Agenda item

Purpose of the item: Scrutiny of the Draft Budget and Medium-Term Financial Strategy.

 

Witnesses:

Mark Nuti – Cabinet Member for Adults and Health

Anna D’Alessandro – Director of Finance, Corporate and Commercial

Rachel Wigley – Director of Finance, Insight and Performance

Nicola Kilvington – Director of Corporate Strategy and Policy Wil House – Strategic Finance Business Partner for Adult Social Care and Public Service Reform

Jonathan Lillistone – Director of Integrated Commissioning

Rachel Crossley – Joint Executive Director for Public Service Reform

Ruth Hutchinson – Director of Public Health

Maria Millwood – Board Director, Healthwatch Surrey

Key points raised during the discussion:

1.    The Cabinet Member provided some opening remarks, noting the added investment into Adult Social Care (ASC) nationally and that the Council were embracing new forms of technology, as well as partnership working to mitigate the impact of increased demand and pressures on the directorate.

 

2.    The Director of Finance (Corporate and Commercial) presented summary slides (Annex 1) on the corporate financial position. The draft budget had assumed an additional £15 million funding for ASC; however, the exact amount would not be known until the Local Government Finance Settlement which was expected on 21 December 2022. The Director explained four key options that could be utilised to close the budgetary gap and if alternative measures were utilised, there would be an alternative scrutiny process in January 2023.

 

3.    In reference to slides on the capital programme, the Chairman asked whether there was any indication of what could be shifted. The Director (Corporate and Commercial) explained that the full capital programme was affordable, but they asked directorates to look at whether programmes were deliverable as well. The Chairman asked whether the programmes were RAG-rated. The Director explained that the programmes were monitored in-year and there was an assumption that they were all deliverable when set.

 

4.    A Member asked how the plans for extra care housing were impacted by inflation rates. The Director of Integrated

Commissioning explained that the current model of delivery was a design build finance operate model secured through a competitive tender process. Therefore, the risk of managing inflation was passed over to the delivery partner in the contract. 

 

5.    A Member queried how confident the witnesses were that residents understood the true cost of ASC and how that message was being communicated to residents. The Cabinet Member explained that he did not think that residents fully understand the role of ASC and as Cabinet Member, this was something that he wanted to change. As it was the largest area of spend in the budget, it was important to educate residents. There had been positive feedback from public engagement in past years towards spend on ASC. The Director of Integrated Commissioning shared that the consultation on the budget last year illustrated strong support for prioritisation spend on ASC and the pandemic had brought that into sharper focus. The Chairman noted that the economic climate had changed significantly since the consultation in 2021. The Director of Finance (Insight and Performance) explained that the Council conducted a cost-of-living survey in August 2022 which supported the feedback received previously. The Director of Corporate Strategy and Policy added that there could be greater support to focus on supporting vulnerable residents in the challenging climate.

 

6.    The Director of Integrated Commissioning presented slides on ASC, highlighting the focus on changing the model of care to encourage independence. It was noted that the Care Quality Commission (CQC) were introducing inspections on ASC departments and there was a strong focus on the digital offer provided to service users. Workforce was an area of key focus, as well as recognition of carers and the role they played in the system. The Strategic Finance Business Partner presented slides on the ASC budgetary position which showed that pressures exceeded efficiencies considerably. It was announced that there would be funding for discharge to assess (D2A), but it was yet to be confirmed how much of the national funding the Council would receive. 

 

7.    The Joint Executive Director presented slides on Public Service Reform (PSR), explaining that the directorate focused on reducing health inequalities, enabling communities to make healthy choices, and prevention. The Director of Public Health explained that public health (PH) spending made up the majority of the PSR budget. There was set criteria of the PH grant which was ringfenced and therefore, had to be spent on certain services. Through PH services, the Council worked to protect residents from clinical diseases and environmental hazards. The bulk of PH funding was spent on commissioned services which demonstrated value for money. The Strategic Finance Business Partner added that the corporate financial position did not impact the PSR budget, due to the ringfencing of the grant. This position could change in the future. An assumption had been made that the grant would increase.

 

8.    A Member asked to receive greater insight into the process of how the budget figures were devised. The Director of Finance (Insight and Performance) explained that finance officers worked with directorates from March 2022, with the budget envelope approach taken. Funding opportunities were explored, and pressures were matched against likely efficiencies and funding. An assumption of a 1.99% council tax increase was also taken. Core planning assumptions were utilised, whereby officers costed for things that could affect the environment for local government. Finance officers worked alongside colleagues in policy and performance to understand the impact of policy changes and figures were iterated throughout the process. The top two effects on the budget for the next financial year (2023/24) were inflation and increased demand. Several routes of mitigation had been explored, but reserves would only be used for one-off pieces of work. The Director of Corporate Strategy and Policy added that horizon scanning for national context was completed on a quarterly basis and fed into the core planning assumptions. 

 

9.    The Director of Finance (Corporate and Commercial) explained that 50% of the pressures were inflation-related and there had been significant increase in pressures compared to previous years. There was a £20 million contingency to mitigate against specific risks which would be used if required. The Joint Executive Director added that the senior leadership team challenged each other in terms of directorate budgets and noted that planning assumptions had been accurate in previous years. It would be useful to have the settlement early and longer-term horizon scanning from central government. 

 

10.A Member asked whether the in-depth research was reaching all demographics within the Council. The Director of Corporate Strategy and Policy explained that that used a research agency which reached out to residents to complete the survey. The survey was statistically representative of Surrey’s adult population as they had 1,087 responses using a representative sample. The focus groups were also recruited to represent

different demographics, however, due to the smaller numbers, they were not statistically representative. There were some communities that agencies did not reach and usually do not want to partake in research. The Council had completed some research to reach out to groups with protected characteristics on public services in Surrey more broadly. The Member was not convinced that 1,087 respondents was enough to say that there was confidence that residents’ priorities aligned with the Council’s. The Director of Corporate Strategy and Policy explained that it was a benchmark used across the country and in market research. It has been proven that beyond 1,100 responses, the results did not vary much. The Cabinet Member added that engagement with residents rested both with councillors and with officers. Some services needed to be provided regardless of whether residents supported the use of funding. The Director of Integrated Commissioning explained that the Council worked actively with provider networks and the Surrey Care Association. The funding reforms had begun discussions about the differences between the NHS and ASC.

 

11.In response to current engagement on the draft budget, the Director of Corporate Strategy and Policy shared that there was a survey currently live which had taken the budget proposals and described the split for the directorates by percentage for an average band D council taxpayer. There were also questions on ways to close the budget gap. The survey was open to anyone and thus, it would not be statistically representative. The results would be included in the final budget papers.

 

12.A Member asked about further efficiencies that could be considered to address the remaining budget gap. The Strategic Finance Business Partner explained that one method would be planning for a lower level of demand and price inflation to close the gap.

 

13.A Member asked in what respects the pandemic was still impacting the Council’s budgeting. The Director of Finance (Insight and Performance) explained that the Council continued to see demand for services at a high level and this had not dropped off. This was also having an impact on income levels from services receiving a lower revenue. The Strategic Finance Business Partner added that the level of need in general had increased, especially in terms of the average cost of a care package. The Director of Public Health explained that there was extra resource during the pandemic through the covid outbreak management fund which was ending at the end of the financial

year, although demand was continuing. The Chairman asked about support for the D2A process which started in the pandemic. The Director of Integrated Commissioning explained that ASC and the NHS jointly commissioned home-based care and residential care to ease the discharge process.

 

14.The Board Director of Healthwatch Surrey asked about the equality impact assessment (EIA) and whether it highlighted any risks for those with protected characteristics, vulnerable groups, and priority populations, as well as any mitigations taken. The Director of Corporate Strategy and Policy explained that the directorates’ EIAs were brought together around November and early December and the cumulative impacts were reported by finance. The report would be appended to the final budget reports to Cabinet and Council.

 

15.In response to a question on pay inflation, the Strategic Finance Business Partner explained that the level of pay inflation for council staff was subject to full council decision. The estimated pay inflation was in line with assumptions for other directorates but would need to be reviewed. The Member asked about the figures being used currently. The Director of Finance (Insight and Performance) explained that it was still being discussed with unions, however, they were trying to reach a decision to keep it within the envelope. The Director of Finance (Corporate and Commercial) added that an overall 5% increase for the next financial year was being considered and how it would be divided was yet to be decided.

 

16.A Member queried the efficiency for Section 117 (Mental Health Act 1983) at a time when mental health demand was increasing following the pandemic. The Strategic Finance Business Partner explained that the efficiency related to joint funding from the NHS for individuals discharged with Section 117 aftercare. The ongoing care should be funded 50/50 between the NHS and the Council and there were some cases at the moment whereby the Council was wholly funding. There was an ongoing review to look into such cases which was why it was rated amber. The member asked how many cases were being reviewed. The Strategic Finance Business Partner responded that it was around 120 cases, and the intention was to reach agreement in the current financial year (2022/23).

 

17.A Member asked about the £20 million of efficiencies and how they would manifest themselves through the services provided to residents. The Director of Integrated Commissioning explained

that a large amount of this would come from the closure of care homes, due to operating costs coming to an end.

 

18.The Chairman asked about the efficiencies related to learning disabilities and autism (LD&A) regarding the in-house provision, day services, and transport services. The Director of Integrated Commissioning explained that those who required transport would continue to receive it. In terms of the in-house services, the key change was the deregistration of two care homes, which would become supported independent living accommodation. The efficiency related to day services involved progressing with the transformation of Surrey Choices’ offering. For those who still needed a centre to visit, this was included in the model. As there were fewer people attending day centres, there was less need for transport, however, the offer would always be calibrated to the assessed level of need. The Chairman raised the issue of long waiting lists. The Director of Integrated Commissioning confirmed that ASC teams had capacity for reviews but would look into NHS waiting lists. The Strategic Finance Business Partner added that at the point of putting the budget together, the negotiations over in-house services with YMCA and CQC were ongoing, but they had since progressed more positively. The efficiency around the reablement service was about utilising staff more productively through a new rostering system, which was since operational.

 

19.A Member enquired about the efficiency regarding the front door redesign. The Strategic Finance Business Partner explained that one aspect was about supporting people when they leave hospital through reablement services, rehabilitation services, and the D2A model. The other aspect was about supporting people’s needs that come from the community, such as, effective support at the beginning of their care pathway. They were not cuts to services, rather the method of meeting needs would cost less. The Director of Integrated Commissioning added that it was about digitising the offer and linked to the broader goal of prevention and early intervention. It also incorporated social prescribing and was connected to the wider work of the Council. The Chairman asked about the funding for social prescribing. The Director explained it came from PH and Surrey Heartlands ICS. 

 

20.In response to a question on how the D2A process worked in practice, the Director of Integrated Commissioning explained that there were a range of options available, with a focus on getting people home. The Director was confident they were working on the right things, but they did learn lessons from cases that went wrong. The Chairman asked if the witnesses were happy with the financial co-operation. The Strategic Finance Business Partner explained that the Council and NHS partners worked closely on D2A and met weekly to plan together. There had been an announcement of £500 million for the coming financial year (2022/23), which had been extended for the next two years. The Cabinet Member added that there was a collaborative feeling that the Council could work better with the NHS on this. Following the Fuller stocktake, the Chief Executive of Surrey Heartlands ICS was willing to make the funding happen. The Member asked whether care homes would be paid less. The Director of Integrated Commissioning explained that it was not about paying care homes less, rather it was about pricing consistency of purchasing care and agreeing small scale blocks.

 

21.A Member asked about the percentage of agency staff. The Strategic Finance Business Partner explained that within ASC there were a small number of agency social workers (27 FTEs out of 264 FTEs at the end of November 2022). The Chairman asked whether agency workers were consistently employed and the impact on attrition rates. The Cabinet Member explained that benchmarking showed that the Council paid social workers at a good level compared to other local authorities. It was important to make the role more attractive and work on career pathways to improve retention. The Chairman noted the impact of high house prices in Surrey. The Director of Integrated Commissioning explained that there was a strong focus on the external workforce, as a lot of services were commissioned from the independent sector. The pay grades compared to other sectors remained a challenge and a discussion remained around supporting providers to float money down to employees. A Member asked about the future use of care homes and the Director explained that no decision had been made yet on the future use of the sites being closed down.

 

22.Responding to a question on the potential of the PH grant becoming unringfenced, the Director of Public Health explained that the position was currently unclear, but it could be part of wider plans for local government reform around 2025/26. The focus on preventative services and reducing health inequalities would be maintained, but there would be greater flexibility if it was not ringfenced.

 

23.A Member asked about any potential for the PH funding formula to change. The Director of Public Health responded that there had been slight adjustments over the last 10 years and the service would continually assess the health needs of the population and prioritise accordingly.

 

24.A Member asked whether there was any prospect of permanent funding for PSR staff working on data insights and supporting broader integration. The Joint Executive Director explained that there was a prospect. They would put together business cases for the roles, as it was still on the agenda.

 

Actions/requests for further information:

1.    The Director of Integrated Commissioning to provide information on waiting lists for learning disability and autism reviews.

 

2.    The Strategic Finance Business Partner to provide further information on the new rostering system for learning disability and autism staff.

 

3.    A written update on the work of social prescribing to be provided from all partners.

 

4.    The Director of Integrated Commissioning to provide a written update on the stability of the workforce and the rate of turnover. 

Recommendations

Adult Social Care:

1.    That the Accommodation with Care & Support Strategy is allocated sufficient budgetary resources for the delivery of ExtraCare and Supported Independent Living facilities to remain on schedule. 

2.    That sufficient budgetary plans and resources are in place to effectively support Discharge-to-Assess processes. 

Adult Social Care and Public Service Reform:

3.    That there is a coordinated approach between in-house, day services, and transport services for Learning Disabilities and Autism, and for this to be used toward determining pressures and efficiencies for this area.

4.    That findings from Equality Impact Assessments are included in the draft budget reports provided to Select Committees by December 2023.

 

The meeting paused at 12:33pm. The meeting recommenced at 12:42pm.