Archived decisions

HAMPSHIRE COUNTY COUNCIL

Decision Report :

EXECUTIVE SUMMARY

1) Summary of Decision Area:

1.1. This is the second revenue budget monitoring report for the financial year 2008/09, showing a forecast year end overspend of £0.8m (£0.1m overspend on the Schools Budget and £0.7m overspend on non-schools).

1.2. The most significant variances are on the demand-led budgets of Home to School Transport, SEN Out of County Placements and Children in Care.

1.3. Despite the reported overspend position, the department is expecting to achieve a balanced budget position at the end of the financial year, particularly as a result of:

a) The additional investment in foster care services which is expected to impact later in the year with a consequent reduction in spend.

b) The temporary savings from vacant posts arising from the organisational changes in social work teams and the Youth Service that have not been fully evaluated.

c) `Worst case' projections on some of the more demand-led budget areas.

2) Issues Covered in Report:

2.1. The current forecast outturn position for the Children's Services Department revenue budget as at the end of August 2008 (period 5) and actions being taken to contain the overall budget position within the cash limit.

3) Recommendations:

3.1. Agree the current financial issues and the management actions that are being undertaken to address them within the 2008/09 budget.

3.2. Agree the issues and latest financial position of the Wessex Youth Offending Team and the Comprehensive CAMHS Commissioning Trust.

MAIN REPORT

1) Purpose of the Report:

1.1. To set out for the Executive Lead Member for Children's Services (Education) the current position on the Children's Services revenue budget for 2008/09, including comments on any significant variances and proposed management actions being taken.

2) Contextual Information:

2.1. The 2008/09 budget was agreed by Cabinet on 8 February 2008.

2.2. Appendices are listed at paragraph 13.1.

3) Key Issues:

3.1. Managing budgets impacted by activity changes (e.g. Home to School Transport, Children in Care).

3.2. Developing new services (e.g. Services for Young People and Hantsdirect).

4) 2008/09 Revenue Budget Summary as at 31 August 2008 (period 5):

4.1. The overall 2008/09 cash limited budget for Children's Services has increased since the original budget was set in February 2008 as outlined below:

	Schools £'000	Non-Schools £'000	Total £'000
Original Agreed Cash Limited Budget	766,027	147,768	913,795
Approved Changes:
Carry-forward of 2007/08 non-schools underspend	-	681	681
Grant adjustments and other minor changes	2,613	21,240	23,853
Corporate Pay and Benefits allocation:
2007/08 Back pay allocation	-	130	130
2008/09 Core allocation	-	2,002	2,002
Current Cash Limited Budget	768,640	171,821	940,461

4.2. The projected outturn reported for 2008/09 is an overspend of £0.8m. The variance reported by each branch, and by Schools Budget and non-schools budgets is as follows:

	Period 5
	£000
Performance & Resources	+938
Education & Inclusion	+103
Children & Families	-193
Total	+848
Broken down by:
Schools Budget	+110
Non-schools budget	+738
Total	+848

4.3. A number of emerging factors will affect the final position, the net impact of which is expected to result in a balanced budget position at the end of the financial year. These include:

a) The financial position for Services for Young People is currently being reported as a balanced budget for 2008/09. A number of vacancies are currently being recruited to in respect of vacant posts that were not filled as part of the `slotting in' process of staff and additional practitioner posts that have been created. This will result in an underspend on these budgets this year. However, these are not yet factored into to outturn forecasts as there are a number of issues still to be clarified in respect of one-off and ongoing IT and premises costs which are likely to offset this position. A separate report on Services for Young People will be presented to the Executive Lead Member for Children's Services (Education) in December.

b) It is currently unclear how some inflationary increases for services, above that allowed for in setting the budget will impact on the department. Two key examples are Home to School Transport where fuel prices may well impact on some contract negotiations which are due to be undertaken, and Special Educational Needs (SEN) Out County Placements which have regionally been agreed at a 2.76% increase for residential schools (0.26% above the inflation allocation of 2.5%).

c) Following the implementation of Hantsdirect, a review of the social care team structure has been undertaken. However, it is anticipated that Hantsdirect will continue to be supported by these teams throughout 2008/09.

