Purpose of the item: To scrutinise the Draft Budget and Medium-Term Financial Strategy.
Minutes:
Witnesses:
• Sinead Mooney, Cabinet Member for Adults and Health
• Simon White, Executive Director for Adult Social Care
• Ruth Hutchinson, Director of Public Health
• Wil House, Strategic Finance Business Partner (Adult Social
Care and Public Health)
• Anna D’Alessandro, Director of Finance (Corporate and
Commercial)
• Rachel Wigley, Director of Finance (Insight and Performance)
• Adam Whittaker, Senior Strategy and Policy Lead
• ImmyMarkwick, Mental Health Lead (Independent Mental Health Network)
Key points raised during the discussion:
1. The Director of Public Health provided an update to the Select Committee regarding the current situation of the COVID-19 pandemic. Surrey had some of the highest rates of positive COVID-19 cases in the country, which was different to the trends seen in 2020 where higher rates were found in the north of England. The Director shared a slide (Annex 1) which showed a ranking of seven day case rates for lower-tier local authorities in England from 5 December 2021 to 11 December 2021. Three out of the top 20 of the lower-tier local authorities with the highest seven day rates were found in Surrey, with Reigate and Banstead recording the highest rates in the whole country. The Director highlighted that the number of confirmed Omicron cases within the county were only the tip of the iceberg, as they were likely to be a significantly higher in reality. The Director noted that this was a rapidly changing situation.
2. The Cabinet Member for Adults and Health introduced the report and the context which underpinned it. The Cabinet Member welcomed the government’s decision to reform Adult Social Care (ASC) and its focus on the front-line social care workforce and prevention agenda. Both demand and cost in ASC exceeded the funding provided by central government which had led to higher thresholds to access services. The proposed increases in national insurance would drive up cost for providers and would add to challenges with recruitment and retention. The Cabinet Member noted that arrangements were being made for her to shadow a care home and a care provider in the community once it was safe to do so, and the findings of these visits would be shared with the Select Committee in due course. The invitation was extended to Members of the Select Committee.
3. The Director of Finance (Corporate and Commercial) noted that the Council was expecting the provisional Local Government Finance Settlement from central government today (16 December 2021). Following a briefing with Cabinet Members, information on the settlement would be shared with all Members. It would take longer to understand how the settlement could change the budgetary gap. The draft budget was established in line with the Community Vision 2030 and the Council’s priority objectives. The 2022/23 draft budget presented a net gap of £19.5 million. It had been assumed that the Council would receive circa £16 million from the settlement and this had been factored into the draft budget. The Council presented a circa £50 million efficiency programme, which included £19.4 million efficiencies in the Adult Social Care Directorate and £0.3 million in the Public Service Reform and Public Health Directorate. There was no planned use of any reserves for 2021/22 at this point in time, which suggested a reserves balance of £196.7 million at the end of the financial year.
4. Regarding the consultation and engagement process with residents, the Senior Strategy and Policy Lead informed the Select Committee that it was strongly felt by residents that funding for services which supported vulnerable residents should be protected. Where the rationale for increasing council tax and/or use of the ASC precept was to protect funding for those services, residents were more likely to support such a rise. The closing date for the consultation on the draft 2022/23 budget was 28 December 2021. This process would help to identify potential areas of support and resistance within the draft budget before going to Cabinet on 25 January 2022.
5. The Director of Finance (Insight and Performance) explained the rationale behind the Twin-Track approach. Any changes as a result of the Local Government Finance Settlement would come back to the Select Committee in early 2022 if possible, to allow for scrutiny of such proposals. Work undertaken had followed guiding principles which included being enabled by data and insight and maintaining a focus on outcomes.
6. The Executive Director of Adult Social Care introduced the ASC draft budget for 2022/23. A strength-based approach was adopted to promote people’s independence and well-being and reduce dependence and a life-long reliance on care services. This aimed to shift support away from institutional models of care, unless such models were the only option to appropriately support people who have the most complex needs. The intention was to support residents to remain in their own home or supported accommodation where possible. The numbers of residents who were receiving care had fallen during the pandemic, whilst the average cost of care had increased sharply. The full year cost of care packages delivered in 2021/22 was likely to be circa £18 million above the current budget, which had been built into next year’s (2022/23) budget as a pressure. The hospital discharge programme had resulted in increased unit costs for ASC. The impact of ASC’s transformation programme was demonstrated by the fact that since 2017/18, the Council’s spend on ASC had increased by 8% compared to 14.5% in the South East.
