Agenda item

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

Witnesses:

Anna D’Alessandro, Director of Corporate Finance

Wil House, Strategic Finance Business Partner (Adult Social Care and Public Health)

Ruth Hutchinson, Director of Public Health

Jon Lillistone, Assistant Director of Commissioning (Adult Social Care)

Sinead Mooney, Cabinet Member for Adults and Health

Liz Uliasz, Deputy Director of Adult Social Care

Simon White, Executive Director of Adult Social Care

Rachel Wigley, Director of Financial Insight

Key points raised during the discussion:

1.    The Cabinet Member for Adults and Health introduced the report, stating that, while 2020 had been a difficult year due to the Covid-19 pandemic, the 2021/22 budget was one of stability. There were significant challenges in Adult Social Care (ASC). With regards to Public Health (PH), there was a particular need for increased attention on and funding for mental health.

2.    The Director of Corporate Finance presented slides on the budget, stating that the report as presented to the Select Committee showed the draft budget as had been approved by Cabinet on 24 November 2020. The draft iteration had a gap of circa £18m. The Council expected a provisional settlement from central government today (17 December 2020), which would provide details of Surrey-specific funding, against the current £18m gap[1]. The Medium-Term Financial Strategy (MTFS) gave a longer-term view on budgetary implications for the Council. Estimates were indicative and were iterated every year, meaning that they were prone to change in future, and as the spending review released by central government this year was only a one-year spending review, it gave little certainty across the medium term. The Council had been informed by central government that they aimed for the Fair Funding Review (FFR) and business rates reset to take place when the pandemic had finished; therefore, it was estimated that these would take place in 2022/23.

3.    A Member noted that there had been many statements from central government that Covid-19 costs would be met in full. Did the Director think that was correct, and was she confident it would continue? The Director of Corporate Finance responded that the only information the Council had received on Covid-19 funding in 2021 was that £1.5bn of spending review funding would be allocated across all costs nationally next year. Surrey County Council did not know yet what proportion of that it would get, and it wouldn’t know this until the provisional settlement was released. As at December 2020, Surrey County Council had a surplus of circa £10m that it could use to cover Covid-19 costs for 2020/21 or to carry over any surplus into 2021/22. However, the Council had no guarantee that its Covid-19 costs would be met in full in 2021/22.

4.    The Strategic Finance Business Partner presented slides on the draft ASC budget, which forecast a gap of £5m; it was anticipated that this £5m gap would be closed with the provisional settlement, as a proportion of the circa £18m gap to close. Looking ahead, an increased spending requirement of £75m was anticipated, leading to a gap of circa £107m across the five-year MTFS period. These assumptions would continue to be reviewed over future years, and would be influenced by the FFR, any changes to the national ASC system, and the impact of transformation plans across the Council.

5.    The Strategic Finance Business Partner continued to explain that the majority of pressures in ASC related to care package price inflation and increased demand for ASC services funded by the Council. There were £31m efficiencies currently planned in the medium term, and these efficiencies would mitigate pressures rather than reducing the overall spend. The scale of efficiencies was broadly similar across client groups, amounting to approximately 3% of base budgets. Due to the pandemic, ASC was anticipating to incur circa £50m additional spending in 2020/21, about £45m of which had been spent on additional support to providers. The ongoing impact of the pandemic had been taken into account with regards to care package price inflation, and would continue to be reviewed as time went on, noting that it was difficult to predict the financial impacts of the pandemic as the national and local situation was continually changing.

6.    The Executive Director of ASC outlined the ways in which the Council was reducing spend in an ethical way that had positive outcomes for service users. These were: using a strengths-based approach, transforming the model of care, and buying care as effectively as possible.

7.    A Member asked what traditional day care services were being decommissioned as part of the transformation of the model of care, how the Council would ensure that residents were not negatively affected, and what investment would be put in community support. The Executive Director replied that the biggest client group for traditional day care services was people with learning disabilities (LD). All savings earmarked against reviews of day care services for people with LD were net. The ASC service would prioritise finding alternative day solutions for all individuals currently receiving traditional day care services. In a number of cases, the Council was effectively paying twice, as an individual might have 24/7 residential care as well as attending day care services. The Council aimed to provide a more modern model of care for these people, whereby they would not necessarily have to travel from their place of residence to access day services; a more modern model would involve the existing provider working with the individual and their family to find a solution that works for them, which would lead to savings comprising mostly building and transport costs. Where appropriate, this would involve supporting people with disabilities to find employment.

8.    A Member enquired how confident officers were that this budget was achievable. The Executive Director stated that in his experience it had always been possible to make efficiencies where necessary. The Council would put the needs of its customers first. He expressed confidence that the Council could provide more inclusive opportunities in a way that would simultaneously deliver efficiencies.

9.    The Executive Director stated that Covid-19 costs was the biggest area of uncertainty in ASC in 2021/22 at the moment. This uncertainty and the associated financial impacts of the pandemic combined with general pricing and demand pressures would be the main challenges in delivering ASC’s 2021/22 budget.