4.4. The major variations within the reported position shown above are as follows:

	Branch	Cash Limit £'000	Variance £'000	Variance %	Report para
Schools Budget
Pay reform payments	P&R	19,116	-170	-0.9	4.6
Statemented Pupils	C&F	8,805	-170	-1.9	4.7
Out of County Special Schools	C&F	8,383	+440	+5.2	4.8
Non-Schools Budget
Home to School Transport	P&R	23,418	+960	+4.1	4.11
Commissioning and Social Work	C&F	13,790	-782	-5.7	4.13
Children in Care	C&F	32,222	+155	+0.5	4.17
Family Support Services	C&F	7,265	+184	+2.5	4.40
Other Children's Services	C&F	6,364	+281	+4.4	4.42

4.5. The following paragraphs provide brief details on these variations.

Schools Budget

Teachers Pay Reform Payments -£170,000 (-0.9%)

4.6. The forecast underspend in this claims based budget is based on an assumption that the number of staff eligible in 2008/09 will be similar to the number in 2007/08. The forecast will become more accurate as the year progresses.

Statemented Pupils -£170,000 (-1.9%)

4.7. The current forecast underspend relates to the costs of four pupils previously funded from this budget who had been placed with an external provider as an alternative to more expensive Out County placements. The provider has since been approved as a school by the DCSF, resulting in the costs of the placements now being reflected within the Out County budget.

Out County Placements +£440,000 (+5.2%)

4.8. The forecast overspend is on Out County Special School Placements. The pressures arise from a lower number of summer term leavers compared with 2007 and from appeals to the SEN tribunal.

4.9. This position assumes a number of new placements being made pending the outcome of tribunals, as well as assumptions around potential leavers and outcomes of fee negotiations for existing placements.

4.10. The average number of children placed in Out County Placements at the start of 2008/09 has increased by 7.7% from the end of the previous year (from 221 to 238). Part of this increase is explained in paragraph 4.6 above.

Non-Schools Budget

Home to School and College Transport +£960,000 (+4.1%)

4.11. The forecast overspend consists of:

a) Escort Costs: +£44,000, which has mainly arisen due to Criminal Records Bureau checks deferred from previous years.

b) Contract Costs: +£916,000. The main elements in this are:

o the full year costs of contracts increasing by £1,158,000 since the budget was set, mainly as a result of the number of contracts increasing above that anticipated during 2008/09 (1,403 contracts in May 2008 compared to 1,363 in May 2007).

o partially offset by spend to save reviews producing savings of £167,000.

4.12. Exactly how increasing fuel prices will impact on this position is not yet clear. Contracts are re-priced on an annual basis, and for 2008/09 this is currently based on an estimated increase of 3%.

Commissioning and Social Work -£782,000 (-5.7%)

4.13. Following the changes in the service, partly arising from the implementation of Hantsdirect and the growth investment of £600,000 for qualified social workers within the 2008/09 budget, work continues by the Children and Families branch to implement the revised social work team structure.

4.14. In 2007/08 this service underspent by £490,000. In view of the additional investment received in the current financial year, the department is able to demonstrate that the on-going county-wide recruitment campaigns have had some success in recruiting to vacancies across the service.

4.15. Approximately 11 social worker vacancies within fieldwork teams have been identified as still needing to be recruited to against the revised structure. Based on a mid-point full-year costs of £40,000 per full-time equivalent (FTE), this represents an annual cost of approximately £440,000. Some team manager vacancies, together with a number of the recent appointments made being newly qualified social workers, further contribute to the overall underspend position reported.

4.16. Further information on the progress being made by the department in the recruitment and retention of social workers is provided in paragraph 9.1.

Children in Care +£155,000 (+0.5%)

4.17. The graph below shows the recent change in the numbers of children in full-time care since March 2007. As at the end of August 2008 1,037 children were recorded as being in the care of the County Council.

