YOT is about £8m in 2007/08. It is funded primarily by the Youth Justice Board and partner organisations (whose contributions may be in cash and/or contributions in kind). The Children's Services contribution for 2007/08 is £2.079m.

6.3 The Wessex YOT Management Board receives regular finance and performance reports. At its meeting on 11 December 2007 the Management Board received a report on the financial position for 2007/08 as at the end of October 2007. This showed that, although there are a number of pressures, an overall balanced budget is anticipated.

CAMHS Children's Trust

6.4 On 3 December 2007 the Board received an update on the position as at 31 October 2007, showing a slight increase in underspend of about £30,000. The Board reviewed its previous decisions and made further proposals regarding the use of the underspend for one-off projects and carry forward.

7 Consultation

7.1 The forecast outturns are based on ongoing financial monitoring in consultation with partner organisations where appropriate e.g. Youth Offending Team.

8 Legal implications

8.1 None.

9 Financial implications

9.1 The financial implications are summarised at paragraph 1.

10 Personnel implications

10.1 None.

11 Impact assessment

11.1 The proposals contained in this report are not considered to be discriminatory .

12 Crime prevention issues

12.1 None.

13 Views of the Local County Councillor

13.1 No specific consultations or views sought.

14 Conclusion

14.1 There is a projected net underspend of £1,173,000 on the Children's Services Revenue Budget. This is made up of a forecast underspend of £1,173,000 on the Schools Budget that is ring-fenced and a balanced budget on the non-schools budgets (after applying one-off funding of £624,000).

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