Agenda item

 

This report sets out the budget proposals for Adult Social Care.  An update is also provided on any changes in fees and charges.  Cabinet will present their revenue budget and council tax proposals to Budget Council on 22^nd February 2017.  

 

Councillor Rory Vaughan, Chair, welcomed finance officers, led by Hitesh Jolapara, Strategic Finance Director, who was accompanied by Prakash Daryanani, Shared Service Interim Director of Finance for Adult Social Care & Public Health, Richard Simpson, Public Health Finance Manager.  Councillor Vaughan explained that a Corporate overview would provide context, as an introduction, followed by the Medium Term Financial Strategy (MTFS, Agenda Items 4 and 5) for Adult Social Care and Public Health, respectively.

 

Hitesh Jolapara provided a national context as a backdrop to the Hammersmith and Fulham budget setting process.  In what was noted to be the final autumn statement going forward, given in November 2016, there were some changes to the spring budget.  The budget had been closely scrutinised by the Office for Budget Responsibility (OBR) and the Institute for Fiscal Studies (IFS). The OBR headline key messages forecast a weaker national economic outlook, weaker sterling, lower investment, with uncertainty created by Brexit, making it difficult for public finances to balance budgets nationally before the end of the current parliamentary session. 

 

It was explained that the GDP (Gross Domestic Product) for March and November 2017 varied between 2.2 and 1.4, percentage change on 2016.  Councillor Andrew Brown commented that, while he accepted current figures, previous OBR forecasted figures and economic modelling had been discredited.  The Bank of England and the Organisation for Economic Co-operation and Development (OECD) more recent analyses had indicated a rise.  Hitesh Jalopara, explained the difficulties inherent in forecasting, and responded that Councillor Brown’s perception of the differences was accurate.  Since the autumn statement, the US elections had taken place, which, combined with other global factors, led some commentators to forecast a rise in GDP.

 

The difficulty of forecasting was notable in the change in growth of national debt, predicted for 2017/18, at March as £1677 billion, later increased in November by £163 million to £1840 billion.  Locally forecasted debt for Hammersmith & Fulham was £37.1 million. Using fuel duty as an example, this neatly illustrated the difficulty of predicting figures, covering the period 2008/09 to 2020/2021, as all policy assumptions had been proven wrong by the actual fuel duty rate recorded at the time.

 

Hitesh Jolapara presented data taken from the IFS, on real term % changes to public spending, 2010-11 to 2019-2020, drawing comparisons between the total public spend, the revenue spending of London boroughs and local government core funding for London.  The steep decline in figures for the latter illustrated the severity in real term cuts to core funding in local government. It was confirmed that this did not take into account the devolution of business rates to local authorities and that this was not planned until the end of the current Parliamentary session (2019/20).  It was noted that if and when this occurred, it may be accompanied by the transfer of other responsibilities such as transport. 

 

A baseline budget of £160 million took into account a number of factors ranging from the council tax freeze to rates of inflation.  The budget was not limited to efficiency savings or austerity measures but also include growth.  Additional factors also included assumptions that council tax will be frozen, the Adult Social Care (ASC) precept will not be applied by LBHF.  The fees and charges for ASC will also be frozen.

 

Councillor Brown asked if maintaining a low council tax policy and not applying social care precepts had impacted on ASC.  Hitesh Jolapara explained that since 2010, they had received less income across the system in general but reminded Members that £4.4 million of growth had been included.  He explained that the social care settlement had been good but that careful management would be required to alleviate pressure on the social care budget, additionally taking into consideration factors such as the impact of the living wage.

 

Referring to the projected £22.7 million budget risk, he anticipated a good, general balance within the total reserve of £86 million, with 20% of reserves earmarked.  He confirmed that reserves of around £90 million was standard, with small variations over previous years, viewing the amount as stable.

 

Prakash Daryanani, Shared Service Interim Director of Finance for Adult Social Care & Public Health provided a review of the figures and implications for ASC.  The MTFS and proposed net budget for 2017/18 was £60.2 million, compared to £57.9 million for 2016/17, representing a growth of £2.3 million resulting from underlying budget pressures and increased investment. 

