Archived decisions

HAMPSHIRE COUNTY COUNCIL

Decision Report :

EXECUTIVE SUMMARY

1) Summary of Decision Area:

1.1. This is the third revenue budget monitoring report for the financial year 2008/09, showing a forecast year end underspend of £1.9m (£0.6m underspend against the Schools Budget and £1.3m underspend on non-schools).

1.2. The most significant variances are on the budgets impacted by activity changes including Home to School Transport, Special Educational Needs (SEN) Out of County Placements, Statemented Pupils and Children in Care.

1.3. This position incorporates further assumptions around some key areas of expenditure which had not previously been reported. These include:

a) The impact on the investment in foster care due to the number of children in care exceeding the forecast activity for the invest to save initiative. The consequence of this has been to use new in-house foster carers to meet the increased need for foster placements.

b) The temporary savings from vacant posts arising from the organisational changes in social work teams and Services for Young People.

c) The maximisation of Government grants, including the success recovering the former Neighbourhood Nurseries Initiative Grant relating to 2004 to 2006 from the Department of Children, Schools and Families (DCSF)

d) The additional revenue costs expected to be incurred during 2008/09 in respect of Building Schools for the Future.

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 October 2008 (Period 7) 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 the County Council on 21 February 2008.

2.2. Appendices are listed at paragraph 11.1.

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 October 2008 (Period 7):

4.1. The projected outturn reported for 2008/09 is an underspend of £1.9m. The variance reported by each branch, and by Schools Budget and non-schools budgets, as compared with Period 5 (end of August 2008) is as follows:

	Period 5	Period 7	Change
	£000	£000	£000
Performance & Resources	+938	-885	-1,823
Education & Inclusion	+103	-603	-706
Children & Families	-193	-411	-218
Total	+848	-1,899	-2,747
Broken down by:
Schools Budget	+110	-619	-729
Non-schools budget*	+738	-1,280	-2,018
Total	+848	-1,899	-2,747

4.2. A number of emerging factors have impacted on the forecast outturn reported since the last report. These include:

a) The financial position for Services for Young People previously reported a balanced budget for 2008/09. A number of vacancies are currently being recruited to in respect of 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, a number of additional one-off and continuing costs (including IT and premises costs) will partially offset this position. An anticipated underspend of approximately £250,000 is therefore reflected within the position reported

b) Further revenue costs of £300,000 in respect of the Building Schools for the Future project are now anticipated to be incurred during 2008/09 (in addition to the budget of £200,000 allocated) as the project develops

c) The impact of the recently announced reductions in the Bank of England base rate on the interest which can now be expected to be accrued against Nursery, Primary and Special school balances

d) The temporary savings from vacant posts arising from the organisational changes in social work teams have been adjusted to take into consideration further recruitment decisions in light of the outcomes of the restructure currently underway

e) The maximisation of Government grants, including success achieved in pursuit of the former Neighbourhood Nurseries Initiative Grant relating to 2004 to 2006.

4.3. There is still some uncertainty around how inflationary increases for services, above that allowed for in setting the budget, will further impact on the department. Two key examples are Home to School Transport where changing fuel prices may well impact on some further 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%).

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

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

Schools Budget

Other Supply Cover (not sickness) -£111,000 (-15.9%)

4.6. This budget previously reported a nil variance. Following subsequent identification of an underlying budget pressure, an additional £200,000 has been added to this budget on a one-off basis as agreed by Schools Forum.

Teachers' Pay Reform Payments -£160,000 (-0.8%)

4.7. A slight reduction of £10,000 from the previous projected underspend based on information received in respect of the autumn term claims. This position continues to assume that the number of staff eligible for the remainder of 2008/09 will be similar to the number of claims received in 2007/08. It is anticipated that a significant proportion of this underspend will be required in 2009/10 to meet the cost of back-dated claims.

Payments for 3 and 4 year olds -£500,000 (-1.8%)

4.8. The forecast against this budget had previously assumed that by September 2008, 60% of non Pathfinders for 3 and 4 year old offerings would move to 15 hours provision per week. As a result of grant uncertainties and revised allocations, this 60% tranche was delayed from September 2008 to January 2009. This has produced a one off budget saving of £500,000 in 2008/09.

Statemented Pupils -£511,000 (-5.8%)

4.9. This underspend has increased by £341,000 since the last report, which is primarily due to a review of the financial commitments based on the known pupil numbers being supported during the Autumn term. The number of pupils reported with low incidence statements (which represents a significant proportion of this budget) has reduced slightly over the last two years as follows:

	Number of pupils with low incidence statements	% reduction on previous year (at September)
As at:
September 2006	861	-
September 2007	858	-0.4%
September 2008	834	-2.8%

4.10. However, whilst this position has levelled out over the past two years (particularly for primary pupils), prior to this the number of pupils with low incidence statements would vary considerably, so it is important to note that this reduction may not be sustainable.

