Agenda item

Purpose of report: To provide details of the budget for scrutiny prior to Cabinet and Council meetings.

Witnesses:

Julie Iles, Cabinet Member for All-Age Learning

Mary Lewis, Cabinet Member for Children, Young People and Families

Rachel Wigley, Director of Financial Insight

Daniel Peattie, Strategic Finance Business Partner

Dave Hill, Executive Director for Children, Families, Lifelong Learning and Culture

Key points raised during the discussion:

Peter Martin declared a personal interest – grandchild applying for an Education, Health & Care Plan (EHCP) in Surrey.

1. The Director of Financial Insight gave an overview of the council’s budgetary position and strategy. They stated the budget was in the consultation phase and that comments and observations from each of the Select Committees would be communicated back to the Resources and Performance Select Committee ahead of Cabinet. Cabinet would then decide whether to recommend the budget to council on February 42020. The budget was underpinned by the concept of financial envelopes for each directorate. Service strategies and proposals had been developed to ensure costs were contained within these financial envelopes.

[Amanda Boote arrived at the meeting at 10.08]

2.    The Director stated that the financial strategy set out how resources would be directed to deliver on both the organisation strategy and the transformation and ambitions of the council. Significant progress had been made as an organisation from financial recovery towards financial stability, whilst continuing the journey of improvement. The Director stated that two years previously the council had been relying on reserves to balance the budget however, the budget for 2020/21 would be based on sustainability and investment. The Transformation Programme would continue to deliver efficiencies, providing offset against continuing demand for services. For the council’s picture as a whole, in terms of revenue, there was £78m worth of demand pressure from services which were partly offset by £38m in proposed efficiencies. Therefore, the council’s net budget increased from £928m to £968m in 20/21. The £40m increase was from additional funding from central government. The Capital Programme proposed over the coming years was £1.4bn. The Director highlighted that the cost of borrowing had been included in the council’s budget.

[Peter Martin arrived at the meeting 10.10]

3. The Strategic Finance Business Partner highlighted placements, Special Educational Needs and Disability (SEND), the High Needs Block (HNB) and transport as being key areas of financial risk for the directorate. The number of children with SEND being transported by the council had been increasing year on year as was the use of taxis, both of which had exerted great financial pressure on the council. Education had previously been picking up costs that they were not statutorily required to. Members were informed that one of the main areas of commissioning activity over the next few months would be Child and Adolescent Mental Health Services (CAMHS), which would be out for tender imminently.

[Yvonna Lay arrived at the meeting at 10.20]

4. The Strategic Finance Business Partner stated that the Directorate’s 2020/1 budget for HNB is a £24 million budgeted overspend in SEND including £13m of additional funding and requiring efficiencies of £14m to manage demand pressures and inflation. The council’s request to transfer funds from the Direct Schools Grant (DSG) to the HNB was rejected by the Secretary of State and a further review had been undertaken, therefore the existing numbers in the report would alter slightly (the base funding of £151m would decrease to £148m, whilst the efficiencies would increase from £14m to £15m).

5. A Member asked what would happen if inflation was higher than predicted and, if so, what restructuring could be done to address this. The Director stated that they had built both flexibility into the overall budget proposals and into the contingency; the general fund balance was higher than previous years. The flexibility in the overall council position therefore would allow for unexpected inflation rates.

6. The Vice Chairman asked how the £14m figure of SEND efficiencies in the main report related to the £11.979m of efficiencies in Annex A. Firstly, it was explained that there was a difference of £5m between the £29m of forecast SEND overspend in 19/20 and the budgeted overspend of £24m in 20/21. The reduction of approximately £5m shown in the General Fund efficiencies was the reduction in annual contribution to the matching SEND reserves. The Director of Financial Insight explained that there would be an overspend in SEND and therefore they had provided an offsetting reserve to ensure resilience in the balance sheet. The deficit of £29m and SEND was charged to the dedicated schools grant. The cumulative deficit is held on the balance sheet. The pressures would increase but there was the transformation programme and the potential to make efficiencies within SEND, which would enable to directorate to reduce its contribution to the offsetting reserve.

[Chris Townsend arrived at the meeting at 10.26]

7. The Vice Chairman asked whether the SEND efficiencies had been stress tested against the impact on the front line and whether it would cause SEND provision to be rationed for families in need. The Executive Director stated that the transformation programme was making a number of efficiencies including reducing the number of children placed in non-maintained schools and if these were taken against demand, it was expected that the directorate would be able to reduce costs.

8. Members asked what the Executive Director considered to be the biggest risks and whether there was anything that could derail the budget proposals. The Executive Director stated that the biggest risks were potential logistical issues such as planning problems that could slow the delivery of the capital plans for more school places. If the speed at which the council could provide the 852 new school places slowed down then the budget would be under pressure. Nevertheless, the Executive Director had confidence that a good plan was in place and the risks were managed.

9. A Member asked whether the additional 852 places would be sufficient to achieve the change required. The Executive Director stated that this was a rolling programme with an infrastructure of three main special schools alongside a smaller number of placements in mainstream schools, within the 852 places. They stated that the three larger schools were two years away from completion and the budget programme had been based on the understanding that these places were coming on stream.

