|
Meeting: |
Health, Housing and Adult Social Care Scrutiny Committee |
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Meeting date: |
18/10/2023 |
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Report of: |
Patrick Looker, Steve Tait and Ian Cunningham
|
|
Portfolio of |
Cllr Coles – Executive Member for Health, Wellbeing and Adult Social Care Cllr Pavlovic – Executive Member for Housing, Planning and Safer Communities |
2023/24 Finance and Performance
Monitor 1
Subject of
Report
2. This report outlines the Council’s serious financial position with a forecast overspend for 2023/24 of £11.4m. This is a significant overspend that is of serious concern and it is very clear that the Council cannot afford to keep spending at this level. The general reserve is £6.9m and, whilst we have other earmarked reserves that we could call on if required, continued spending at this level would quickly see the Council exhaust its reserves.
3. Given the scale of the forecast overspend, immediate action is needed to bring spending down to an affordable level, both within the current financial year and over the next 4 years, to safeguard the Council’s financial resilience and stability.
4. This report outlines the actions we need to take and identifies areas for further work. If we take immediate action and make these difficult decisions now, this will ensure the future financial stability of the Council and that we can continue to provide services for our residents. It is vital that the mitigations are delivered, and the forecast overspend is reduced.
Benefits and Challenges
5. This report is mainly to note the latest financial projections and current performance. The main challenge is delivering on agreed savings whilst also identifying further reductions in expenditure. The main benefit of approving the recommendations will be the ongoing financial stability of the Council.
Policy Basis for Decision
6. This report is mainly to note the latest financial projections and current performance. The ongoing financial resilience and stability of the Council will be essential to ensuring that Council priorities can continue to be achieved.
Financial Strategy Implications
7. This report sets out the projected financial position and identifies a range of actions that are necessary in order to reduce expenditure, both within the current financial year and over the next 4 years to safeguard the Council’s financial resilience and stability.
Recommendation and Reasons
8. The Committee is asked to:
· Note the finance and performance information.
Reason: to ensure expenditure is kept within the approved budget.
Background
Financial Summary and Mitigation Strategy
9. The current forecast is that there will be an overspend of £11.4m. This is despite action being taken by managers across the Council to try and reduce expenditure. If the Council continues to spend at the current level, and no action is taken, then we will continue to overspend and will exhaust our reserves and any other available funding. The current level of expenditure is unaffordable and therefore we must take immediate action to reduce expenditure.
10. As outlined in reports to Executive throughout the previous financial year, we have continued to see recurring overspends across both Adult and Children’s Social Care. However, the underspends and mitigations that have allowed us to balance the budget at year end have generally been one off. Whilst the use of reserves to fund an overspend is appropriate as a one-off measure, it does not remove the need to identify ongoing savings to ensure the overall position is balanced. The budget report considered by Executive in February 2023 also included an assessment of risks associated with the budget, which included the need to secure further savings and effectively manage cost pressures.
11. Members will be aware that the financial position of local government is a national challenge and that the pressures being seen across both Adult and Children’s Social Care are not something that is unique to York. Many Councils are experiencing significant financial pressures and struggling to balance their budgets now, so it is vital that we take immediate action to reduce our expenditure down to a sustainable level both within the current financial year and over the medium term. Taking decisive action now will safeguard the Council’s financial resilience and stability and prevent York being in a position where it is unable to balance its budget in future years. This means that, in addition to the actions proposed in this report, there will be a need to continue to identify further mitigations and savings for future years.
12. A series of mitigations and cost control measures are already in place to reduce the forecast overspend but further measures need to be implemented. Given the scale of the financial challenge, and the expected impact on budgets in future years, it is vital that every effort is made to balance the overall position. It is recognised that this will require difficult decisions to be made to protect services for vulnerable residents.
13. Corporate control measures are being implemented but they will not deliver the scale of reduction needed within the year. Other savings proposals, including service reductions, will also be needed.
14. The following measures will therefore be implemented with immediate effect.
· Increase car parking charges by 10p per hour as outlined in paragraphs 81 to 82.
· A freeze on recruitment, agency, and overtime wherever possible and safe to do so. Some exceptions are in place for waste, social care, income generating posts and health and safety matters. This will impact on service delivery in a variety of ways, depending on where the vacancies arise. Corporate Directors will monitor the position in their own directorates and highlight any risks as appropriate.
· Introduce an officer procurement challenge panel to review all procurements, ensuring that they look to reduce costs and review service levels with an expectation that savings are delivered from contracts. This will include not reprocuring non statutory contracts where it is considered possible and safe to do so.
· Identify alternative funding sources for the remaining one off items, totalling £650k, that are due to be funded from the Venture Fund and Business Rates Pool to allow this funding to instead offset the forecast overspend.
15. Further work will also be done to consider whether savings can be realised from a range of other areas. This work will start now, and any options considered in a future report to Executive or an Executive Member Decision Session as appropriate.
· Explore the potential for generating income through provision of some non-statutory services such as green waste collection.
· Review the current capital programme to identify any schemes that can be delayed so that we can also defer borrowing costs to generate a revenue saving in year. This review will also consider whether schemes not yet started should progress and will include a review of ICT expenditure to identify any work that can be reduced or delayed.
· Consider a reduction in expenditure on highways maintenance.
· Consider further reductions in ward funding.
· Review all grant payments to Community & Voluntary sector to identify any areas that could be reduced.
· Review all fees and charges to identify where in year increases could be implemented.
· Review a range of existing contracts and service levels to identify any that can be reduced.
16. Alongside these actions, officers will continue to carefully monitor spend, identify further mitigation, and review reserves and other funding to make every effort to reduce this forecast position. However, it is possible that it will not be reduced to the point that the outturn will be within the approved budget. The Council has £6.9m of general reserves that would need to be called on if this were the case. As outlined in previous reports, any use of the general reserve would require additional savings to be made in the following year to replenish the reserve and ensure it remains at the recommended minimum level.
17. It must be a clear priority for all officers to focus on the delivery of savings plans during the year. Corporate Directors and Directors will keep Executive Members informed of progress on a regular basis.
Financial Analysis
18. The Council’s net budget is £141m. Following on from previous years, the challenge of delivering savings continues with c£6m to be achieved to reach a balanced budget. Early forecasts indicate the Council is facing net financial pressures of £11m and an overview of this forecast, on a directorate by directorate basis, is outlined in Table 1 below.
|
Service area |
Net budget |
2022/23 Gross Forecast Variation |
Mitigation |
2022/23 Revised Forecast Variation after mitigation |
|
|
£’000 |
£’000 |
£’000 |
£’000 |
|
Children & Education |
25,083 |
5,074 |
-500 |
4,574 |
|
Adult Social Care & Integration |
45,329 |
6,835 |
-3,000 |
3,835 |
|
Place |
22,605 |
-1,118 |
-140 |
-1,258 |
|
Customers & Communities, Public Health & Corporate Services |
26,437 |
1,601 |
-1,000 |
601 |
|
Central budgets |
22,670 |
-1,000 |
|
-1,000 |
|
Sub Total |
|
11,392 |
-4,640 |
6,752 |
|
Contingency |
-500 |
|
-500 |
-500 |
|
Use of earmarked reserves |
|
|
-4,250 |
-4,250 |
|
Target for further mitigation |
|
|
-2,002 |
-2,002 |
|
Total including contingency |
141,624 |
11,392 |
11,392 |
nil |
Table 1: Finance overview
Directorate Analysis
Adults
19. The projected outturn position for Adult Social Care is an overspend of £6,835k and the table below summarises the latest forecasts by service area. This projection is based on customer numbers and costs in the first two months of the year. The projection assumes that £1,832k of previously agreed savings will be made by the end of the year.