Inter Authority Recoupment +£200,000 (+33.3%)

4.11. A review of invoices now received in respect of Hampshire children who were placed in other Local Authority schools during 2007/08 compared with previous estimates made, together with revised estimated charges for placements during 2008/09, has identified a projected overspend of £200,000 for this financial year.

Out County and Pre-School Placements +£500,000 (+6.0%)

4.12. The forecast overspend is on Out County Special School Placements (£600,000), offset by an underspend of £100,000 in respect of pre-school placements.

4.13. The pressures partly arise from a higher number of pupils being placed in out county provision compared to the previous financial year. The number of pupils as at September 2008 was 222 compared with 211 as at September 2007 (an increase of 5.2%).

4.14. In addition, whilst work continues to review and negotiate fee amounts, the high cost of some placements, and the inflation increase of fees above the 2.5% allocated, has further contributed to the overspend forecast against this budget.

4.15. 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.

Non-Schools Budget

Home to School and College Transport +£635,000 (+2.7%)

4.16. This is a reduction of £325,000 since the previous report. The current overspend position reported is based on updated information received on the number of pupils being transported and contract price negotiations completed as at the end of October. The forecast overspend consists of:

a) Escort Costs: -£39,000, which mainly comprises volume savings on escorts. It is now anticipated that the costs of £32,000 in respect of CRB checks previously included will not be incurred during the current financial year

b) Contract Costs: +£694,000, which consists of a pressure of £638,000 on annual and daily contracts, and £56,000 on other contract headings (including increased costs relating to parental contracts).

c) Season tickets: +£24,000, as a result of a greater pupil numbers using such transport, including some pupils from low income families being entitled to transport, as well as an increase in prices.

d) Income -£44,000 this compares with the zero variance reported at the end of September, and is the result of increased levels of recharge income being expected, in particular from the special sector.

4.17. Exactly how any further potential change in fuel prices will impact on this position is not yet clear. Contracts are re-priced on an annual basis, and for 2008/09 this was based on an estimated increase of 3%.

Interest on School Balances +£400,000 (+33.0%)

4.18. This represents the interest retained by the County Council in relation to Nursery, Primary and Special school balances.

4.19. Following the recent reduction in the Bank of England base rate by 1.5% to 3.0%, and the subsequent further 1% reduction, it is envisaged that this will have an adverse impact on the level of interest that can now be expected to be accrued against these balances during 2008/09.

IT -£1,057,000 (-11.4%)

4.20. This position takes into account the projected underspend due to the national delay in implementing Contact Point, as well a delay in implementing various other departmental IT pressures which will continue in to 2009/10. Subject to the department's overall budget position, it is proposed to seek agreement to carry-forward this planned underspend to meet the deferred costs in 2009/10.

4.21. An underspend against the staffing budget as a result of delays in recruitment during 2008/09 further impacts on this position. These represent one-off savings in 2008/09.

Early Education and Childcare Unit (EECU) -£138,000 (-7.0%)

4.22. This position is based on the underspend projected against the non-schools element of the EECU budget following a review of the forecast expenditure and income streams. A potential recharge from Adult Services in respect of the continued support they are providing for the Children's Information Service is currently being explored, and the outcome of this review may result in a change in this reported position.

Building Schools for the Future (BSF) +£300,000 (+150.0%)

4.23. A growth allocation of £200,000 was agreed in respect of the 2008/09 budget to meet the then anticipated costs of preparing the department for Building Schools for the Future. Since then the Department for Children, Schools and Families announced the potential for earlier entry in to the BSF, accelerating the preparatory work. Further work to establish the full revenue implications of the initial project work in these early stages, which includes the cost of ICT development and Property Services charges, has identified estimated costs of £500,000 during 2008/09, resulting in a projected overspend of £300,000. The on-going costs will be addressed in the 2009/10 budget setting process.

Neighbourhood Nurseries Initiative -£580,000

4.24. This is a one-off amount received during 2008/09 from the DCSF following the successful pursuit of a grant claim in relation to the former Neighbourhood Nurseries Initiative Grant relating to 2004/05 and 2005/06.

Commissioning and Social Work -£807,000 (-5.8%)

4.25. 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. It is currently envisaged that this new structure will be implemented by April 2009.

4.26. 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.

4.27. The forecast underspend takes into consideration the latest assumptions around recruitment to vacant Team manager and Social Work vacancies.

4.28. 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 +£160,000 (+0.5%)

4.29. The graph below shows the recent change in the numbers of children in full-time care since March 2007. As at the end of October 2008 1,040 children were recorded as being in the care of the County Council. This represents an increase of 17 children since the end of March 2008, and a increase of three since August 2008.