10. A Member of the Committee referred to the comparison in spend per child between Surrey and Essex from 2017-2018 (£700 and £460, respectively) and asked why Surrey County Council’s per capita cost was so high. The Executive Director stated that services had been put in place for children with SEND at the point of crisis and, along with  the high number of Education, Health and Care Plans (EHCPs) being issued, had resulted in a high cost for Surrey. They informed Members that they were approaching 10,000 EHCPs and when they had benchmarked themselves on cost, Surrey County Council was higher than other councils. The Executive Director stated that it would take a three to four year plan to achieve the median local authority spend, or below.

11. The Cabinet Member for All-Age Learning highlighted that there were issues with placement and inclusion in mainstream schools; the number of children who received special needs support in the mainstream schools had reduced significantly from 2009, yet there had been a large rise in EHCPs. The number of independent specialist placements had also increased for EHCP children, more than the number of mainstream placements. The Cabinet Member stated that it was crucial to strike the right balance.

[Lesley Steeds arrived at the meeting at 10.34]

12. The Committee moved on to review the rest of the Directorate’s budget and questioned the level of confidence that the Cabinet Member for All Age Learning had in the savings in their remit. The Cabinet Member informed the Committee that the savings had been looked at in great detail and were backed up by transformation plans. The schools budget came from the Department of Education and complicated calculations ensured that it protected the minimum funding levels for schools. With regard to the libraries programme, efficiencies were made in the current year by looking at transforming what underpinned the libraries and the services that they provided. Transformation would also be achieved through a capital programme that was in place. Cost efficiencies were also made through shared spaces. The Cabinet Member told the Committee that they believed savings had been identified in the right places. They stated that the refusal from the Secretary of State to transfer £3.3m into the HNB needed to be updated in the budget going forward to council.  

13. The Vice Chairman referred to the council’s relationship with health and the potential £2m funding from clinical commissioning groups (CCGs) and subsequently queried the risk attached to achieving this transfer and whether this sum was achievable. The Executive Director explained that this was not a simple transfer but related to individual children and that the council would negotiate with the NHS on a case-by-case basis. The Executive Director further informed the Committee that management of health and social care commissioning for children now sat within his portfolio and therefore he was now directly managing the children’s commissioner for the NHS. There had been a genuine attempt across the council and the NHS via a strategic finance group to think holistically about how the money was being spent across the agencies. The Vice Chairman was pleased that steps had been made towards the joint commissioning of health and social care.

14. The Cabinet Member for All-Age Learning stated that they were also linking the transport assistance team with the transport coordination team, which would also report to the Executive Director.

15. The Chairman asked for examples on how the budget would be supporting key elements of the council’s organisation strategy and vision for the following five years. The Cabinet Member for Children, Young People and Families informed the Committee that almost everything in children’s social care and improvement was about partnership working and the ambition that no one was left behind. The new safeguarding arrangements meant that the police, health and the council were statutory partners in the statutory elements of the work of the Cabinet Member. District and borough councils and schools had also been included in the new arrangements in Surrey. The budget supported this partnership working.

16. The Cabinet Member also highlighted that strong focus had been put on bringing schooling closer to home for SEND children and increasing the number of social workers and foster carers in county, all of which would reduce transport and travel. These would help deliver the efficiencies within the budget whilst contributing to Surrey’s greener future and enhancing the wellbeing of the children and families in Surrey. The Chairman considered it important that Cabinet Members were able to articulate how the budget would help realise the council’s vision for 2030.

17. The Cabinet Member for All Age Learning referred to the work undertaken to set the investment up for the Surrey Alliance for Excellence structure which would highlight issues at some of Surrey’s schools where support was needed. If there was a case to justify for early intervention of a child, schools could access a small pot of money through the Local Learning Fund. This would enable the Special Educational Needs Coordinator (SENCO) staff at schools to approach the council for assistance that might enable a child to remain in mainstream education. The Cabinet Member stated that their partnership working was very much around schools continuing to be good and outstanding, the inclusion work in school, and early intervention, all of which was funded by the budget provision.

18. The Chairman questioned what level of confidence there was regarding the sufficiency of contingencies for future possible demand. The Executive Director stated that SEND was the greatest area of volatility and they were hoping that the number of EHCPs would decrease. In relation to children’s social care, the numbers had reduced over the previous two years, particularly around the number of child protection cases. The numbers on looked after children (LAC) were stable and the proportion of Surrey’s children in care were relatively low and stable. Overall, they were content with the budget that had been set.

19. The Chairman asked whether there were any ways that the budget would be used to recruit and retain social workers. The Committee asked why more progress had not been made in this area. The Executive Director informed the Committee that it was only since the new recruitment campaign began in December that seventeen permanent new social workers had been recruited; more had been recruited throughout the previous year. To be fully staffed, the service needed to recruit 110 social workers. If all vacancies were filled, caseloads would be about twelve per social worker. The service was trying to encourage agency staff to become permanent employees and there was also a return to work programme, a retraining programme, and the option of working flexible hours. The Executive Director also discussed other incentives such as gym memberships, and retainers for social workers who stayed with the council and the possibility of recruitment in North America.

[Robert Evans left the meeting at 11.10am)

RESOLVED:

The Chairman summarised that the Committee were supportive of the Directorate’s budget and agreed to recommend it to the Resources and Performances Select Committee ahead of Cabinet’s meeting.