 

Budget challenges included the transition of the funding model for the Home Care contract, funded in Year 1 through reserves and the ASC budget, it was explained that from Year 2 onwards, this would be funded corporately.  The ASC growth total amounted to £4.413 million, representing 61% of overall Council growth.  The savings (£1.885 million) represented 12.6% of total savings overall.  In terms of investment to fund, the National Living Wage, increased by 30p for over 25’s from April 2017, which equated to a 4% increase, representing £400k, to be factored into payments to homecare providers.

 

Bryan Naylor commented that the STP (Sustainability and Transformation Plan) called for increase in ASC and hospital care and observed that the budget proposal made no reference to anticipated increases for funding care in the community.  Councillor Vivienne Lukey, Cabinet Member for Adult Social Care and Health, responded that no assumptions had been made about receiving funding from the implementation of the STP and additionally, the views emerging from other local authorities and CCG colleagues was that there was no information forthcoming as to the amount or allocation of funding on the table. 

 

Continuing, Prakash Daryanani explained that while the number of customers in ASC increased in terms of acuity and need, the intention was to ensure greater independence for clients and reduce the overall requirement for long term care.  Utilising technology to assist with independent living needs was not a new approach but the it was explained that officers were exploring options with high value providers to identify improvements and savings.  Savings of £1.9 million had been proposed, lower than in previous years, which was approximately 30% of the Council’s budget, recognising some of the particular pressures that ASC are currently facing. 

 

Referring to the Apprenticeship Levy and a small issue in terms of finding appropriate apprenticeships to fund the reduction allocated against the ASC budget, Councillor Brown enquired if this was being used to mitigate against a cut in salary.  It was explained that this was a cost to providers of the Apprenticeship Levy that will apply to them, and that they will try to offset this cost through the contract with the Council, as they looked for higher levels of uplift.

 

The new, improved Better Care Fund grant of £831k would be introduced into the baseline budget for 17/18, and was another of the proposed growth items.  There was also a one-off grant of £922K for next year, to mitigate future demographic pressures.  In response to a query from Councillor Brown, it was confirmed that this related to the recently announced new homes bonus and that it would be funded by a grant that will be passported through to ASC. 

 

It was reiterated that previously some parts of the budget had been funded through one-off payments (Home Care packages and Direct Payments), viewed as investment to fund.  Also included in investment to fund was funding for transition services from child to adult provision (for learning disabilities), at an estimated cost of £360k.

 

Co-optee, Patrick McVeigh, observed that the Administration had been very generous in maintaining support for the Independent Living Fund and noted the support for transitioning children.  This had been a long standing concern that could be avoided if appropriate transition funding was in place from the age of 14+. Prakash Daryanani confirmed that there was no special dispensation available from Central Government to either offset or accommodate transition funding.  In response to Councillor Vaughan’s question, it was noted that this was a three-year funding programme, modelled to support the children with learning disabilities cohort who would transition to ASC, aged 18-25 years and assessed to have care needs, with costs estimated by the provider market.

 

In reference to the ASC savings classification (reconfiguration of services prevention, staffing, procurement and contract efficiencies), Patrick McVeigh referred to the new technology assistance and adaptations for those with long term care needs asked if investment to fund included skills and knowledge training for staff.  Additionally, he asked if this was ‘front loaded’ and included in the budget.  Bryan Naylor added that the concept of using new technology and adaptations had two facets, the first being a staff training issue, the second that those for whom the adaptations would be most useful would also require support to select, understand and utilise them in order to maximise the potential benefits and any possible savings.  Mike Boyle, Director of Commissioning, Adult Social Care, explained that under the Care Act guidance, the change in assessment from a deficit model now focussed on what the client could do, identified through an outcomes based assessment aimed at promoting independence and significantly improving what they were capable of doing.  This was considered to significantly reduce the Council’s need for intervention, with assisted technology and adaptions being a core part of this process. It was noted that this was also a component of the invest to save programme. Mike Boyle confirmed that he was confident that the potential savings anticipated were achievable with this approach.