4.18. These children are in a number of different placement arrangements including fostering and residential care, as well as other* arrangements such as supported lodgings, secure welfare accommodation, placed for adoption (subject to final approval), as well as in some circumstances living at home with their parent(s), as demonstrated within the table below:

4.19. The overall variation reported for Children in Care is broken down as follows:

	Cash Limit £'000	August Variance £000	August Variance %
Non County Placements (NCPs)	9,158	-695	-7.6
Independent Fostering Providers (IFPs)	6,138	+794	+12.9
HCC Fostering	10,527	+338	+3.2
HCC Children's Homes	6,006	-304	-5.1
Other residential	393	+22	+5.6
Total	32,222	+155	+0.5

Non County Placements

4.20. The forecast underspend of £695,000 represents -7.6% of the cash limit of £9,158,000. Since the last report, activity has increased by three placements to 57 as at the end of August 2008. The forecast outturn also takes into account a reduction in costs for a known leaver in August.

4.21. The budget was set at an average of 57 placements for the year. So far this year the average activity has been 55, resulting in lower actual expenditure. In addition, some success has been achieved in respect of re-negotiating fees with providers and securing Primary Care Trust contributions as a result of reviewing individual placements. For 2008/09 this work has resulted in estimated cashable savings of approximately £360,000 being achieved for the department (mostly in relation to social care, but also a small amount in relation to Schools Budget contributions).

Independent Fostering Providers (IFPs)

4.22. The current forecast outturn indicates an overspend of £794,000 which represents +12.9% of the cash limit of £6,138,000.

4.23. The number of children placed within independent fostering provider placements has increased by 15 since the end of May 2008, from 151 to 166. Since the beginning of the year 53 new placements have been recorded, and 24 have been confirmed as ceasing.

4.24. As part of the 2008/09 budget setting process the cash limit was reduced by £400,000 to reflect the impact of the additional investment in in-house fostering services.

4.25. The current position does not take into consideration the savings which are expected to be realised towards the end of the financial year as a result of the fostering investment.

In-house Fostering Service

4.26. The current forecast outturn indicates an overspend of £338,000 which represents +3.2% of the cash limit of £10,527,000.

4.27. This position includes the increased investment of £1.8 million for the in-house fostering budgets, some of which relates to investment within the Family Placement teams who support the foster carers.

4.28. The number of children placed with Hampshire County Council foster carers since May 2008 has reduced from 593 to 578 placements. Reduced capacity of Hampshire carers over the holiday period has contributed to this reduction and, therefore, the increased number of children needing to be placed with IFPs.

4.29. Despite this reduction the current activity levels still represents an increase of 44 from the baseline of 534 placements identified in the Business Case.

Return on Foster Carer Business Case

4.30. The fostering budget has been set based on a number of assumptions around expected growth in activity levels and target reductions in IFPs as part of the Hampshire Fostering Service investment business case, which was prepared in December 2007. The following table shows some of the key activity areas, compared with the budgeted average activity, and the target numbers as at March 2009):

* numbers as per the business case (Dec 2007)

4.31. Any savings achieved through a reduction in the number of IFPs will be reported later in the year, in view of the time required to approve new in-house foster carers. Initial information, however, indicates that the overall trend in the number of enquires continues to rise, and also suggests that the new investment has already had some success in attracting the department's target group of professional foster carers, including some carers who were previously with IFPs. The number of assessments that the service is completing each month is also gradually increasing, and a marked upward trend in the number of approvals each month has been observed.

4.32. Between the period of September 2008 to January 2009 a further 26 foster carers are expected to be approved. With this growth, and a reduction in the number of de-registrations (supporting the departments target of improving the retention of existing carers), the department is gradually building capacity within the service in line with the recruitment plans in the business case?.

4.33. Due to the increase in numbers of children in care, there has consequently been additional demand on these services. The requirement for foster placements has increased significantly from the baseline and a consequent additional cost pressure has emerged, impacting on the ability to identify any return on investment.

4.34. By analysing the relative population of the in house and IFP placements it is possible to assess any improvements and make a judgement on the return on investment.

4.35. The comparison is summarised below:

4.36. The comparison above shows a deterioration in the ratio driven by the increase in Children in Care and the resulting disproportionately large increase of independent placements as at August 2008. A more detailed impact assessment is being carried out, the results of which will be incorporated into the next budget monitoring report.

