County Council Revenue and Capital Budget Monitor 2005/06

COUNTY COUNCIL REVENUE AND CAPITAL BUDGET MONITOR 2005/06

Report of the Finance Director

Author: Andrew Nightingale, Assistant Finance Director

Tel: 01992 555331

Executive Members: Derrick Ashley

Stuart Pile

1.Purpose of the Report

At its meeting on 13 December 2005 the Overview and Scrutiny Committee:

‘Agreed that budget monitoring reports should be included as an agenda item for the service scrutiny committees and that proposed items for scrutiny arising from consideration of the budget monitors could then be raised by Members and referred to the Overview and Scrutiny Committee’.

This report has therefore been placed on the agendas of all the service scrutiny committees for the March cycle, with the purpose of providing Members with an opportunity to monitor the budget and to identify any areas requiring more in-depth review.

This report covers the forecast outturn for Revenue and Capital Budgets for 2005/06 as at the end of December 2005.

2.Summary

2.1The monitoring positionat the end of December 2005 shows a revenue underspend of £675,000 (0.06%) against the latest budget of £1,077.141m.

2.2The principal reasons for the variation in the forecast revenue outturn are listed in Table 2 (Para 1.2), whilst a summary analysis across service is shown in Appendix A.

2.3Table 3 (Para 3.1) analyses by service the projected capital underspend of £17.004m, Analysis by type of variance is shown in Table 4 (para 3.1), whilst a summary analysis across services is given in Appendix B.

2.4Following the closure of the 2004/05 accounts, the opening level of general balances at 31 March 2005 was £36.5m, of which £14.5m is to be used to support this year’s budget, leaving a projected level of balances at March 2006 of £22.0m.

2.5 As at the end of December the balance on the special provision is £2.655m and the balance on the pay and price contingency is £3.664m. On the basis of monitoring information to date, a contribution to balances of up to £5.3m is projected at year end. However, £1.5m of this sum required to be carried forward to support the potential impact of the Mumby judgement relating children’s social care practice. Also with regard to the Buncefield oil depot fire, it is estimated that the council will need to meet costs of up to £1.7m from its reserves, assuming that the Bellwin scheme for central government support will cover 85% of all eligible costs in excess of £2.1m (the bellwin threshold for HCC). Final costs to the council of this incident are not yet clear as claims from other fire services for their costs have not all been received and because of restricted access to the area, much of the necessary highways work has not yet begun.

2.6The reported 2005/06 prudential indicators show that no limits have been breached nor are they expected to be in the remainder of the year.

3.Conclusions

3.1Members are asked to decide if there are any items arising from the budget monitor report which they wish to consider for future scrutiny and refer these to the Overview & Scrutiny Committee.

1.REVENUE BUDGET VARIANCES

1.1Table 1 below summarises the variances by service using the criteria previously laid down in Financial Regulations 2000.

Table 1: Budget Variances 2005/06

1.2The following table shows those variances of £75,000 or more against the latest budget. Detailed explanations for these variances are listed in sections 1.3 to 1.6.

Table 2

All Services

Total Forecast Underspend

1.3CHILDREN, SCHOOLS & FAMILIES (CSF)

1.3.1Additional Welfare and Tuition £300,000 or 4.1% underspend

The projected underspend on the Additional Welfare & Tuition relates to Applied Behaviour Analysis programmes to support autistic children. There has been an increasing trend for this support up to 2003/04 following tribunal decisions. However, this trend has not continued and it is estimated that this will result in an underspend of £300,000 in the 2005/06 budget. There is however still a continued growth in demand for support for young children with complex needs, including autism, and this will need to be carefully monitored over the next year to assess requirements.

1.3.2Recoupment£500,000 or 108% underspend

Inter-authority Recoupment operates in arrears. At the end of each financial year income and expenditure for that financial year is estimated and accrued. This means that during 2005/06 financial year claims are sent and received by authorities for the financial year 2004/05.

We have been more successful at collecting special school recoupment income for 2004/05 than had been anticipated at the end of 2004/05. In addition, we anticipate that we will collect more income for 2005/06 than was previously estimated.

The effect of the anticipated increase in income has resulted in the underspend forecast on this budget.

1.3.3 Earmarked Pupil Funding£179,000 or 46.6% overspend

The overspend in EPF is due to an increased number of allocations to pupils meeting the criteria. Although the percentage of agreed applications has remained the same the total number of applications from schools has increased. This increased perception of need from schools is not out of line with the national picture of increasing pressures on SEN budgets that are heavily centralised and primarily targeted to individual pupils. Like many other authorities Hertfordshire is currently undertaking a review of its SEN funding arrangements in mainstream schools to try to address this and other issues.