10.  A Member asked where the £11.5m income from learning disabilities and autism (LD&A) would come from. The Strategic Finance Business Partner responded that circa £9m of the £11.5m would come from assessed charges: the statutory policy was to assess the benefits people received and receive a proportion of those as charges. The remainder of the £11.5m was mostly composed of contributions from Clinical Commissioning Groups where individuals’ care was jointly funded by the Council and the NHS.

11.  Referring to efficiencies outlined in the agenda, a Member noted that there was a line about introducing a new transport policy. Was this a euphemism for reducing services for people with LD&A? He also endorsed the notion of people with LD&A participating in horticultural or animal husbandry activities as a means of day activities, and asked what the Council was doing in this area. The Strategic Finance Business Partner said that efficiencies in transport came from supporting people to travel more independently where this was assessed to be suitable and purchasing transport more effectively – for instance, trying to reduce usage of the most expensive forms of transport, like individual taxis. Regarding the Member’s second point, the Cabinet Member praised the work of providers in the LD&A area and invited Members to accompany her and visit providers to see LD&A services for themselves. Being more ambitious with regards to day activities and opportunities for people with LD&A was important.

12.  A Member asked whether the Council would raise funding to close the budget gap by increasing the ASC council tax precept. The Director of Corporate Finance explained that the only increase in council tax that had been factored into the budget at the moment was the 1.99% increase to overall council tax; no increase to the ASC precept had been factored into the budget as it stood. The Council was permitted to increase the ASC precept by up to 3% over the next three years, and officers were keen to have the Select Committee’s feedback on whether to increase the precept at all. At this point, the Council was awaiting the provisional settlement, but it was already clear that the government would underwrite the collection fund deficit and that there would be £1.5bn Covid-19 funding from government. It was anticipated that the provisional settlement would allow the Council to close the budget gap without the Council having to make any more efficiencies.

13.  A Member remarked that in the report there were references to improving purchasing of care beds and home-based care packages, which could imply a reduction of payment to providers. He indicated that many ASC providers were currently struggling financially due to the pandemic, and asked how reductions would work for providers. The Executive Director said that this did not represent a reduction, but rather that the Council was aiming to buy care at a more consistent price. If the Council bought beds at its target price, it would save money without reducing provision for any individual. The Assistant Director of Commissioning confirmed this and added that recent analysis had shown significant variation in different parts of the county, and it was necessary to make this more uniform. The Council was having constructive conversations with home-based care providers and working on structuring rounds more efficiently in future. It was also ensuring it purchased good quality care, all of which would lead to reduced spend.

14.  A Member asked why efficiencies for the mental health transformation programme were RAG (red, amber green) rated red in the report. The Executive Director replied that this was because 2020 was the first year that mental health services had been under the remit of the Council (prior to the end of the Section 75 agreement, they had been solely under the remit of Surrey and Borders Partnership NHS Trust). The Trust had not made savings effectively in the past, so this area had to be rated red; however, there was no reason to believe that the Council would not be able to make savings in mental health in future, and the RAG rating might improve.

15.  A Member remarked that approximately 40% of the Council’s clients in LD&A had not had their care package reviewed in the last two years. The target was to review 80% of LD&A clients, but if reviews were increased to this extent, the amount of spending on care packages might increase significantly, meaning that LD&A pressures could outweigh LD&A efficiencies. If this was the case, how was it anticipated that the Council would keep the budget balanced? The Executive Director expressed disappointment that the level of reviews was so low, but added that the service had taken action on that. One of the reasons that the Council had set up a specialist LD&A team was to improve the service, and the Assistant Director of Disabilities, who was in charge of the LD&A team, had increased the number of permanent roles in the team. The Executive Director expressed confidence that the service would recover the position on reviews over the next year. Furthermore, he doubted that increasing the number of reviews would lead to a significant increase in cost, as those who had not been reviewed were mostly people in residential care, so they had had a form of contact with the system. The Executive Director was also hopeful that when the Council did conduct these reviews, it would find a way of moving people into more independent living and less institutional forms of care, thereby making savings rather than increasing cost. Of course, if when conducting reviews the service encountered people who did need more care, it would give them more care.

16.  The Cabinet Member praised technology-enabled care (TEC) as an effective tool against loneliness and described the launch of a pilot of TEC for frail and older residents, planned for 2021. She was keen to keep the Select Committee updated on this.

17.  A Member noted the mention in the report of a £2.7m efficiency from the ‘resolution of continuing health care disputes’, and enquired what these were and how it would be ensured that there was not a problem with these in future. The Executive Director of ASC responded that Surrey had over 100 disputes with the NHS, most of which concerned whether a certain need pertained to Surrey County Council ASC or the NHS. Due to how cases had fallen to date, it was not unreasonable to assume that some of the cases would fall in the Council’s favour in future.