Residential Children's Homes

4.37. The current forecast outturn indicates an underspend of £216,000 which represents -3.7% of the cash limit of £5,856,000.

4.38. The cash limit includes an additional £92,000 one-off allocation for residential unit allowances back pay relating to Pay and Benefits.

4.39. This underspend is partly due to savings achieved as a result of a short period of closure of one home for refurbishment which re-opened in the autumn. However, further budget and forecast adjustments are required in relation to the closure of the Corner House and the implementation of the North Intensive Support Service, and this will impact on the financial position reported for both residential children's homes and Commissioning and Social Work budgets.

Family Support Service +£184,000 (2.5%)

4.40. The forecast overspend consists of:

	Cash Limit £'000	August Variance £'000	August Variance %
Direct Payments	674	+75	+11.1
Day Care	524	-60	-11.5
Services for Under 8s	123	-2	-1.6
Home Care	743	+40	+5.4
Equipment and Adaptations	524	+8	+1.5
Other Family Support	4,677	+123	+2.6
Total	7,265	+184	+2.5

4.41. The main variance is against Other Family Support and is mainly due to the number of children placed within kinship care, special guardianship or residence order arrangements increasing since March 2008 (from 226 to 237). The department had anticipated there to be little growth in the number of children supported via these type of arrangements in 2008/09. The actual growth in numbers which has been experienced, therefore, has resulted in a forecast overspend being reported against the original budget set.

Other Children's Services +£281,000 (+4.4%)

4.42. The forecast overspend consists of:

	Cash Limit £'000	August Variance £'000	August Variance %
Adoption Services	2,231	+136	+6.1
Leaving Care Services	1,676	+37	+2.2
Other Children's Services	2,457	+108	+4.4
Total	6,364	+281	+4.4

4.43. The overspend within adoption services has partly arisen due to an increase in expenditure on adoption allowances since last year. The average number of children who were being financially supported through adoption allowance payments in 2007/08 was 209, compared with an average of 220 as at the end of August, an increase of 5.3%.

4.44. The overspend within the Other Children's Services budget is mainly due to pressures on transport for children, particularly within the North and East of the County.

4.45. A more detailed analysis of these underlying pressures will be undertaken to inform the 2009/10 budget setting process.

5) Partnerships:

5.1. Within Children's Services there are two `significant' partnerships - Wessex Youth Offending Team (YOT) and the Comprehensive CAMHS Commissioning Trust.

Wessex YOT

5.2. The total adjusted cash limited budget for Wessex YOT in 2008/09 is £9.2m. It is funded primarily by the Youth Justice Board and partner organisations (whose contributions may be in cash and/or contributions in kind). The contribution from the Children's Services Department for 2008/09 is £2.2m.

5.3. The Wessex YOT Management Board receives regular finance and performance reports. At its meeting on 22 September 2008 the Board received an update on the financial position for 2008/09.

5.4. This reported that whilst there are were some pressures being experienced by the service, through appropriate management action, overall a balanced budget position was expected to be achieved.

Comprehensive CAMHS Commissioning Trust

5.5. At its meeting on 3 September 2008 the Trust's Management Board received an update on the financial position for 2008/09. This reported a forecast underspend for the year of £219,000.

5.6. Of this £219,000 underspend, £70,000 is earmarked and committed to be carried forward to 2009/10 leaving a balance of £149,000 uncommitted in 2008/09. The Trust's Management Board agreed to review the proposals for using this underspend when the budget position for 2009/10 becomes clearer.

6) Children's Centres:

6.1. The report presented to the Children's Centre Board on 3 September 2008 identified an underspend against the core budget of £43,000. However, a projected underspend of £375,000 has also been reported against the business unit, of which £115,000 relates to Sure Start Early years Childcare Grant (SSEYCG).

6.2. A detailed review of all business unit plans will be undertaken during September and October to ensure that appropriate management action is being taken to address this.

7) Business Units:

7.1. Appendix 3 shows the forecast year end business unit balances as at the end of June 2008 compared with the original budget. These forecasts are reviewed on a quarterly basis. This shows that overall in-year balances are estimated to be £143,000 (net) lower than the original budget.