1.3.4Playgroups£160,000 or 53.7% underspend

The requirement for additional support for children with additional needs attending private or voluntary settings has been less then that previously predicted. The availability of Sure Start grant has also reduced the call against this budget.

1.3.5 Minority Ethnic Curriculum Support Service (MECSS)£129,000 or 4% underspend

The new needs related formula for allocation of the Ethnic Minority Achievement (EMA) Grant, from 1 April 2005, resulted in a significant projected reduction of funding for the service. This underspend relates to the carry forward from 2004/05 to meet the potential for additional costs resulting from redundancy. The grant announcement in December 2005 reduced the grant loss over the two financial years from £562,000 to £423,000. Given this theredundancy costs can be covered within existing resources leaving the reported net underspend of £129,000..

1.3.6Maternity£129,000 or 10.6% overspend

There has been an increase in both the volume and average pay for maternity claims from schools which have resulted in an overspend of £129,000. This budget is extremely volatile and relies on prompt notification from schools of planned maternity leave. Management action is being taken to improve the notification processes from school so that variances can be highlighted at an earlier stage.

1.3.7Speech and Language Therapy contracts£191,000 or 14% underspend

This service is provided under contract from the Hertfordshire Partnership Trust in the west of the county and the North Herts and Stevenage PCT in the east of the county. The potential underspend recognises the provision that can be delivered by the contractor in 2005/06. CSF and health partners are reviewing the current arrangements for the provision of the service with the plan to implement a new model from April 2006. This has also led to further savings as services are now included under the contract that were previously understood to be outside.

1.3.8AWPU Recovery and Contingency£948,000 or 27.5% underspend

There are two elements to this underspend; availability of Targeted Transitional Support Grant (TTSG) and recovery of AWPU for excluded pupils. The DfES approved the use of £837,000 of TTSG to support the cost of the 3% protection factor in the schools delegated budgets. This enabled a contingency to be made in the Schools Budget against the continued uncertainty over the level of three year old provision, following the introduction of universal entitlement in April 2004. In the light of the summer and autumn term 2005 level of take up of places, this contingency is not expected to be required.

In addition the level of AWPU recovered from excluded pupil AWPU for excluded pupils exceed the payments for readmitted pupils by £111,000. This reflects both the increase in the numbers of excluded pupils and the numbers of these that are ‘out of school’.

1.3.9Nursery Provision£300,000 or 2.95% underspend

This budget includes a comparatively new entitlement, a free nursery place for all three-year-olds. Although uptake initially conformed to the expected pattern, demand has levelled off over recent terms and it is now expected that the demand will continue at this level.

1.3.10Inspection of Adult and Community Learning£82,000 or 2.3% overspend

The recent external audit review of the ACL provision concluded that some adult provision did not meet the ACL criteria set down by the local Learning and Skills Council (LSC). This is in addition to the provision already identified as part of our budget work during 2004/05.

This will result in a loss of income from the LSC of an estimated £82,000 during the 2005/06 financial year. The loss of income in the 2005/06 academic year is estimated to be £140,000

1.3.11Necessitous Clothing£104,000 or 47.2% overspend

The amalgamations of a number of Hertfordshire schools have impacted on this demand led budget and led to the current overspend position.

1.3.12Youth Service£119,000 or 2.5% overspend

The overspend largely relates to the impact of rent costs (£82,000) for 2004/05 that had not been accrued. In addition there have been extra recruitment costs resulting from the Growth and Change reorganisation of this area of the service.

1.3.13Discretionary awards£179,000 or 77.5% underspend

The underspend results from more effective use of the grant to meet the costs of non medical awards and thus reduce the pressure on the CSF budget.

1.3.14 Premature Retirements£219,000 or 5.6% overspend

This relates to both pensions and severance costs for school based staff. Whilst provision had been made within the budget for increased severance relating to amalgamations and reorganisations, delays in the expected implementation of a number of these from 2004/05 has meant that the costs have all been absorbed in the current financial year. In addition the closure of BoxmoorHouseSchool will continue to contribute to the increase in severance costs to year end.

1.3.15Human Resources£171,000 or 7.8% overspend

The budget reflects the costs of pay, non pay and associated HR overheads which include the appointments/employee relations team. The implementation of the new SAP system has had an ongoing impact on the costs of processing changes to the payroll system. Management action to contain the costs has reduced the overall overspend in this month.

1.3.16Schools IT Support Systems£80,000 or 91.3% overspend

There has been an increase in the data collection and processing requirements for CSF (e.g. PLASC and assessment data), which is delivered by this team. This overspend has been previously off-set by trader balances which are now exhausted.

1.3.17Children with Disabilities£325,000 or 14.8% overspend

This overspend reflects the high cost of spot purchase arrangements with the Wrixon Care Agency for emergency placements. There is ongoing management action to reduce spending on care and supervision provided by Wrixon Care which should reduce this overspend situation.