7. The Director of Public Health explained that there were strict criteria for the use of the Public Health (PH) Grant (£38.6 million for the Council), a reasonable proportion of which was allocated to other departments which spent the money according to the grant requirements. The Treasury was yet to announce whether the council would receive extra allocation regarding the COVID Outbreak Management Fund, or if funding received to date could be carried forward into 2022/23.
8. The Chairman asked how confident the officers were that the red- and amber-rated efficiencies would be achieved and what impact such efficiencies might have on service users. The Executive Director of Adult Social Care responded that at this stage in the process, it would be expected that a large proportion of the proposed efficiencies would be rated amber or red. These efficiencies were considered challenging in a variety of ways, but if they were not considered challenging then the Service would already be doing them. The Cabinet Member for Adults and Health explained that a robust monitoring mechanism sits behind these challenging efficiencies which provided a level of
confidence. The Strategic Finance Business Partner (ASC and PH) added that there were no savings which were solely rated red.
9. The Chairman enquired about the sustainability and risks of the
Learning Disabilities and Autism (LD&A) efficiencies. The Executive Director of Adult Social Care explained that expenditure on LD&A had risen, and would continue to do so, due in large to those transitioning from Children’s Services into ASC every year. The Chairman asked about the rationale behind the assumptions related to LD&A efficiencies, particularly those related to day care, as well as the suspected demand in this area in 2022/23. The Executive Director of Adult Social Care explained that the proposed efficiencies in this area were focused around changing the model of day care services and a maximisation of independence. The approach had shifted to making services accessible to those with LD&A and supporting those currently in institutional models of day care to enjoy universally accessible activities. The Executive Director of Adult Social Care noted the importance of responding to the needs of families this would affect. The Chairman asked about the lessons learnt from the first lockdown and the financial steps that ASC would take to support families with LD&A needs if restrictions tightened further or another lockdown was introduced. The Cabinet Member for Adults and Health shared that during lockdown and COVID restrictions, the Council was able to offer providers with a great deal of support, particularly financially. Conversations had taken place with providers, such as Surrey Care Association, to understand what more the Council could do to support them should that situation arise.
10.A Member asked how confident officers were that the forecasts were accurate and what assurances could be provided to the Select Committee. The Strategic Finance Business Partner (ASC and PH) explained that it was a rapidly changing situation, however the draft budget proposed, a sizeable increase in ASC’s budget of £18.6 million between 2021/22 and 2022/23. A robust monthly monitoring process enabled the Council to be clear on how expenditure on ASC services compared to the budget proposals. The Member asked whether the potential financial impact of the Omicron variant had been factored into the reserves for 2022/23. The Director of Public Health explained that the risk of a new variant had remained on the corporate risk register and that through using COVID reserves, PH could flex their services as appropriate.
11.A Member asked what contingency plans had been established to reshape services if the county was faced with adverse outcomes from the Omicron variant and any future variants. The Executive Director of Adult Social Care responded that with all future options, a best-case and worst-case scenario were accounted for. The Director of Public Health explained that this would be when the Local Outbreak Management Plan would be utilised which provided a framework of how to respond to changes in the pandemic. The Director of Finance (Corporate and Commercial) stated that from the 2021/22 financial year, the Council had circa £11 million of reserves and contingencies which could be added to the 2022/23 budget, any unspent money from 2021/22 was assumed it could be carried over. The Spending Review had not announced any new COVID related grants.
12.A Member enquired about the dilemma surrounding the amount the Council was able to pay for services from providers and the cost at which providers could provide such services for, as well as inflationary increases and national insurance increases. The Executive Director of Adult Social Care explained that once the settlement had been received, the Council could review the general level of inflation offered to the sector and it was hoped this could be a generous offer. The intent was to reduce variation of the cost for services, which would create savings and could be achieved without damaging the provider’s underlying business model. The Cabinet Member for Adults and Health added that this was one of the single biggest challenges the directorate was facing in this draft budget and it was a key priority.