|
|
2023/24 Budget £’000 |
Forecast Outturn Variance £’000 |
Forecast Outturn Variance % |
|
|
Direct Payments |
4,813 |
1,212 |
25.1 |
|
|
Home and Day Support |
1,234 |
2,442 |
197.9 |
|
|
Supported Living |
14,527 |
750 |
5.1 |
|
|
Residential care |
13,639 |
1,172 |
8.6 |
|
|
Nursing care |
4,905 |
575 |
11.7 |
|
|
Short term placements |
1,228 |
218 |
17.7 |
|
|
Staffing (mostly social work staff) |
7,261 |
363 |
5 |
|
|
Contracts and Commissioning |
2,341 |
-25 |
-1 |
|
|
In House Services |
4,817 |
-22 |
-0.5 |
|
|
Be Independent & Equipment |
929 |
49 |
5.3 |
|
|
Other |
-10,318 |
51 |
0.5 |
|
|
Recharges |
-47 |
50 |
106.4 |
|
|
Total Adult Social Care |
45,329 |
6,835 |
15.1 |
|
|
Mitigations to reduce forecast overspend |
|
|
Use of Market Sustainability and Improvement Fund for price pressures |
-800 |
|
Recover all unused Direct Payments |
-750 |
|
Stop any non-statutory activity |
-500 |
|
Impact of introducing residential and nursing framework for providers |
-500 |
|
Review of high-cost packages and Supported Living Schemes |
-450 |
|
Revised position |
3,835 |
20. A number of factors have come together to make an extremely challenging operating environment for adult social care.
21. Most services that deliver care are commissioned by CYC from the independent sector where the cost of providing care has been increasing through inflation, for example in workforce and utilities costs. Partners such as the NHS are also under pressure meaning there is increased pressure on social care to support hospital discharge and to support people with increasingly high needs at home. Austerity, the pandemic and cost of living crisis have meant that more people than ever feel the need to come to the local authority seeking support. Our population is ageing and has the increased additional needs this brings. This is at the same time as increased additional responsibilities around the delivery of high quality, personalised, accessible and affordable support have come through the ‘People at the Heart of Care’ national strategy and regulatory requirements of the care quality commission, without the necessary additional resource to fund this.
22. In order to manage within budget, we will see significant reductions in the price we pay, the numbers of people we provide commissioned services to, the amount of the services which people receive and the type of commissioned service we provide.
23. Introduction of robust and fair provider frameworks to limit the cost while maintaining the quality of residential homes, nursing homes, supported living and home care are being introduced. The introduction of brokerage services to link this provision to the assessment of individual need will ensure that we make best use of such services. We have in place assurance processes to check, challenge and where necessary decline assessments and requests for service. Over the coming months there is a refresh of the practice model to assure good assessments and decision making that requires all personal and community assets and assistive technology is used before services are put in place.
24. The number of people entering residential and nursing care have been declining over recent months due to the introduction of measures above. However, we have people placed in services in the past at higher rates and in order to deliver budget reductions, we need to see the total numbers of people in these settings reduce and this will happen over time. The completion of the refurbishment of the independent living scheme at Glen Lodge is also key to achieving this.
25. This decrease in the use of residential and nursing care puts additional pressure on use of home care. The numbers of people receiving home care services will also reduce. This will happen through an improved of short reablement services, which requires retendering, a remodelling of the front door, which is planned through the improved practice model, increasing our brokerage capacity to cover all service areas, bringing our communities services closer to adult social care and improvements in the use of assistive technology.
26. The following paragraphs outline the main variations.
27. Be Independent is currently projected to overspend by £144k. There is still a budget gap of £130k which needs to be addressed, together with a historical budget overspend on recharges of £50k. In addition, staffing is expected to overspend by £102k due to an unfunded regrade of some of the posts in the team and to having a review manager post over establishment. There is also expected to be an underachievement on the sales income budget as no further equipment sales are expected to be made (£49k). This is offset by additional income arising from Mediquip moving into the site at James Street.
28. Yorkcraft is projected to overspend by £167k due to an underachievement of income (£106k) offset by an underspend on staff due to vacancies (£23k), and other minor overspends across the service.
29. The Bungalow and Pine Trees are projected to underspend by around £111k in total mainly due to staffing vacancies in both services.
30. Older People permanent residential care is projected to overspend by £759k due to both an increase in both the cost and the number of customers. Nursing Care is projected to overspend by £165k. This is largely due to the less income from health for Continuing Health Care than expected offset by a reduction in the number of people in nursing care.
31. Physical & Sensory Impairment Community Support is projected to overspend by £821k due to a higher than expected average cost per hour on the framework contracts and the average income from customers being less than in the budget.
32. The Older People Community Support Budget is projected to overspend by £765k. This is due to an increase in homecare provided and an increase in the average cost per hour.
33. The Physical & Sensory Impairment Supported Living schemes budget is expected to overspend by £757k due to an increase in costs.
34. Learning Disabilities Community Support Budget is projected to overspend by £478k, due to the average cost of a homecare placement being £250 per week higher than in the budget and the average cost of a day support placement is £10 per week higher. In addition, the average health income received per customer is £511 a week less than budgeted for.
35. Learning Disabilities direct payments are projected to overspend by £1,081k. This is due to the average weekly health income received per customer being £412pw less than in the budget. In addition, the average direct payment per customer is £115pw more than in the budget and the average transport direct payment per customer is £42 pw higher than budget. This is offset by having 9 fewer direct payment support customers.
36. The Residential Learning Disabilities – Working Age budget is projected to overspend by £619k due to the average cost of a placement being £176 a week more than in the budget and there is one less health funded customer. This is offset by having one less customer in residential care compared to the budget.
37. Mental Health Community Support Budget is projected to overspend by £243k, this is due to the average cost of a homecare placement being £110 a week higher than in the budget and the average cost of a day support placement is £36 a week more than budget. In addition, the average amount of health income per customer is £248 a week lower than in the budget - this is largely due to one customer's funding having ended in May 2023.
38. The Mental Health nursing care – over 65 budgets are expected to overspend by £154k, largely due to the average cost per customer being £577 pw and having 2 more customers than budgeted. This is offset by the average amount of s117 funding received per customer being £419 pw more than in the budget. This customer cohort is relatively small and relatively expensive so small changes in numbers can have a significant financial impact.
39. The Mental Health nursing care – working age budgets are expected to overspend by £205k, this is due to the average cost per customer being £1,152 pw more than in the budget. Additionally, the average amount of s117 received per customer is £160 per week less than in the budget.
40. The department acknowledges that the initial position is unsustainable and has come up with the following actions which will mitigate the forecast overspend.
41. The government have allocated further Market Sustainability and Improvement Fund (MSIF) grant, £1.1m for York. Some of it will be invested in staffing but the majority will be used to fund the existing price pressures we face.
42. Direct Payment Customers have unused balances in their accounts that are to be recovered and can be used non recurrently to offset the forecast overspend.
43. We will stop any activity that is not directly meeting customers’ assessed needs.
44. We are introducing a framework for our residential and nursing providers which will allow us to access beds at our framework rate. This may mean some customers are moved from their existing placements.
Place - Housing & Community Safety
|
Service Area |
Expend Budget £’000’s |
Income Budget £’000 |
Net Budget £’000
|
Projected Variance £’000’s |
|
Building Maintenance |
4,707 |
-5,227 |
-520 |
0 |
|
Housing Options and Homelessness |
5,199 |
-3,656 |
1,603 |
+60 |
|
Private Sector Housing |
1,331 |
-1,071 |
260 |
0 |
|
Community Safety |
785 |
-81 |
704 |
0 |
|
Housing and Com. Safety (Gen Fund) |
21,817 |
-19,829 |
1,988 |
+60 |
46. At the end of the first quarter it is projected that there will be an overspend of £60k across Housing Services General Fund. This is primarily due to higher than budgeted energy costs within the council’s hostels.
Housing Revenue Account
47. The Housing Revenue Account budget for 2022/23 was set as a net deficit of £1,558k. There were carry forwards of £1,611k agreed as part of the outturn report meaning the revised budget stands at £3,169k deficit (including £1,900k debt repayment). At the first monitor a nil variance is projected against this revised budget.
48. The HRA allocated significant increases for inflation to cover repairs and energy costs and at this stage of the year it is forecasted that the actuals will be contained within the budget.
49. There are continued forecast shortfall in dwelling rental income of £500k due to the level of voids. Glen Lodge currently has around 30 empty properties pending the refurbishment works, this also has an impact on the service charges income. These pressures will be offset by the teams carrying vacant posts and the bad debt provision budget remains at a prudent level.
50. The depreciation charge for the HRA is anticipated to be £500k higher than budget. This can be mitigated from higher than budgeted interest on credit balances as interest rates are significantly higher than budget.
51. The HRA working balance position as at 31st March 2023 was £29.4m. The HRA projected outturn position means the working balance will reduce to £26.2m at 31st March 2023. This compares to the balance forecast within the latest business plan of £25.7m.
52. The high level of working balance is available to start repaying the £121.5m debt that the HRA incurred as part of self-financing in 2012. The first repayment of £1.9m is due in 2023/24 and can be met from current resources.
Public Health
53. Public Health (PH) is likely to underspend by £343k which will be transferred to the earmarked Public Health reserve.
54. The table below provides a more detailed breakdown for the services within Public Health
|
Service Area |
Net Budget £’000’s |
Projected Variance £’000’s |
Comments |
|
Public Health General |
1,700 |
-100 |
Staffing underspend, health inequalities grant to be carried forward into next year |
|
Substance Misuse
|
1,714 |
-4 |
Refund Theseus Licenses, Bowes House Rent less than expected |
|
Sexual Health |
1,824 |
-46
|
This includes additional reserve movement for contract uplift which will increase. |
|
Infection Prevention and Control |
65 |
-3
|
Unused Flu Budget |
|
Health Trainer Service
|
411 |
-76
|
Staffing vacancies, champix machine no longer active |
|
Healthy Child Service
|
2,650 |
-114 |
Staffing vacancies |
|
Public Health grant
|
-8,655 |
0 |
|
|
Total Public Health |
-290 |
-343 |
|
|
Transfer to Reserve |
|
+343 |
Predicted Reserve balance at year end is £910k
|
|
Reported Position |
|
0 |
|
55. Public Health General. The underspend relates mostly to staffing underspends and a small amount of the health inequalities grant that will be carried forward into next year.
56. Sexual Health. This small underspend is due to the additional movement in reserves to cover the contract uplift from LARC based on activity.
57. Healthy Child Service. There are currently several vacancies which if not filled by year end will result in a £114k underspend.
58. Public Health Reserve. There was £1,095k in the Public Health Reserve at 31st March 2023. The reserve will decrease by £185k to £910k. This reflects additional growth and restructuring in Public Health services which will prudently reduce the reserve balance over the next four years in a planned manner.
Performance – Service Delivery
59. This interim performance report is based upon the strategic indicators included in the Performance Framework for the Council Plan (2019-2023) which was launched in late 2019. Following local elections in May 2023, a new Council Plan (2023-2027) is going through the formal approval stage and for the Q2 2023-24 Finance and Performance Monitor, there will be a new Performance Framework based on the new Council Plan and therefore a new suite of strategic indicators.
60. The Executive for the Council Plan (2019-23) agreed a core set of strategic indicators to help monitor the Council priorities and these provide the structure for performance updates in this report. Some indicators are not measured on a quarterly basis and the DoT (Direction of Travel) is calculated on the latest three results whether they are annual or quarterly.