The reductionof £92,000 in the overspend this month reflects the difficulties in identifying support for sharedcare and respite. Management action is being undertaken to look at expenditure in this area.

1.3.18Section 17 Preventative Care£221,000 or 22.5% overspend

This overspend reflects the high cost of spot purchase arrangements with the Wrixon Care Agency for emergency placements. There is ongoing management action to reduce spending on care and supervision provided by Wrixon Care which should reduce this overspend situation. The impact of any action to reduce the overspend is unlikely to be seen until the new financial year.

1.3.19Looked After Children£325,000 or 36% overspend

This reflects the continuing costs of funding emergency placements through Wrixon Care, particularly in the north and west of the county. A single ‘block bed’ contract has been commissioned with a care provider to reduce the pressure on this budget. There is also ongoing work with Manpower to establish a ‘pool’ of contact workers to support such placements, which should reduce overall costs. The impact of any action to reduce the overspend is unlikely to be seen until the new financial year.

1.3.20 Family Centres£389,000 or 14.8% underspend

This underspend relates to further slippage on the establishment of a contact service to support identification of relevant needs of potential clients in the local areas. This service is not anticipated to be fully in place before the end of the financial year.

1.3.21 Over 10s Family Service£253,000 or 29.4% underspend

This service is included in the review of adolescent services under Growth and Change which aims to provide a more co-ordinated and targeted service for early intervention. The current underspend of £253,000 results from vacancies which could not be permanently recruited to until the future of the combined service was agreed. Whilst the new service is now in place there is an ongoing impact in the 2005/06 budget.

1.3.22Family Placement Service£351,000 or 4.6% overspend

There has been an increase in demand for the number of foster placements particularly in relation to adolescent placements of 1.6% (10). Two issues account for the increased overspend of £200,000 in December. Payments relating to Section 24 of the Children’s Act, which provides for young people aged 18 plus with continuing support (i.e. in further education) have increased by 9 (90%) from this stage last year. This accounts for £150,000 of the increase. Additional higher spending on outside school activities has been made compared to previous years and this has created an overspend of £50,000. The LAC strategy aims to reduce the pressure on the service through reductionin overall numbers.

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1.3.23Residential Homes£233,000 or 3.3% underspend

The slippage on the re-opening of the Wilbury Road Home, from October 2005 to January 2006, together with the Pennine Unit has impacted on this budget. There will be cost pressures in relation to the refurbishment of the home which could reduce the level of underspend.

1.3.24Leaving Care Contracts£584,000 or 20.3% underspend

Growth of £714,000 was agreed for 2005/06 to recognise the additional number of care leavers under the Leaving Care Act. The strategy for provision is at an initial stage and has seen growth in both supported lodgings and housing beds. However, it is anticipated that the additional planned increase of 50 beds will not be achieved within 2005/06. This will be delivered in 2006/07 to meet the projected needs.

1.3.25Commissioning Team£127,000 or 15.9% underspend

This underspend relates to five vacancies in the Commissioning and Contracting Team. Recruitment is underway but the appointments are unlikely to be in place before the end of the financial year.

1.3.26Shortfall on Libraries Fees and Charges£155,000 or 10% overspend

There are a number of factors contributing to the shortfall of fees and charges for the service. This includes previous decisions to reduce or freeze fees and charges. The greater availability of digital TV channels and the fall in price of DVD and videos has also impacted on the hire income.

The shortfall for income has increased in the current month due to the continuing decline of library fees and charges particularly video income. We are reviewing the extent to which this overspend can be mitigated across the service

1.4ADULT CARE (including Money Advice Unit)

1.4.1Elderly residential and nursing care homes £200,000 or 0.4% underspend

This budget should be considered alongside the home care budget (see paragraph 1.4.2 below).

Based on commitments as at 31December 2005, taking into account movements since then and following management action to limit expenditure as far as possible while meeting statutory responsibilities, this budget is now projected to underspend by £200,000 (0.4% on a budget of £52.262m.).

This is the same position as was reported last month.

To achieve a projected underspend of £200,000 has involved:

i). Board level sign off of all placements apart from block contracted beds. However, even with this procedure in place, it has not been possible to place significantly fewer clients than the number of closed cases for the same period. For example, in November 2005 it was necessary to place 125 people in care homes whereas the number of closed cases was 142.

(ii) Placing some clients who were previously being supported at home with packages of care costing more than the cost of a care home placement. In these cases it is more cost effective to make a placement in a care home and this reduces pressure on the home care budget.

(iii) The need to prevent delayed transfers of care from acute hospital beds (and avoid fines) places pressure on this budget but prompt placements have meant that £200,000 less than expected will be spent on fines and this offsets some of the cost pressures on the budget.