13.The Mental Health Lead for the Independent Mental Health Network asked for reassurance that mental health would be a focus of forthcoming budgets to ensure that ASC capacity could meet the increased demand on the Service as a result of mental health issues. The Executive Director of Adult Social Care acknowledged the impact that the pandemic has had on residents’ mental health and the increased demand this had put on ASC services. The current system-wide approach to mental health was recognised as not working well in its current state. There was a desire to improve practice related to hospital discharges after an admission under the Mental Health Act and to provide solutions which promoted the individual’s long-term wellbeing. The Strategic Finance Business Partner (ASC and PH) stated that the assumption of a continuation of the high level of demand for mental health services was built into the draft budget for 2022/23. The Mental Health Lead enquired about the impact on the voluntary, community and faith sector from the draft budget 2022/23. The Executive Director of Adult Social Care highlighted the crucial support provided by third-sector organisations and reassured Members that there was a commitment to maintaining funding for this sector. The Cabinet Member for Adults and Health endorsed the commitment to working with third-sector organisations and informed with Members about the recently held Mental Health Summit. The Director of Public Health highlighted the importance of financial investment and system-wide prevention work, this was shown through the Health and Wellbeing Strategy Refresh.
14.A Member asked for clarity regarding the closure of some care homes and the impacts this could present for residents, as well as the difficulties surrounding recruitment of staff. The Cabinet Member for Adults and Health acknowledged the important partnership work which had kept care homes open throughout the pandemic. The Member questioned why the Council was not utilising its reserves in order to make fewer cuts in such exceptional circumstances and increased demand. The Director of Finance (Corporate and Commercial) explained that the Council had large reserves due to the scale of the services it provided and to mitigate financial challenges of unexpected events. Financial resilience had been achieved in the last three years through lots of hard work. There had been increased investment in transformation programmes through use of reserves. The Strategic Finance Business Partner (ASC and PH) brought attention to the Capital Programme which had a significant amount of investment earmarked for ASC.
15.A Member asked what funding had been put in place to ensure residents were aware and engaged with the LD&A changing model of care, referencing feedback from a resident. The Executive Director of Adult Social Care explained that any large service changes must include consultation with residents. There had not yet been a general communication strategy, but the feedback was noted. Another Member shared their concerns regarding a lack of communication with policy changes. The Executive Director stated that this would be taken away and a colleague would write to the Member in due course.
16.Regarding what cost implications were anticipated for the ASC budget as a result of winter pressures and the affect the Omicron variant could have on hospital discharges, the Executive Director of Adult Social Care stated that there would be cost implications if we entered into another crisis due to the Omicron variant. The Service was yet to reach a stage where it could not respond to the circumstances. However, there were problems with NHS community services, which needed to be addressed if individuals were to be discharged with greater needs.
17.A Member asked whether the strength-based approach had worked to deliver efficiencies. The Executive Director of Adult Social Care explained that, prior to the pandemic, this approach had delivered efficiencies over a number of years satisfactorily. If the Service remained in a perpetual crisis, then social workers would be dominated by responding to the crisis and residents in the community could fail to receive the appropriate response they required.
18.The Chairman enquired about how the efficiencies identified would help to tackle health inequalities and the impact on residents. The Director of Public Health explained that the efficiencies outlined in PH for the 2022/23 draft budget were relatively small and that they should not have any material impact on health inequalities. All of the PH spend was based on services that aimed to reduce health inequalities. The Strategic Finance Business Partner (ASC and PH) added that there were no significant changes to services provided as a result of planned efficiencies and other funding opportunities were being explored.
Recommendation:
The Select Committee agrees that, subsequent to this meeting, the Adults and Health Select Committee will agree wording for inclusion in the report to Cabinet regarding the draft budget and Medium-Term Financial Strategy, which is to be prepared jointly by the Council’s four select committees.
Actions/requests for further information:
The Cabinet Member for Adults and Health to feed back to the Select Committee her views and findings of the care home shadowing work she will be undertaking.