61. Performance items around the Council plan topics “Good Health and Wellbeing” and “Creating homes and World-class infrastructure” are reported below, as historically other topics in the Council plan are reported to the other various scrutiny setups.
62. A summary of the strategic indicators that have an improving direction of travel based on the latest, new, available data are shown below.
· % of adults that are physically active – The latest data from the Adult Active Lives Survey for the period from mid-November 2021 to mid-November 2022 was published in April 2023. In York, 497 people aged 16 and over took part in the survey, and they reported higher levels of physical activity, and lower levels of physical inactivity, compared with the national and regional averages. Positively:
§ 70% of people in York did more than 150 minutes of physical activity per week compared with 63% nationally and 65% regionally.
§ 20% of people in York did fewer than 30 minutes per week compared with 26% nationally and 23% regionally.
· Net Housing Consents – Housing approvals between 1st April 2022 and 31st March 2023 totalled 1,559 net additional homes. This total represents a significant increase compared to the previous 12-month monitoring period when just 327 homes were approved and indicates a return to the relatively high annual consent figures experienced prior to 2021-22. Current approvals rates are similar to the levels achieved over the four-year period from 2017-18 to 2020-21. The main features of the consents approved were;
§ 1,303 of all net homes consented (83.6%) were granted on traditional (Use Class C3) housing sites;
§ Notable housing schemes were approved at Land North of Monks Cross (907), Land at Hospital Fields Road (85), Eastfield Lane, Dunnington (83), Cherry Tree House, 218 Fifth Avenue (48) with a further 84 homes approved on sites of 5 or less homes
§ A total of 253 student cluster flats were approved with Mecca Bingo, 68 Fishergate and Alton Cars York Ltd, 3 James Street both gaining approval for 104 student cluster flats
§ At least 192 homes had a resolution to grant planning permission subject to legal agreements prior to 31st March 2023. These are in addition to the 1,559 homes determined during the monitoring year.
· Average number of days to re-let empty Council properties – The average number of days to re-let empty Council properties (excluding temporary accommodation) was 58 days at the end of Q1 2023-24. This figure had been reducing slowly from 108 days at the end of May 2022 and is now broadly in line with Q1 figures prior to 2022-23. The total number of void properties at the end of Q1 2023-24 was 60 which is the lowest figure seen for a number of years.
63. Strategic indicators that have a worsening direction of travel based on the latest, new, available data are;
· Number of homeless households with dependent children in temporary accommodation – The latest available data shows that the number of households with dependent children in temporary accommodation has increased during 2022-23 from 22 at Q1 to 35 at Q4, which is 51% of total households in temporary accommodation. Generally, the households with children rise and fall in line with the total households and there was a peak at the end of 2021-22 where 57% were households with children. Numbers reduced during the height of the pandemic but have since been increasing and are now just above levels seen in the years before the pandemic.
§ The increase in numbers of households in temporary accommodation can also be seen nationally for 2022-23, and when looking at the total number of households in temporary accommodation per households in area (000s), York continues to perform positively compared to benchmarks (0.78 in York compared to 4.35 Nationally, 1.1 Regionally and 16.54 in London). It should be noted that these figures are snapshot figures and therefore may fluctuate between the snapshot dates.
Contact details
For further information please contact the authors of this Scrutiny Report.
Author
|
Name: |
Patrick Looker / Steve Tait |
|
Job Title: |
Head of Service Finance / Finance Manager |
|
Service Area: |
Finance |
|
Telephone: |
Ext 1633 |
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Report approved: |
Yes |
|
Date: |
06/10/2023 |
Co-author
|
Name: |
Ian Cunningham |
|
Job Title: |
Head of Business Intelligence |
|
Service Area: |
Governance |
|
Telephone: |
Ext 5749 |
|
Report approved: |
Yes |
|
Date: |
06/10/2023 |