18.  A Member asked what the rationale was for not factoring an increase in the ASC precept into the budget. The Director of Corporate Finance explained that the Council was told on an annual basis by central government whether it would be allowed to levy a precept. In the 2019/20 financial year, the Council received no such directive, so it would have been premature to decide this either way when setting the draft budget for Cabinet approval. The Council was then first informed that it would be able to levy the precept on 25 November in the spending review. Whether or not to levy the precept was a political decision. To provide an indication of scale, a 1% levy on the precept would amount to £7m to £8m income for the Council.

19.  The Select Committee deliberated on the issue of whether the ASC precept should be levied and, generally, Members expressed the opinion that the precept should not be levied, for the following reasons: the budget was based on good assumptions and likely to be balanced as it was; many residents would already be struggling financially due to the economic effects of the pandemic, and would struggle to pay a higher rate of tax; and it was important that central government did not feel relieved of its responsibility to provide sufficient funding. The Cabinet Member stated that Members’ views would be taken on board with regards to the precept.

20.  The Strategic Finance Business Partner provided an overview on the PH budget. Surrey’s PH budget was funded by a ringfenced grant, which had been increased this year. Surrey’s increase this year was larger than most Councils’, and it was assumed that this was in recognition of Surrey’s historically low funding. There was a confirmed stable budget position for Surrey’s PH budget for the next two years (up to 2022/23). Moreover, as part of the FFR, there was a possibility that the PH grant would become un-ringfenced, which would significantly influence PH spending in future; if this was the case, it would not come into place until 2022/23 at the earliest. In 2020, PH had led on the Covid-19 response in Surrey, and this work had been funded by two grants from central government and special tier funding. These costs were expected to be met within those separate funding streams, so they did not form part of the PH budget. At the moment, it was anticipated that funding provided would be sufficient to cover costs in PH (therefore, there was currently no gap in the PH budget).

21.  The Director of PH mentioned the Community Impact Assessment (CIA), which was published on the Surrey-I website and gave an in-depth overview of the impact of Covid-19 on geographical and demographic groups. She also restated that there had not been a Covid-19 pressure on the PH budget, as the Covid-19 response had been completely covered by special government funding.

22.  A Member asked witnesses how they saw the budget contributing to the prioritisation of the issue of health inequalities, as well as the three other priorities that formed the Council’s main priority objectives. The Director of PH replied that reducing health inequalities was an essential part of PH. The PH service worked in partnership with officers working on the Health and Wellbeing Strategy, which contained key health priorities for the Council. Covid-19 had increased recognition of other elements that need to be incorporated into the Council’s strategies, such as housing (homeless people had been placed in emergency housing as part of the response to Covid-19). Furthermore, there was a requirement within the NHS to reduce inequalities, so the Council was dovetailing with the NHS to make their work more effective. One key indicator of health inequalities was a disparity in healthy life expectancies between different geographical areas or demographic groups, and Surrey still had some large gaps, despite being an affluent county. There was a public Tableau dashboard (a piece of online data software used by the Council) containing all the Health and Wellbeing Strategy metrics, and the Council could use this to share with residents its aim to reduce inequalities.

23.  The Chair of the Independent Mental Health Network (IMHN) expressed concern that there was a reduction in mental health funding in 2021/22 compared with the previous year, and asserted that this went against the priority of tackling health inequality. The Cabinet Member expressed a commitment to looking into increased funding for mental health and stated that she would like to involve the committee in this at some point. The Chair of the IMHN raised the work of the Mental Health Task Group, which had included in its findings a need for increased funding on mental health. The Cabinet Member responded that the work of the Task Group had raised the profile of mental health and was a factor behind the recent Mental Health Summit that was held, involving partners from across the system.

24.  The Chair of the IMHN emphasised that the worsening of mental health across the country caused by the pandemic would not stop as soon as the pandemic stopped; mental health problems were likely to affect individuals in the long term.

25.  The Chairman of the Select Committee stated that she was committed to mental health, which included lobbying Westminster for funding and increased mental health support, such as GPIMHS (GP Integrated Mental Health Services).

26.  A Member enquired whether PH’s business as usual work would be affected negatively if the funding did not increase as expected. The Cabinet Member replied that, while there had been an increase in grant funding for PH, Surrey’s PH funding was still lower than would be ideal. Increased funding was essential for tackling the long-term impacts of Covid-19, and the Cabinet Member encouraged people to lobby their MPs and government for this.

27.  A Member asked what was being done to address issues raised in the CIA and the impact it had had on different groups across Surrey. The Director of PH responded that the CIA was kept as up to date as possible and was fed into by received intelligence. Where disproportional impacts in certain population groups were recorded, PH spending would match these proportions to tackle inequalities. She acknowledged the importance of addressing the medium- and long-term impacts of the pandemic.

Recommendations:

That, subsequent to this meeting, the Adults and Health Select Committee will agree wording for inclusion in the report regarding the draft Budget and Medium-Term Financial Strategy, which is to be prepared jointly by the Council’s four select committees.

Actions/further information to be provided:

1.    Democratic Services officers to look into the possibility of organising for Members to visit LD&A services (whether remotely or in person);

2.    Democratic Services officers to look into the possibility of updating the Select Committee on TEC.