 

Councillor Brown sought clarification regarding the distinction between “block” and “spot” purchasing of placements and how this impacted on the budget.  Mike Boyle explained that “block” payments were contractually agreed in advance, with an agreement that payment would be made for a set number of placements, with a condition as to the minimum number to be paid for, regardless of whether that number was reached.  By contrast, “spot” purchase placements were individual, usually located outside the Borough and could be more expensive, depending on the nature of the contract.  Councillor Lukey acknowledged that while ASC budget pressures were challenging, this not simply a matter of block or spot placements or money. Councillor Lukey welcomed the level of flexibility this offered, ensuring greater choice and support be available for both clients and relatives (who often lived outside the Borough), as needed.  Councillor Brown indicated his support for Councillor Lukey and endorsed the approach but went on to clarify that the CQC figures he had identified indicated a higher cost for spot placements, which appeared counter-intuitive.  Mike Boyle responded that the CQC ratings would have been dependent on the previous year’s inspection, then compared across the rest of London.

 

Councillor Natalia Perez referred to in-house service delivery savings to lower costs, examining community and other delivery models.  It was confirmed that in-house service savings would be identified through smarter budgeting arrangements and Prakash Daryanani cautioned that it was too soon to know whether the outcomes of the new delivery models would be as hoped. 

 

Councillor Vaughan referred to the review of Careline homes provision.  Mike Boyle confirmed that the review was undertaken earlier in the year and that in terms of the condition of the sheltered housing stock, much of it required updating to include access to broadband or other assisted technology facilities that would then be freely accessible.  A more detailed report on this would be provided towards the end of 17/18.

 

In response to an observation regarding greater pressure on the budget from Councillor Brown, Councillor Rory Vaughan, Chair, welcomed finance officers, led by Hitesh Jolapara, Strategic Finance Director, who was accompanied by Prakash Daryanani, Shared Service Interim Director of Finance for Adult Social Care & Public Health, Richard Simpson, Public Health Finance Manager.  Councillor Vaughan explained that a Corporate overview would provide context, as an introduction, followed by the Medium Term Financial Strategy (MTFS, Agenda Items 4 and 5) for Adult Social Care and Public Health, respectively.

 

Hitesh Jolapara provided a national context as a backdrop to the Hammersmith and Fulham budget setting process.  In what was noted to be the final autumn statement going forward, given in November 2016, there were some changes to the spring budget.  The budget had been closely scrutinised by the Office for Budget Responsibility (OBR) and the Institute for Fiscal Studies (IFS). The OBR headline key messages forecast a weaker national economic outlook, weaker sterling, lower investment, with uncertainty created by Brexit, making it difficult for public finances to balance budgets nationally before the end of the current parliamentary session. 

 

It was explained that the GDP (Gross Domestic Product) for March and November 2017 varied between 2.2 and 1.4, percentage change on 2016.  Councillor Andrew Brown commented that, while he accepted current figures, previous OBR forecasted figures and economic modelling had been discredited.  The Bank of England and the Organisation for Economic Co-operation and Development (OECD) more recent analyses had indicated a rise.  Hitesh Jalopara, explained the difficulties inherent in forecasting, and responded that Councillor Brown’s perception of the differences was accurate.  Since the autumn statement, the US elections had taken place, which, combined with other global factors, led some commentators to forecast a rise in GDP.

 

The difficulty of forecasting was notable in the change in growth of national debt, predicted for 2017/18, at March as £1677 billion, later increased in November by £163 million to £1840 billion.  Locally forecasted debt for Hammersmith & Fulham was £37.1 million. Using fuel duty as an example, this neatly illustrated the difficulty of predicting figures, covering the period 2008/09 to 2020/2021, as all policy assumptions had been proven wrong by the actual fuel duty rate recorded at the time.

 

Hitesh Jolapara presented data taken from the IFS, on real term % changes to public spending, 2010-11 to 2019-2020, drawing comparisons between the total public spend, the revenue spending of London boroughs and local government core funding for London.  The steep decline in figures for the latter illustrated the severity in real term cuts to core funding in local government. It was confirmed that this did not take into account the devolution of business rates to local authorities and that this was not planned until the end of the current Parliamentary session (2019/20).  It was noted that if and when this occurred, it may be accompanied by the transfer of other responsibilities such as transport. 

 

A baseline budget of £160 million took into account a number of factors ranging from the council tax freeze to rates of inflation.  The budget was not limited to efficiency savings or austerity measures but also include growth.  Additional factors also included assumptions that council tax will be frozen, the Adult Social Care (ASC) precept will not be applied by LBHF.  The fees and charges for ASC will also be frozen.

 

Councillor Brown asked if maintaining a low council tax policy and not applying social care precepts had impacted on ASC.  Hitesh Jolapara explained that since 2010, they had received less income across the system in general but reminded Members that £4.4 million of growth had been included.  He explained that the social care settlement had been good but that careful management would be required to alleviate pressure on the social care budget, additionally taking into consideration factors such as the impact of the living wage.

 

Referring to the projected £22.7 million budget risk, he anticipated a good, general balance within the total reserve of £86 million, with 20% of reserves earmarked.  He confirmed that reserves of around £90 million was standard, with small variations over previous years, viewing the amount as stable.

 

Prakash Daryanani, Shared Service Interim Director of Finance for Adult Social Care & Public Health provided a review of the figures and implications for ASC.  The MTFS and proposed net budget for 2017/18 was £60.2 million, compared to £57.9 million for 2016/17, representing a growth of £2.3 million resulting from underlying budget pressures and increased investment. 

 

Budget challenges included the transition of the funding model for the Home Care contract, funded in Year 1 through reserves and the ASC budget, it was explained that from Year 2 onwards, this would be funded corporately.  The ASC growth total amounted to £4.413 million, representing 61% of overall Council growth.  The savings (£1.885 million) represented 12.6% of total savings overall.  In terms of investment to fund, the National Living Wage, increased by 30p for over 25’s from April 2017, which equated to a 4% increase, representing £400k, to be factored into payments to homecare providers.

 

Bryan Naylor commented that the STP (Sustainability and Transformation Plan) called for increase in ASC and hospital care and observed that the budget proposal made no reference to anticipated increases for funding care in the community.  Councillor Vivienne Lukey, Cabinet Member for Adult Social Care and Health, responded that no assumptions had been made about receiving funding from the implementation of the STP and additionally, the views emerging from other local authorities and CCG colleagues was that there was no information forthcoming as to the amount or allocation of funding on the table. 

 

Continuing, Prakash Daryanani explained that while the number of customers in ASC increased in terms of acuity and need, the intention was to ensure greater independence for clients and reduce the overall requirement for long term care.  Utilising technology to assist with independent living needs was not a new approach but the it was explained that officers were exploring options with high value providers to identify improvements and savings.  Savings of £1.9 million had been proposed, lower than in previous years, which was approximately 30% of the Council’s budget, recognising some of the particular pressures that ASC are currently facing. 

 

Referring to the Apprenticeship Levy and a small issue in terms of finding appropriate apprenticeships to fund the reduction allocated against the ASC budget, Councillor Brown enquired if this was being used to mitigate against a cut in salary.  It was explained that this was a cost to providers of the Apprenticeship Levy that will apply to them, and that they will try to offset this cost through the contract with the Council, as they looked for higher levels of uplift.

 

The new, improved Better Care Fund grant of £831k would be introduced into the baseline budget for 17/18, and was another of the proposed growth items.  There was also a one-off grant of £922K for next year, to mitigate future demographic pressures.  In response to a query from Councillor Brown, it was confirmed that this related to the recently announced new homes bonus and that it would be funded by a grant that will be passported through to ASC. 

 

It was reiterated that previously some parts of the budget had been funded through one-off payments (Home Care packages and Direct Payments), viewed as investment to fund.  Also included in investment to fund was funding for transition services from child to adult provision (for learning disabilities), at an estimated cost of £360k.

 

Co-optee, Patrick McVeigh, observed that the Administration had been very generous in maintaining support for the Independent Living Fund and noted the support for transitioning children.  This had been a long standing concern that could be avoided if appropriate transition funding was in place from the age of 14+. Prakash Daryanani confirmed that there was no special dispensation available from Central Government to either offset or accommodate transition funding.  In response to Councillor Vaughan’s question, it was noted that this was a three-year funding programme, modelled to support the children with learning disabilities cohort who would transition to ASC, aged 18-25 years and assessed to have care needs, with costs estimated by the provider market.

 

In reference to the ASC savings classification (reconfiguration of services prevention, staffing, procurement and contract efficiencies), Patrick McVeigh referred to the new technology assistance and adaptations for those with long term care needs asked if investment to fund included skills and knowledge training for staff.  Additionally, he asked if this was ‘front loaded’ and included in the budget.  Bryan Naylor added that the concept of using new technology and adaptations had two facets, the first being a staff training issue, the second that those for whom the adaptations would be most useful would also require support to select, understand and utilise them in order to maximise the potential benefits and any possible savings.  Mike Boyle, Director of Commissioning, Adult Social Care, explained that under the Care Act guidance, the change in assessment from a deficit model now focussed on what the client could do, identified through an outcomes based assessment aimed at promoting independence and significantly improving what they were capable of doing.  This was considered to significantly reduce the Council’s need for intervention, with assisted technology and adaptions being a core part of this process. It was noted that this was also a component of the invest to save programme. Mike Boyle confirmed that he was confident that the potential savings anticipated were achievable with this approach.

 

Councillor Brown sought clarification regarding the distinction between “block” and “spot” purchasing of placements and how this impacted on the budget.  Mike Boyle explained that “block” payments were contractually agreed in advance, with an agreement that payment would be made for a set number of placements, with a condition as to the minimum number to be paid for, regardless of whether that number was reached.  By contrast, “spot” purchase placements were individual, usually located outside the Borough and could be more expensive, depending on the nature of the contract.  Councillor Lukey acknowledged that while ASC budget pressures were challenging, this not simply a matter of block or spot placements or money. Councillor Lukey welcomed the level of flexibility this offered, ensuring greater choice and support be available for both clients and relatives (who often lived outside the Borough), as needed.  Councillor Brown indicated his support for Councillor Lukey and endorsed the approach but went on to clarify that the CQC figures he had identified indicated a higher cost for spot placements, which appeared counter-intuitive.  Mike Boyle responded that the CQC ratings would have been dependent on the previous year’s inspection, then compared across the rest of London.

 

Councillor Natalia Perez referred to in-house service delivery savings to lower costs, examining community and other delivery models.  It was confirmed that in-house service savings would be identified through smarter budgeting arrangements and Prakash Daryanani cautioned that it was too soon to know whether the outcomes of the new delivery models would be as hoped. 

 

Councillor Vaughan referred to the review of Careline homes provision.  Mike Boyle confirmed that the review was undertaken earlier in the year and that in terms of the condition of the sheltered housing stock, much of it required updating to include access to broadband or other assisted technology facilities that would then be freely accessible.  A more detailed report on this would be provided towards the end of 17/18.

 

In response to an observation regarding greater pressure on the budget from Councillor Brown, Prakash Daryanani reiterated concerns regarding the homecare providers requesting wage 4% increases, whereas the budget had allowed for 3%.  He took the view that this would have to be negotiated with individual providers on a case by case basis. 

 

RESOLVED

 

1.      That the comments of the Policy and Accountability Committee on the Medium Term Financial Strategy for Adult Social Care, be noted; and

 

2.      That the report be noted.