7.2. This variance mainly relates to the Hampshire Inspection and Advisory Service (HIAS), which is projecting an in-year deficit of £169,000 as a result of underwriting part of the cost of the National Strategy Consultants who are providing support to schools looking to achieve improvements. This position would result in the overall estimated reserves for HIAS as at 31 March 2009 reducing from £2.1m to £1.9m. Due to the uncertainty in future grant funding for these consultants beyond March 2009, HIAS has agreed to continue to underwrite the full cost of these posts from reserves, thus enabling the consultants' fixed term contracts to be extended until March 2011.

8) Grants:

8.1. The total of all the elements within the Area Based Grant (ABG) for Children's Services is £22.0m. The ABG has no conditions attached to it and is treated as part of the overall department resource. Any over or underspend will therefore be subject to the usual rules around carry-forward as part of the department's overall cash limit.

8.2. The impact of changes in ABG for 2009/10 and 2010/11 will be considered as part of the medium-term budget strategy. For example, the Connexions grant reduces in both years.

8.3. The total value of the department's specific grants (excluding the Dedicated Schools Grant, School Development Grant and Schools Standards Grant) is £43.8m. Expenditure against these grants is being closely monitored to ensure that any potential underspends are identified early on, maximising the use of these funds where ring-fenced (e.g. SSEYCG), and identifying any potential carry-forward to 2009/10 within the scope of the grant conditions.

9) Recruitment of Social Workers:

9.1. The last budget report to the Executive Lead Member for Children's Services (Education) provided some details on the county-wide recruitment campaign which started in April. At that point the outcomes of the June round of recruitment were unknown.

9.2. Of the 19 social worker vacancies (including Family Placement) which were being recruited to in this round, 47 applications were received, and 16 posts were successfully appointed to. Of these 16, 11 of the successful applicants were newly qualified social workers.

10) Services for Young People (SfYP):

10.1. Work has continued to finalise the budget requirements with service leads. This work has flagged further issues around some areas of expenditure including the on-going IT and premises costs and these issues will need to be explored further as information becomes available to consider the impact on the 2009/10 budget.

10.2. For 2008/09 budgets are in the process of being allocated to teams and training is currently being developed for managers which is intended to provide them with an overview of the financial framework within which the service operates. This training will be delivered to budget managers during November.

11) Pay and Benefits:

11.1. It has been difficult to fully assess the impact of Pay & Benefits at individual budget level and more information is still being collected. However, the overall budget allocation received for Pay and Benefits should ensure that the Department is able to meet its financial commitment in 2008/09.

11.2. Budget allocations will be finalised by the end of October and the full financial impact will be outlined within the next report.

11.3. There may be some further claims to pay as well as the ongoing protection arrangements. The funding of any successful equal pay claims and changes arising from appeals are not included at this stage.

12) Savings Targets:

12.1. An update of the current achievement against the department's savings targets for 2008/09 of £1,555,000 is shown in Appendix 4. This identifies that £1,090,000 of this overall target is currently expected to be achieved.

12.2. The key area where the target is not being reported as achieved is the £400,000 in respect of Independent Fostering Provider placements. This is referred to earlier in this report. A report on the progress being made within the fostering service overall as a result of the additional investment received will be provided in the next report (18 December 2008).

13) Appendices:

13.1. The following appendices are attached:

Appendix
1	Budget Monitoring Summary
2	Activity Data	(a) termly (b) monthly
3	Forecast Business Unit balances
4	Savings Targets

14) Conclusions:

14.1. The 2008/09 forecast outturn is a projected overspend of £0.8m (schools of £0.1m and non-schools of £0.7m). However, it is anticipated that a number of factors not currently reflected in this reported position, together with other management actions currently being undertaken, will result in the department achieving a balanced budget at the end of the financial year.

15) Summary Recommendations:

15.1. Agree the current financial issues and the management actions that are being undertaken to address them within the 2008/09 budget.

15.2. Agree the issues and latest financial position of the Wessex Youth Offending Team and the Comprehensive CAMHS Commissioning Trust.

CORPORATE OR LEGAL INFORMATION: