Agenda item

Purpose of the report:  Scrutiny of Budgets/Performance Management

This report provides an opportunity for the Board to scrutinise the Adult Social Care budget.

Witnesses:
William House, Finance Manager
Mel Few, Cabinet Member for Adult Social Care, Wellbeing and Independence
Tim Evans, Cabinet Associate for Adult Social Care, Wellbeing and Independence

Declarations of interests:

None

Key points of discussion:

1. Officers highlighted the challenging budgetary situation facing the service, noting that a core reason for the budget overspend were the high savings targets set out in the Medium Term Financial Plan (MTFP). It was highlighted that the updated September 2016 projected overspend for 2016/17 was £20.9 million. Officers explained that increased demand for adult social care placed a burden on the service, however, it was also noted that this was a national pressure, and one that was not limited to Surrey County Council.
   
   
2. It was highlighted that the introduction of the national living wage had seen care costs increase.
   
   
3. The Cabinet Member for Adult Social Care, Wellbeing and Independence highlighted that briefings had taken place between the Council’s Cabinet and Members of Parliament for Surrey to focus on the issue of the overspend within Adult Social Care. The Cabinet Member noted in particular the limitation of the powers regarding the adult social care 2% council tax increase. This was highlighted as benefitting the service by £12 million and reducing the impact of savings requirements. However, the possible limitation of this increase as a one-time occurrence was a key risk for the service budget. Equally, the £12 million of income raised from the precept is substantially less than the £35 million of pressures budgeted in 2016/17 relating to increased demand and market prices.
   
   
4. Members questioned whether the budget setting method used by the service was appropriate, querying how the financial planning process could be improved to better reflect the trends in demand.  Officers explained that the issue was not to do with the methodology used to predict demand, but the difficulties experienced in delivering savings plans to reduce demand to budgeted levels.  Demand is currently running at 6-7% which is very close to the level modelled prior to including the impact of savings plans which intended to bring demand down to 4%.  It has not been possible to achieve this level of reduction in light of increased demand across the whole health and social care system in Surrey.
   
   
5. It was questioned by the Board whether direct payment reclaims were an achievable target. The Cabinet Member for Adult Social Care, Wellbeing and Independence noted that  the introduction of prepaid accounts for direct payments (which automatically prevent monies being paid out to individuals who have surpluses in their accounts) in the previous financial year will considerably reduce manual reclaims in future years.
   
   
6. Officers and the Cabinet Member for Adult Social Care, Wellbeing and Independence noted that budget changes as a result of winter were not possible to predict accurately due to changing pressures from winter conditions, however that the service was expecting a maximum of £25 million overspend up to the end of the financial year.
   
   
7. Members questioned the impact of Surrey Choices funding on the budget overspend and whether the service holds the organisation to account effectively regarding the increase of £2 million in funding provided by the Council.  The Cabinet Member for Adult Social Care, Wellbeing and Independence noted that the organisation was in a transformation programme. It was also noted that the operational structure of the organisation was the responsibility of its shareholder board. It was noted by the Cabinet Member for Adult Social Care, Wellbeing and Independence that it would be ideal for there to be representation of the Adult Social Care service on the shareholder board to improve accountability.
   
   
8. The Board was informed that Surrey Choices was undergoing changes in delivery since it became a separate entity from the Council, and that this had presented new challenges. The Cabinet Member for Adult Social Care, Wellbeing and Independence highlighted that, dependant on who was driving change, this organisation could present a positive way forward.
   
   
9. Members raised concerns that there was a danger to frontline service as a result of the overspend in the future.
   
   

Recommendations
The Board is extremely concerned that the projected overspend in Adult Social Care poses a significant risk to the Council’s overall financial position in 2016/17 and future years.

The Board recommends:

1. That the Cabinet set out the actions that be undertaken in the next three months in order to reduce the projected overspend;
   
   
2. That the Cabinet consider revising the methodology for finance planning;
   
   
3. That the Cabinet prioritise a sustainable set of savings for Adult Social Care as part of the planning for the Medium Term Financial Plan (MTFP) 2017-2022;
   
   
4. That officers bring a future report on the present issues emerging in the home-based care market, and what action the Council is taking in relation to this;
   
   
5. That officers bring a future report on Surrey Choices to the Board, as the Board is concerned about increased costs;
   
   
6. That the Chairman write to the Surrey Choices shareholder board requesting non-executive representation for Adult Social Care.