"613                INITIAL REVENUE BUDGET PROPOSALS 2016/17 (DSS) -


The initial budget proposals for 2016/17 were submitted to the Committee for consideration together with the Amended Budget for 2015/16 for services which form part of the Committee's remit.

In commencing this item, the Chairman asked if the Director of Social Services could provide Members with some context behind the budget settlement.


The Director of Social Services began by advising Members that it was important to outline some context as the Service was showing a potential overspend. He stated that Social Services now had an established record for achieving a balanced budget, but this was becoming more difficult in terms of the changing demographics and cost pressures. He explained that this was a national picture which also included complex issues such as the need for greater integration with health. He went on to refer to the reliance on grant funding from Welsh Government which had been reduced and the need to find savings on an annual basis. There were also increasing expectations and he cited the example of changes to advocacy services for children, which would increase costs across Wales by an additional £800,000 per year. He also alluded to legislative and case law changes, such as changes to the Deprivation of Liberty Safeguards which had a very adverse impact and he also made mention of future pressures which may come about following the new Regulation and Inspection Act which would require a system of regulation for care sector staff.


He went to comment around the cost pressures highlighted in Appendix 3 to the report and the way that the Service was attempting to manage costs demands through schemes such as the Learning Disability Commissioning Strategy. He also mentioned how well the Service had managed the level of fees paid for residential and domiciliary care and how the Service had made a number of savings by reducing the number of managers, which had been undertaken across all divisions. The Service had looked at all areas of savings and the Council prided itself on its ability to maintain frontline services.


The Director advised Members that it was important to remember the growth of care packages and the cap on the charge for non-residential care services, which affected the Vale more than other local authorities. He went on to refer to the performance of the Service, which was 'holding up' and the positive comments made earlier in the meeting by the Care and Social Services Inspectorate for Wales. Members were also asked to note the pressures that staff were under and the increase of caseloads; the Service could therefore not allow standards to fall in statutory services below an acceptable level.


As a final point and in terms of the potential overspend, the Director stated that the Head of Adult Services did have a recovery plan in place, which it was hoped would impact on service pressures and also help to achieve savings.


In referring back to the report, this highlighted that the Council's budget was determined largely by the Revenue Support Grant (RSG) settlement set by the Welsh Government (WG). In previous years, the provisional RSG settlement was received from WG during October, with the final settlement being received during December. This year, however, the initial budget proposals had not yet been received.


A statement on the timing of the WG's budget for 2016/17 was released by the Minister for Finance and Government Business on 6th October, 2015. This stated that the late timing of the UK Government's Spending Review presented WG with significant challenges for the preparation and publication of the Draft Budget. It was highlighted that WG had not known their Budget for 2016/17 until 25th November, 2015. WG was facing unprecedented levels of uncertainty and consequently would not publish the Draft Budget for 2016/17 until 8th December, 2015 with the Final Budget being released on 1st March, 2016.


WG's timetable showed the Local Authorities would be advised of the Provisional Settlement on 9th December and of the Final Settlement by 9th  March, 2016, however, the Final Budget would be debated by WG on 9th  March, 2016.


In addition, the report highlighted that the Council was required under statute to fix the level of Council Tax for 2016/17 by 11th March, 2016 and in order to do so, would have to agree a balanced revenue budget by the same date.


Revised Budget 2015/16


Appendix 1 to the report set out the Amended Budget for 2015/16, together with the necessary adjustments to be made to the original budget.


The following table compares the amended budget with the projected outturn for 2015/16:













 (-) Adverse







Social Services


Children and Young People




Adult Services




Business Management and Innovation










The report advised that the projected outturn for the Social Services Directorate was an adverse variance of £300,000 when compared to the amended budget.


In terms of Children and Young People's Services, the report stated that this service was anticipated to outturn £450,000 under budget at year end. The key issue for this service continued to be managing the demand for the Joint Budget for Residential Placements for Looked After Children, however, currently it was forecast to outturn with a £250,000 underspend at year end. There were also potential underspends elsewhere in Children's Services of £65,000 on staffing budgets and £135,000 on alternative means of provision and accommodation costs required for the current cohort of children.


With regard to Adult Services, it was advised that this service was currently anticipated to outturn £750,000 over budget at year end. This was due to a projected overspend on Community Care Packages of £950,000 as a result of increased demand for services, particularly for frail older clients. The annual deferred income budget 2015/16 had been set at £739,000 and as at 30th September, 2015 income received to date was £74,000 under-recovered. It was currently being projected that this budget would outturn at £50,000 over budget by year end and this adverse variance was included as part of the projected overspend for care packages. It was anticipated that there would be underspends of £200,000 elsewhere in the budget which could offset part of this overspend with £165,000 from staffing, £20,000 from Transport and £15,000 from premises.


Savings 2015/16


Attached at Appendix 2 to the report was a statement showing the progress made to date against the 2015/16 savings targets. It was currently considered that all savings would be achieved. Care package savings had been allocated to Learning Disabilities and Mental Health Services. Savings in these areas had been made, however, demand for services for frail older clients had created additional pressures and were resulting in an overspend against this budget.


Budget Strategy


The Budget Strategy for 2016/17 outlined that in order to establish a baseline, services should prepare initial revenue budgets based on the cost of providing the current level of service and approved policy decisions and including the existing savings targets.


Medium Term Financial Plan


The Medium Term Financial Plan 2015/16 to 2018/19 was to be presented to Cabinet on 14th December, 2015, to coincide with the presentation of the Draft Corporate Plan.


The 2015/16 Final Revenue Budget Proposals would set savings targets to be achieved between 2016/17 and 2017/18 of £17.822m for the Authority as a whole, excluding schools. This was based on the anticipated reduction in funding from WG of 4% in 2016/17 and a further 2% in 2017/18.


The latest Plan factored in a managed level of cost pressures, a notional increase in Council Tax of 2% each year, price inflation of 1% and annual pay awards of 1% each year from 2016/17.


Provisional Settlement 2016/17


The provisional settlement from WG would not be published until 9th December, 2015. However, the Council was unable to wait until this date to commence its budget preparations for 2016/17 and therefore the report had been based on the projections previously used as part of the Medium Term Financial Plan for 2014/15 to 2017/18.


Based on the projection of a 4% reduction in funding from WG in real terms, the Council was projected to receive £111.537m from WG as RSG and a share on the Non-Domestic Rates of £34.845m. Together these figures constituted the Council's projected Aggregate External Finance of £146.382m.


2016/17 Initial Budget Proposals


The report stated that as part of the initial proposals, it had been necessary to revisit the cost pressures facing services in order to build up a complete and up to date picture of the financial position for which an updated list for this Committee was shown at Appendix 3. These included a new cost pressure for the introduction of the National Living Wage from 1st April, 2016, which would provide for a minimum hourly rate of £7.20 for workers aged 25 and above. It was noted that this change had a significant effect on services commissioned by the Directorate from external organisations.


Details of the proposed areas for savings for 2016/17 through to 2017/18 for this Committee was attached at Appendix 4. A summary of the overall base budget for 2016/17 was attached at Appendix 5. This had been arrived at by adjusting the 2015/16 budget for items such as inflation and unavoidable growth, but did not include identified cost pressures or savings. These were shown as a note to the table and were further detailed in Appendices 3 and 4.


If all identified cost pressures were funded, this would increase the shortfall to £18.601m. If all proposed savings were achieved, the shortfall would be reduced to £6.431m. The shortfall was already based on the requirement to achieve a high level of savings in 2016/17 and also included the increase in Employers national Insurance which would take place from April 2016.


Further work would be undertaken by the Budget Working Group in order to achieve a balanced budget for the final budget proposals for 2016/17. This would include a review of the use of reserves, a possible increase in Council Tax, a review of all cost pressures, possible changes to the approved saving targets, a review of the inflation assumptions and the current financial strategies. The Budget Working Group would also consider the results of the budget engagement process in determining priorities for future savings and service delivery and the impact of the revised Corporate Plan.


The Chairman requested if Officers could provide explanations as to how each of the cost pressures, shown in Appendix 3, were determined.


S1 - Managing demand at Initial Point of Access


In referring to this cost pressure, the Head of Children and Young People Services advised Members that this was linked to the introduction of the Social Services and Wellbeing Act and to challenges around increased demand. This was also linked to the work around early intervention and preventative work and the need for additional resources for the new Multi-Agency Safeguarding Hub. The additional £120,000 would be for staff at the front end of the service.


The Committee agreed that, as a cost pressure, this should be funded.


S2 - Increasing Numbers of Looked After Children and Children Supported to Live with their Families as an Alternative to Care and Accommodation Costs for 16 year Olds and Over


For this cost pressure, the Head of Children and Young People Services explained that the £555,000 was linked to the Children's Commissioning Strategy and the need to reduce the number of Looked After Children by offering alternatives to care such as greater family support services and more respite. It was also linked to challenges in managing more complex cases and supporting children through therapeutic fostering arrangements. There were also elements directly attributable to the new Act.


The Chairman went on to query how much of this cost pressure could be attributed to the new Act. In reply, the Head of Children and Young People Services stated that Welsh Government's 'When I am Ready' initiative was directly linked to the Act. She also advised Committee of the position of Welsh Government that the Looked After Children population in Wales was too large and needed to be reduced.


The Head of Children and Young People Services was able to breakdown the total cost pressure and advised Members that £180,000 could be attributed to the 'When I'm Ready' initiative.


In reply to a follow up question regarding whether the cost pressures were funded in an appropriate way, the Director of Social Services commented that this related back to the Commissioning Strategy. He drew Members attention to the trends experienced over the past 5 years, when the number of Looked After Children had increased month by month, with considerable cost implications. The Service had been able to reverse this trend despite an increase in demand. He stated that the aim was to respond better to children on the 'edge of care' by helping families to stay together. He made reference to issues around the demand for the Families First service that had been identified at a previous Committee meeting. As a final point he mentioned that the Service would have to find other ways of working as otherwise Looked After Children numbers could increase.


The Committee was in agreement that this cost pressure should be fully funded.


S3 - Legal and Advocacy Costs


In considering this cost pressure, the Committee heard that the Council had a central reserve for legal costs which was not for the same purpose as that identified for this cost pressure. Members were advised that legal costs for the Service related to complex Court proceedings for Looked After Children, the numbers of which may have increased.


The Committee was also advised that two thirds of this cost pressure was attributed to legal costs with the remainder associated with advocacy services.


The Committee was in agreement that this cost pressure should be fully funded.


S4 - Children with Complex Medical Conditions Living Longer


The Committee was advised that this was connected to domiciliary care costs which were mainly as a result of the increase in the national minimum wage. The Service had also projected that the number of children with complex needs living longer would increase.


The Committee was in agreement that this cost pressure should be fully funded.


S5 - Impact of Continuing Demographic Growth in Numbers of Very Old people in the Population


Members noted that this cost pressure was based on a report completed back in August, which highlighted a rise in the number of people aged 85 or over. The Head of Adult Services explained that between 2011 and 2015, the population of people aged 85 and over increased by 18% and this was predicted to rise by 91% between 2013 and 2030.


The Director of Social Services also advised that up until 2009, the Council average budget rise per year was 5.5% and that such increases had now stopped.


The Committee agreed that this cost pressure needed to be funded.


S6 - Changes in legislation and policy including Social Services Wellbeing (Wales) Act 2014 and Sleep Ins


In terms of 'sleep ins', the Head of Adult Services advised the Committee that this had come about following a change in employment law. 'Sleep ins' mainly related to supported accommodation settings, where staff would be asleep on the premises and would be expected to wake should a care need arise. It had now been deemed unlawful if this meant that the overall salary for an individual fell short of the national minimum wage. Members noted that of the total cost pressure of £275,000, £135,000 of this related to 'sleep ins' and £145,000 could be attributed to the Social Services and Wellbeing Act.


The Chairman questioned whether this cost pressure was sufficient in view of the potential cost of implementing the Act. In reply, the Committee was advised that there were costs associated with the Information, Advice and Assistance part of the Act but changes to Care and Support had been difficult to cost as only some of the required detail and information had been received.


A Committee Member enquired as to whether these were on-going cost pressures. In answer to this, the Head of Adult Services stated that it could be argued that some of these were one off costs, but some such as the setting up of a Social Enterprise could not be described as a one off. He also stated that services around the Information, Advice and Assistance part of the Act could be relatively small, although this would not be fully known until services were up and running.


At this point the Cabinet Member, with permission to speak, stated that the ageing population did have an effect on the budget but as an Authority, the Council should be celebrating that people were living longer and more independently. With regard to cost pressures, he stated that there were the 'knowns' and the 'unknowns' and in respect of the Act, Welsh Government had indicated that this would be cost neutral. However, he stated that there was evidence to show that implementation would cost the Council money. As a final point, he alluded to the impact that legislative and legal changes could have on the Council's budget and he raised the issues around Deprivation of Liberty Safeguards as an example.


Members agreed that this cost pressure should be fully funded.


S7 - Grant Cessation / Change in Arrangements - Intermediate Care Fund (ICF), Regional Collaborative Fund (RCF), Supporting People


With consideration of this cost pressure, the Chairman queried the position of the local health board and the funding of joint projects and services. In response, the Head of Adult Services explained that health had agreed funding for a number of projects and that without this money the cost pressure would be higher. He also stated that without health funding, closer integration with health would still continue.


A Committee Member commented on the Council's grant exit strategies and he queried that as ICF and RCF were set up by Welsh Government as 'invest to save 'projects, were they producing any savings. The Head of Adult Services stated that savings had been made. The Reablement Service had improved the capacity of the Service to return people to full independence and had been very positive. The reviewing of high cost learning disability cases was also positive, assisting people to live more independently.


With regard to the changes to the Supporting People Grant, Members noted that Welsh Government had reduced the funding to the Council.


The Committee was in agreement that this cost pressure should be fully funded.


S8 - Increasing hospital discharge activity


The Committee heard that this was linked to the reduction in the number of people who experience a Delayed Transfer of Care, for which two extra social workers had been allocated as part of the Hospital Discharge Team. Members also noted that people who stayed in hospital too long could eventually have a higher degree of care needs.


The Committee agreed that this cost pressure needed to be funded.


S9 - Transitions From Children's to Adult Services


For this cost pressure, Members were advised that the Service was tracking a number of individuals that would require extensive care and support.


The Committee was in agreement that this cost pressure should be fully funded.


S10 - Change in UK policy - National Enhanced Minimum Wage


In considering this cost pressure, the Chairman queried whether carer travel time had been included as part of the overall calculation. In response, the Committee was advised that the overall figure of £1.35 million did not include travel time. Work around travel time cost implications was still ongoing for which regular workshops with care providers were taking place.


The Director of Social Services went on to comment that anticipating costs in this area was challenging which included consideration of pension liabilities and the outcome of a judicial review. He stated that this was developing on a week by week basis and that the amount highlighted as a pressure was a minimum. He advised that more work around this was needed.


At this point, Mr. Brian West, a representative from the independent care sector who had requested to address the Committee prior to the meeting, was invited to advise Members about some of his thoughts on this issue. Mr. West stated that following a quick look at costs for the independent sector, it had been projected that for the domiciliary care sector, an extra £861,000 had been identified along with an extra £700,000 for the residential sector. This made a total of £1.561 million. He also raised other potential costs following changes to holiday pay and zero hours contracts.


Following Mr. West's comments, the Director of Social Services stated that providers should be involved when assessing the impact and the Service had recognised the pressures on the level of fees paid to care providers in the Vale. He advised that more work in regard to reconciling the figures still needed to be undertaken.


Overall, the Committee was in agreement that this cost pressure should be funded. However it was important as a matter of some priority that the Council effected further work on the impact of the National Living Wage and the additional costs of travel time that care providers would now have to fund. It was confirmed that officers were engaging with ongoing work across the South East Wales Improvement Collaborative Region.


Following further discussion on the cost pressures, the Committee also considered it important that Cabinet make written representations to Welsh Government on three separate issues that involved new cost pressures which were outside the control of the Council.


Firstly, it was abundantly clear that the Social Services and Well Being Act was not cost neutral and that its implementation was going to cost the Council a great deal of money. As this was a result of Welsh Government legislation then it would seem only equitable that these additional costs should be borne by Welsh Government and not by the Council.


Secondly, the introduction of the National Living Wage would result in substantial additional costs to providers of residential and domiciliary care. These costs would need to be passed onto the Council. The situation was exacerbated by the fact that providers of domiciliary care now had to pay their staff travel time and the additional costs involved to providers would also need to be passed onto the Council. It was invidious for the Council to have to fund these additional costs. This was particularly so of the National Living Wage which was the direct result of UK Government legislation.


Thirdly, the cessation of grant funding for the RCF and the transfer of the ICF to the health board had meant that the Council now had to fund much of the continuing integration agenda. Not to do so would seriously compromise all the excellent work that had been affected to date. The reduction in the Supporting People Programme Grant would also mean that the Council would need to step in and fund part of this programme. It was particularly inequitable that the Council should have to now fund integration which should be led and funded by Welsh Government.


After considering the report the Committee




(1)                …………….


(2)                …………….


(3)                …………….


(4)                T H A T the Cabinet be requested to make three separate written representations to Welsh Government on the following:

i.                The additional costs incurred by the Council as a result of the UK Government's introduction of the National Living Wage and the requirement for domiciliary care providers to pay travel time.

ii.                The fact that the Social Services and Well Being Act was not cost neutral and that the Council has incurred substantial additional costs as a result of the introduction of this Welsh Government legislation.

iii.                The fact that the Council now has to fund much of the integration agenda in view of the cessation of RCF and the transfer of the ICF to health boards, and that the Council is also having to fund elements of the Supporting People Programme.


Reasons for recommendations


(1)                …………….


(2)                …………….


(3)                …………….


(4)                To advise Welsh Government of the substantial additional costs that the Council has incurred, that are completely outside the Council's control, which as such should be funded by Welsh Government."