4.30. 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. It excludes children with a disability who receive short programmed breaks.

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

	Cash Limit £'000	October Variance £000	October Variance %
Non County Placements (NCPs)	9,158	-629	-6.8
Independent Fostering Providers (IFPs)	6,138	+660	+10.8
HCC Fostering	10,616	+418	+3.9
HCC Children's Homes	6,097	-328	-5.4
Other Residential	393	+39	+9.9
Total	32,402	+160	+0.5

Non County Placements

4.32. The forecast underspend of £629,000 represents -6.8% of the cash limit of £9,158,000. Since the last report, activity has increased by two placements from 57 to 59 as at the end of October 2008.

4.33. The budget was set at an average of 57 placements for the year. So far this year the average activity has been 56, 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)

4.34. The current forecast outturn indicates an overspend of £660,000 which represents +10.8% of the cash limit of £6,138,000.

4.35. The number of children placed within independent fostering provider placements has reduced overall by three since the end of August 2008, from 166 to 163. Since the beginning of the year 71 new placements have been recorded, and 51 have been confirmed as ceasing (i.e. a net increase of 20 placements since the end of March 2008).

4.36. 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.

4.37. The current position takes into consideration the further estimated net savings of £150,000 which are expected to be realised towards the end of the financial year as a result of the fostering investment.

In-house Fostering Service

4.38. The current forecast outturn indicates an overspend of £418,000 which represents +3.9% of the cash limit of £10,616,000.

4.39. 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.

4.40. The number of children placed with Hampshire County Council foster carers since August 2008 has increased from 578 to 590 placements. This follows a period of reduced numbers over the summer months due to reduced capacity of Hampshire carers over this period.

4.41. The current activity levels represents an increase of 56 from the baseline of 534 placements identified in the Business Case for investment in the service.

Return on Foster Carer Business Case

4.42. 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)

4.43. In view of the timescales required to approve new in-house foster carers, it is anticipated that the estimated savings included within the forecast outturn will begin to be realised later in the financial year. The number of enquiries about fostering for Hampshire continues to produce promising results, and further success has been achieved in attracting the department's target group of professional foster carers.

4.44. Due to the increase in numbers of children in care (see above), and ultimately the need for foster care provision overall, 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 return on the investment.

4.45. 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.

4.46. The comparison is summarised below:

4.47. 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 October 2008.

Residential Children's Homes

4.48. The current forecast outturn indicates an underspend of £328,000 which represents -5.4% of the cash limit of £6,097,000.

4.49. 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 will be required following the decision to re-invest the Corner House budget (following the home's closure last year) to develop and implement an Intensive Support Service in the North and East area of Hampshire. This will impact on the financial position reported for both residential children's homes and Commissioning and Social Work budgets. Currently the underspend against this budget is contributing to this position.

Family Support Service +£219,000 (3.1%)

4.50. The forecast overspend consists of:

	Cash Limit £'000	October Variance £'000	October Variance %
Direct Payments	674	+89	+13.2
Day Care	528	-62	-11.7
Services for Under 8s	123	-3	-2.4
Home Care	743	+69	+9.3
Equipment and Adaptations	524	+7	+1.3
Other Family Support	4,563	+119	+2.6
Total	7,155	+219	+3.1

4.51. Pressures on direct payments and home care support reflect an increase in preventative support packages to enable children with disabilities to remain at home. The number of children being supported by direct payments has increased from 163 as at the end of March 2008 to 178 as at the end of October, an increase of 9.2%.

4.52. The most significant variance reported 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 250, a net increase of 24). The department had anticipated there to be little growth in the number of children supported via these type of arrangements in 2008/09. However, as the number of children looked after has increased, so also has the demand for other types of support such as special guardianship arrangements. The net increase of 24 children has therefore resulted in a forecast overspend being reported against the original budget set. This has avoided further potential increased costs against the children in care budget by preventing some of these children from becoming looked after.

Other Children's Services +£474,000 (+7.3%)

4.53. The forecast overspend consists of:

	Cash Limit £'000	October Variance £'000	October Variance %
Adoption Services	2,273	+132	+5.8
Leaving Care Services	1,648	+227	+13.8
Other Children's Services	2,529	+115	+4.5
Total	6,450	+474	+7.3

4.54. 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 221 as at the end of October, an increase of 5.4%. This overspend has slightly increased since the previous report, partly due to the inclusion of the estimated cost of purchasing of a car for a family who are adopting a disabled child.

4.55. The overspend against the Care Leavers budget reflects a steady increase in the number of care leavers who are continuing to be supported by the department since 2007/08. This is demonstrated below:

4.56. This increase in expenditure and activity has mainly been observed within the North and East area, and work is currently underway to review the current provisions for care leavers against other areas of the County to ensure that the forecast expenditure for this service is presenting an accurate projection of costs. An update on the outcomes of this work will be provided in the next report.

