HERTFORDSHIRE COUNTY COUNCIL

POLICY AND RESOURCES CABINET PANEL

WEDNESDAY 15 SEPTEMBER 2010 AT 2.00PM

HERTFORDSHIRECOUNTY COUNCIL PERFORMANCE AND FINANCE MONITOR Q1 2010/11

Report of the Director of Resources and Performance

Authors:Claire CookTel: 01992 555737

Chris BadgerTel: 01992 588314

Executive Members:David Lloyd (Resources and Economic Wellbeing)

Richard Roberts (Performance and Partnerships)

  1. Purpose of report

1.1To presentthe Quarter 1 (April to June 2010) performance and finance report to the Policy and Resources Cabinet Panel.

1.2This report has a number of refinements and improvements, including the integration of the quarterly budget report with the performance monitor, and includes a focused commercial/procurement report. The report will be considered by Cabinet on 20 September 2010.

  1. Update on Actions from Policy and Resources Cabinet Panel 16 June 2010, Q4 2009/10

Priority 2: Maximise Independent Living
Action: Adults with learning disabilities (LD) in settled accommodation (NI145) has decreased and adults with learning disabilities in employment (NI146) has increased over the quarter. Members requested further information for these changes
Update: NI 145 – LD accommodation; the final value submitted for this indicator was 52.0%, an improvement from the previously reported estimate for Q4 of 48.7%. The figures during the year are always likely to fluctuate due to the calculations involved – using part-year information to estimate an annual figure leads to some inaccuracy. Small variations between quarters should therefore be treated with caution.
NI 146 – LD employment; the final value submitted for this was 4.5%, compared with the 4.1% estimated at Q4. The increase is simply the result of work done to identify clients in employment and to fully include data from Work Solutions, not present in previous quarters. Steve Eaglesham (ACS information system reporting lead).
Action: Vacancies for adults social workers rose slightly, and further information on the reasons for this was requested
Update: External market issues (supply) have led to a national shortage of Qualified Social Workers (QSWs) which has impacted on all local authorities. This has led to high numbers of vacancies being carried by many authorities. In order to address these issues, the Council has developed (and continues to put in place) a number of initiatives to help manage social work vacancies. Minor fluctuations are to be expected in the short term. Richard Hall (HR Business Partner)
Priority 4: Secure a Good Education For All
Action: Members asked why the risk relating to school planning area reviews was amber.
Update:Given the sensitivity surrounding area reviews and the difficulty in accurately forecasting the medium to long term demand for school places, officers felt that an amber rating was appropriate. (Justin Donovan – Deputy Director CSF)
Priority 7: Be A Leading Council
Action: Waste targets have been exceeded: it was recommended that the Herts Waste Management Group be asked to look at incentives to help local businesses reduce waste
Update: The Waste Management Unit (WMU) deals with municipal waste, which is essentially household waste plus a relatively small amount of trade waste which is collected by the district councils. Therefore the WMU has no direct dealings with 'local businesses' , and there is currently no budget to go beyond the scope of the WMU. Ray Greenall (Head of Waste Management)
  1. Recommendations

The Policy and Resources Cabinet Panel is invited to recommend that Cabinet approves:

3.1.the allocation to CSF of £534,000 of Additional Area Based Grant (ABG) announced in April for the Learning and Skills Council staff transfer and the January Guarantee (see paragraphs 11.1.2 to11.1.4 under Priority 4 for details).

3.2a variation to the capital programme for a proposed scheme to deal with the relocation of the Wheelchair Service at Mundells funded by a £600,000 Health Capital Grant (see paragraph 4.4.4 for details).

3.3The Panel is also invited to note progress and comment on any areas of concern and/or interest.

4Revenue and Capital Budget Monitor 2010/11

4.2Revenue Budget

4.2.1The monitoring position at the end of June 2010 shows a revenue underspend of £0.923 million (0.12%) against the latest approved budget of £748.025 million.

4.2.2An analysis of the net variances which make up the forecast revenue outturn is listed below in Table 1. Table 2 lists projected variances over £250,000, together with the latest forecast for the council’s most high risk/volatile budgets. Further details are included within the relevant priority sections of this report.

4.2.3A summary analysis across services is shown in Appendix A.

Table 1: Budget Variances 2009/10

Overspends / Planned
Under-
Spends / Unplanned Under-spends / Net Variances
£`000 / £`000 / £`000 / £`000
ChildrenSchools and Families / 3,295 / (1,375) / 0 / 1,920
Adult Care Services / 2,320 / (1,500) / 0 / 820
Environment and Commercial Services / 0 / (1,669) / 0 / (1,649)
Fire & Rescue / 0 / (150) / 0 / (150)
Strategy and Partnership Directorate / 12 / (100) / (20) / (128)
Resources and Performance / 0 / (940) / 0 / (940)
Sub Total / 5,627 / (5,734) / (20) / (127)
Precepts / 0 / 0 / (21) / (21)
Capital Financing & Interest on Balances / 0 / 0 / (775) / (775)
Contingency/Special Provision / 0 / 0 / 0 / 0
Review of Balance Sheet / 0 / 0 / 0 / 0
Central Items / 0 / 0 / 0 / 0
Totals at 30/06/2010 / 5,627 / (5,734) / (816) / (923)

Table 2: Analysis of movements in variances greater than £250,000 and variances against high risk budgets by priority

High Risk budget? / Movement during Q1 / Over / under-spend
Priority / Department / Description / Y/N / £`000 / £`000
1. Support Economic Wellbeing / N/A / N/A / N/A / N/A / N/A
2. Maximise Independent Living / ACS
ACS
ACS
ACS
ACS
ACS
ACS / OPPD Purchasing (Gross)
LD Purchasing (Gross)
Income from OPPD Client Charges
Supporting People Service
Contribution to Herts Equipment Service (HES) pooled budget
Mental Health Services
OPPD and LD assessment Care Management / Y
Y
Y
Y
Y
N
N / 2120
0
200
0
0
(300)
(600) / 2120
0
200
0
0
(300)
(600)
3. Ensure a Positive Childhood / CSF
CSF
CSF
CSF
CSF
CSF
CSF
CSF / Independent Placements – Social Care
Safeguarding Services Pay
Contact Service
Childcare Litigation
Fostering Services
Independent Fostering Providers
Independent Placements – Disabilities
Commissioning Support Programme / Y
Y
Y
Y
Y
Y
Y
Y / 885
(335)
320
400
0
2590
765
0 / 885
(335)
320
400
0
2590
765
0
4. Secure a Good Education for all / CSF
CSF
CSF / SEN Home to School Transport
Maternity
Independent Placements - Education / Y
Y
Y / 0
0
(1,686) / 0
0
(1,686)
5. Reduce Carbon Emissions / N/A / N/A / N/A / N/A / N/A
6. Promote Safe Neighbourhoods / N/A / N/A / N/A / N/A / N/A
7. Be a Leading Council / ACS
CSF
ENV
ENV
ENV
ENV
R&P
R&P
F&R
CF&IoB / Support Services
Further Management Action
Waste Management
Routine Maintenance
Winter Maintenance
Strategic Planning and Information
Information Technology
Civic Buildings
Firefighters Pay
Capital Financing and Interest on Balances / N
Y
Y
Y
Y
N
N
N
Y
Y / (350)
(1110)
(103)
(509)
(3)
(291)
(500)
(400)
(200)
(775) / (350)
(1110)
(103)
(509)
(3)
(291)
(500)
(400)
(200)
(775)

4.3Efficiencies

4.3.1The latest (June) forecast of cashable efficiency savings for 2010/11 is set out in Table 3 below. These figures comprise:

a)Value for Money efficiency savings included in the 2010/11 budget;

b)Savings included which meet the Value for Money National Indicator 179 criteria but do not impact the budget (e.g. reduced unit costs);

c)Other savings included in the 2010/11 budget which do not meet the Value for Money criteria.

Table 3: Efficiency Savings 2010/11

Planned
£’000 / Latest Forecast
£’000 / Difference
£’000
Adult Care Services / 15,169* / 14,636* / (533)
Crime and Drug Strategy Unit / 170 / 170 / 0
Fire and Rescue / 103 / 103 / 0
Children, Schools and Families / 7,054 / 7,007 / (47)
Environment / 3,494 / 3,494 / 0
Commercial Services / 861 / 904 / 43
Resources and Performance / 4,826 / 4,833 / 7
Strategy and Partnerships / 541 / 541 / 0
Countywide Savings / 0 / 1,349 / 1,349
TOTAL / 32,218 / 33,037 / 819

*Figuresinclude £760,000 of deferred savings from 2009/10

The main movements since the budget was set in February are:

Adult Care Services

  • Increased enablement, early rehabilitation and intervention through enhanced intermediate care arrangements – Delays to the Enablement project starting have occurred due to contractual issues. This will severely restrict the potential savings in 2010/11. A reduction in savings of £580,000 is predicted in 2010/11.

Countywide Savings

  • Manpower KPI savings - an overall increase of £1.186 million is being achieved on the Manpower contract. These savings are attributable to not increasing temporary staff rates to take account of the Working Time Directive (£200,000); a lower rate of pay for temps than the permanent post being covered (£300,000); discount on rates for posts filled by secondments (£92,000); reduction on temporary to permanent placements (£98,000); posts filled from the Bulletin and Website reducing the need for advertising (£300,000); and posts filled from campaigns reducing individual costs (£196,000).

4.4Capital Budget

4.4.1Expenditure for the Capital Budget is estimated to be £2.245 million below the latest budget, as shown in the table overleaf. This variance includes projected slippage of £0.427 million.

4.4.2Major movements in variance (exceeding £250,000) are included within the relevant priority sections of this report.

4.4.3The capital monitor position reflects the revised capital programme agreed at Cabinet on 19 July, and a reconciliation of the latest budget to the revised capital programme is provided in the June monthly monitor.

4.4.4Subsequent to the Cabinet meeting there is a proposed Adult Care Services capital project to deal with the relocation of the Wheelchair Service to the Mundells site. The project is for the adaptation of the existing Mundells space and is funded from a £600,000 Health Capital grant.

4.4.5A summary analysis of the projected capital underspend by service is shown in Table 4 below.

Table 4: Capital Budget Variances 2010/11

LAB / Forecast Outturn / Forecast Variance
Service / £'000 / £'000 / £'000
Adult Care Services / 16,328 / 16,002 / (326)
Libraries, Culture & Learning / 2,738 / 2,738 / 0
Education & Children’s Services / 119,121 / 119,106 / (15)
Environment & Transport / 61,680 / 61,680 / 0
Fire & Rescue Service / 1,675 / 1,675 / 0
Resources & Performance / 13,313 / 11,424 / (1,889)
Trading Standards & Registration / 27 / 12 / (15)
Total / 214,882 / 212,637 / (2,245)

5.Debt Management

  • There has been a noticeable improvement in the speed of payments for debt under 30 days, from 38% at the end of March 2010 to 51% at the end of June. However, the level of invoices unpaid after 90 days has risen from 8.3% at the end of March to 13.7% at the end of June. 63% of this debt category is subject to legal action or has an installement plan. Work is currently being undertaken to address the speed of resolution of disputed items, and so improve the overall speed of debt settlement.
  • The timeliness of the payment of invoices for commercial goods and services paid by the Council within 30 days of receipt has dropped to 94.2%, compared to 95.8% in June 2009. Although this is above the national benchmark of 92.3% the importance of timely payments is being reinforced across the organisation.
  • (Further detail on debt management is provided at Appendix B)

6Commercial Report

Markets Summary
Highlights of significant market / contract issues from Procurement Board Category Reports
The British Chamber of Commerce forecast growth in three months to end of June to be between 0.6% and 0.7%. A recent (July 2010) PwC report states that the downturn on UK business is showing more signs of easing (e.g. insolvencies down 11%). This is reflected in fewer financial alerts being received on HCC’s top 500 suppliers.
Supply side commentary
  • ACS reported some supply side opportunities.
  • CSF report as an issue the new requirement to secure a range of accommodation for Children Looked After following new legislation.
  • Property’s contract for roofing has been terminated for non-performance (April 2010). Mouchel management reorganisation continues.
  • Highways report schemes disrupted by knock on effects of the bad winter but report normal operating conditions from early June.
  • Move in energy markets to Liquefied Natural Gas has eased UK dependency on pipelines and stabilized gas prices.
  • Tribal Resourcing, a significant subcontractor to Manpower, is up for sale.
  • CSF and ICT are assessing the impact that Academy and free schools funding will have on contracts. If legislation permits we may well be able to transact freely with Academies as part of the "Hertfordshire Family" of providers.
  • Collaboration on a frozen food contract with Oxfordshire, Kent and Luton has led to significant savings.
Demand side commentary
  • ACS reported increasing demand in a number of areas.
  • CSF report a 100% increase in the number of 16 year olds being admitted to care due to the Southwark judgment in 2009.
  • Highways experienced an increased demand due to poor winter.
  • There was an increase in meal numbers for Hertfordshire Catering this quarter.
  • The CSF Home to School review may result in lower demand in the transport sector.
  • In Waste demand is weak due to the economic downturn and this shows up as less waste being produced
  • Energy is similarly affected which means less carbon produced and a less volatile energy market.
  • Procurement is waiting for a business case regarding Automatic Meter Reading equipment for schools to appoint a supplier. The delay in doing this has meant that we risk financial penalties should we be in the lower half of the Carbon Reduction Commitment (CRC) energy efficiency league table.
  • HR reports that Manpower is seeing a significant decline in public sector recruitment, partially offset by a more buoyant private sector. The savings from the Manpower contract are volume related and will diminish with lower spends. The move to internal only advertising will require a revised process.
  • Property reports reduced throughput in Repairs & Maintenance contracts and less going through the SMARTE framework. The SMARTE framework is being re-procured by Essex at the moment.
  • CSF and Property in discussions on how to deliver the programme for schools expansion.
  • The impact of Council for the Future may mean that we need to build in flexibility to our contracts to enable us to down size volumes / scope in some areas.
Funding/ Grants / External impacts
  • The Chancellor announced his "tough but fair" emergency Budget in June 2010 which set out his five-year plan to reduce the Budget deficit, rebalance the British economy, and design a new model for economic growth.
  • Further immediate impacts have been the deferral of some other capital projects e.g. PFI on street lighting pending ministerial review. We have also had grants clawed back in a number of our major sectors including Highways, Transportation, ACS and CSF. This has meant putting several procurement projects “on hold”. Some grants in CSF have had ring-fencing removed.
  • Whilst the full impact of future government cuts will not be known until later in this year, cuts to date have lead to in year budget problems as well as future aggravation of the HCC’s longer term budget issues. Procurement Board on 2nd July agreed a number of measures to help this including a moratorium on inflation rises in current contracts for one year.
  • Catering and ICT report upwards pressure on prices.
  • ACS plan to introduce new Home based enablement services throughout 2010 in line with strong government initiatives in this area.
Performance Reporting
  • The new contract performance reporting system went live for the first quarter. It reported on 80 contractors with whom we spend over £1m per annum (the majority on a monthly basis i.e. 3 reports). The RAG status for the each report was as follows:
Red / 0
Amber / 23
Green / 165
  • Highways report an increased response time for repair of highways defects in April and May.
  • Category leads assure us that actions are in hand for contract managers to deal with all the amber reports. Thus there are no contracts requiring SMB review this quarter.

Escalated Issues from Procurement Board
Procurement Board (2nd July)
1)Agreed that Contract managers be asked to negotiate strongly on contracts to ensure zero % inflation is applied at the next renegotiation point.
2)Asked that a chief officer sign off the business case for the use of any consultants present and future.
3)Agreed that there would be a single repository of contracts using Electronic Document and Record Management System (EDRMS).

7Overview of Risks

There have been a number of changes on the corporate risk register this quarter:

  • 8 new corporate level risks have been identified for the Council for the Future transformation programme (under priority 7);
  • 1 new corporate risk has been identified for the Climate Change risk register;
  • Services have reviewed their risks and made changes accordingly.

Seven red risks are currently rated 40 or above in terms of their impact and probability (compared to ten in Q4 2009/10) as follows:

  • HFRS0007 – Unplanned terrorist or flooding incidents (priority 1)
  • CSF0061 – Safeguarding pressures affecting inspections (priority 3)
  • CSHF0002 – Economic conditions leading to poor performance of LG pension fund (priority 7)
  • HFRS0004 – Fire service national training requirements (priority 7)
  • HP0014 – Health & Safety risks identified but not actioned (priority 7)
  • ICT0008 – Loss / disclosure of personal data (priority 7)
  • HFRS0011 – Service delivery is aligned to needs & priorities (priority 7)

8PRIORITY 1: SUPPORT ECONOMIC WELLBEING

8.1Financial position

8.1.1There are no high risk budgets associated with this priority and no issues to report this quarter in respect of either the revenue or capital budgets.

8.2Performance Indicators, measures and Hertfordshire Economic Information

  • The latest figures for the overall working age employment rate (NI 151) are for the period October 2008 to September 2009. At 77.8%, therate remained the same as that reported for the previous period, and is still above the target of 75.6%. Hertfordshire’s position relative to the South East has improved slightly. The Hertfordshire Works partnership was putting £800,000 into funding 365 new apprenticeships for 16-19 year olds, however, due to Government cutbacks the numbers supported are being reduced.
  • The latest data for working age people on out of work benefits (based on NI 152) shows a slight reduction to 8.70% at November 2009 from the 8.90% for August 2009. (Adjusted from the data previously reported) This compares to 7.6% in November 2008 in Hertfordshire overall. The figure for Broxbourne has remained static, while there has been a 0.1% fall in Stevenage. Although the trend is starting to look positive, the financial pressures on the public sector will put a strain on support available.

Emerging Economic Strategy. Status - Green

  • The Herts Works Board endorsed a revised Economic Strategy and noted progress on the draft associated action plans in June 2010.

Economic Participation Programme. Status - Green

  • Achieved 97% spend / investment in 2009/10
  • Ready for Enterprise contract awarded

Apprenticeship Programme. Status - Green

  • Although the project is on course funding reductions will result in limited outcomes.
  • The 77 places already filled will continue, but no further recruitment can take place
  • 147 apprenticeships confirmed, further recruitment is currently suspended
  • Working with Chamber of Commerce to see how progress can be made without an employer subsidy

Jobcentre vacancies

  • In May 2010 there were 4,372 Jobcentre Plus live unfilled vacancies in Hertfordshire compared to 3,092 in February. The May 2010 figure is 46% higher than in May 2009, although well below pre-recession norms. There are currently 4.28 claimants to every Jobcentre Plus vacancy, a better ratio than at any time in 2009.

Claimant count