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

Management and Support -£282,000 (-7.2%)

4.58. The forecast underspend takes into consideration a projected underspend of approximately £100,000 against the additional budget allocation received in 2008/09 following the introduction of the new Public Law Outline (PLO), replacing the previous protocol for Judicial Case Management in Public Law Children Act cases.

4.59. This is a change in the process leading up to care proceedings and it is possible that relevant expenditure is not being fully captured against this budget in some instances, but elsewhere within the children's social care reporting structure. This may not, therefore, be a true reflection of the full PLO costs being incurred. Extreme caution is needed given that in other authorities care proceedings appear to be increasing and the level of expenditure in this area could, therefore, rise in the coming months.

4.60. In addition one-off funding available during 2008/09 has enabled the department to achieve some savings against this budget on a temporary basis.

Services for Young People -£250,000 (-1.6%)

4.61. Work has continued to finalise the budget requirements with service leads. As reported previously, this work has flagged further issues around some areas of expenditure including the on-going IT and premises costs and these issues are being explored further as information becomes available to consider the impact on the 2009/10 budget.

4.62. For 2008/09 budgets have been allocated to teams and training has been delivered during November to front-line managers to provide them with an overview of the financial framework within which the service operates. Following this training a more detailed review of the financial forecasts for these teams will be undertaken to feed in to the next report. It is possible, therefore, that this position may change following completion of this review.

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 was agreed at £9.2m. It is funded primarily by the Youth Justice Board (YJB) 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 9 December 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.

5.7. The next meeting of the Trust's Management Board is scheduled for 6 January 2009.

6) Children's Centres:

6.1. There are now 60 SureStart children's centres established within Hampshire, seven of which were developed in phase one between April 2004 and March 2006 and a further 53 in phase two between April 2006 and March 2008. All of these centres received basic designation, in line with targets set by DCSF, and are on track to achieve full offer designation by the required date of March 2010. Full offer designation indicates that a children's centre is delivering a full range of services as set-out within the DCSF guidance to an acceptable standard. There are currently nine children's centres within the county with full designation status, although not required until two years from the initial designation date.

6.2. Whilst the capital building programme continues to progress well, the time scales involved in delivering such a large and complex construction programme has meant that the setting of revenue budgets for some new centres has taken longer than originally planned. The children's centre programme is still in the early stages of development and therefore a settled pattern of expenditure is yet to emerge. Costs such as business rates are still based on estimates as they will not be confirmed until late in the year when buildings have been completed and assessed by district councils.

6.3. Achievements within the children's centre programme have already been significant, despite the many challenges faced in ensuring the recruitment of a workforce with the necessary experience and high quality skills required to deliver services in such a critical area. This factor, when coupled with the complexity of the capital programme have led to delays in recruitment to some posts which, has had implications on the revenue budget.

6.4. In some instances buildings will not be completed until the next calendar year. Therefore, the inability to allocate fully the associated set up costs for these centres within year has also contributed to the identified underspend. The service anticipates expenditure in the region of £20,000 per centre to supplement the basic fit out. Due to the lead time for ordering, the initial set up costs for equipment for centres in many instances may not be incurred until after 31 March 2009. It is estimated that, as a result of these issues, an underspend in the region of £300,000 to £400,000 is likely in 2008/09 and this would need to be carried forward to 2009/10 to meet the additional costs in that year.

7) Business Units:

7.1. Appendix 3 shows the forecast year end business unit balances as at the end of September 2008 compared with the original budget. These forecasts are reviewed on a quarterly basis. This shows that overall an in-year surplus balance of £28,000 is estimated to be achieved against the original budget.

7.2. This is an estimated increase in reserves of £168,000 since the last report. The main changes relate to a reduced deficit forecast for the Hampshire Inspection and Advisory Service (HIAS). Plans for the use of the HIAS surplus over the next three years are being considered as part of the three year budget strategy.

8) Grants:

8.1. The total of all the elements within the Area Based Grant (ABG) for Children's Services is £22.3m. 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 an update on the outcomes of the June county-wide recruitment campaign.

9.2. A further campaign was undertaken during September, and for the 18 social worker vacancies which were being recruited to in this round, 35 applications were received. The outcome of the interviews undertaken in respect of these posts is currently awaited, and further information will be provided in the next report.

10) Savings Targets:

10.1. 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.

10.2. The key area where the target is not being reported as achieved is the £400,000 in respect of Independent Fostering Provider placements.

11) Appendices:

11.1. 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

12) Conclusions:

12.1. There is currently a projected underspend of £1.9m for 2008/09, £0.6m against the Schools budget and £1.3m against the non-schools budget.

13) Summary Recommendations:

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

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

CORPORATE OR LEGAL INFORMATION: