HERTFORDSHIRE COUNTY COUNCIL RESOURCES AND …...is £798.355m (principally due to a net £6.223m contribution to reserves/contributions to capital - see appendix A. This is line with

Page 1 of 85

HERTFORDSHIRE COUNTY COUNCIL

RESOURCES AND PERFORMANCE CABINET PANELFRIDAY, 15 FEBRUARY 2018 AT 10:00AM

FINANCE BUDGET MONITOR - QUARTER 3

Report of the Interim Director of Resources

Author: Ben Jay, Interim Assistant Director – Finance(Tel: 01992 555723)

Executive Member: Ralph Sangster, Resources & Performance

1. Purpose of report

1.1 This is the Quarter 3 (October to December 2018) Budget Monitor report which summarises the 2018/19 position against revenue and capital budgets and highlights key areas of risk to prompt the discussion for actions to be taken.

2. Summary

2.1 The report summarises the 2018/19 position against revenue and capital budgets and forecasts the year end position.

3. Recommendation

3.1 That the Resources and Performance Cabinet Panel recommend to Cabinet that it notes the updates in the Q3 Budget Monitor.

4. Financial Implications

4.1 Financial Implications are considered within the budget monitor.

5. Equalities Impact Assessment (EqIA)

5.1 When considering proposals placed before Members it is important that they are fully aware of, and have themselves rigorously considered the equalities implications of the decision that they are taking.

5.2 Rigorous consideration will ensure that proper appreciation of any potential impact of that decision on the County Council’s statutory obligations under the Public Sector Equality Duty. As a minimum this requires decision makers to read and carefully consider the content of any Equalities Impact Assessment (EqIA) produced by officers.

5.3 The Equality Act 2010 requires the Council when exercising its functions to have due regard to the need to (a) eliminate discrimination, harassment, victimisation and other conduct prohibited under the Act; (b) advance equality

Agenda Item No.

4

Page 2 of 85

of opportunity between persons who share a relevant protected characteristic and persons who do not share it and (c) foster good relations between persons who share a relevant protected characteristic and persons who do not share it. The protected characteristics under the Equality Act 2010 are age; disability; gender reassignment; marriage and civil partnership; pregnancy and maternity; race; religion and belief, sex and sexual orientation.

5.4 No EqIA was undertaken for this report. This is not applicable for this report as the impact will apply equally across all areas of activity and will not impact directly on any part of the local community. Impacts will be determined through Cabinet policy choices and the impact will be assessed at that point.

Background Information:None

Page 3 of 85

HERTFORDSHIRE COUNTY COUNCILBUDGET MONITOR REPORTQuarter 3 – 2018/19

Page 4 of 85

Contents

Section 1 – Executive Summary 5

Section 2 – Service Variances/Movements over £250k 15

Section 3 – Capital Monitor 39

Section 4 – Children’s Services (Schools) Variances 48

Section 5 – Other Financial Information 56

Appendices 59

Appendix A – Details of Approved Virements & Technical Adjustments 59

Appendix B – Invest to Transform 63

Appendix C– Prudential Indicators 72

Page 5 of 85

Section 1 – Executive Summary

1.1 Revenue Monitor

The overall position shows significant service overspending of £7.086m which is driven by a number of ongoing pressures which are currently offset by one off income (£5.625m). The projected revenue outturn as at 31st December 2018 is therefore a projected revenue overspend of £1.461m after ringfenced underspends and carry forwards. The underlying service pressures have been reflected in the Integrated Planning process and they are driving a deteriorating financial position in future years.

Table 1 - Summary Revenue Budget Monitor at 31 December 2018

The overall variance includes an assumed use of a proportion of the £1.487m school Improvement & Brokerage grant. Work is ongoing to ensure this is fully committed.

1.1.1 Latest approved budget

The original Net Revenue Budget for the year was £804.577m. The Latest Approved Budget (above) is £798.355m (principally due to a net £6.223m contribution to reserves/contributions to capital - see appendix A. This is in line with the decisions taken at County Council in February).

A number of other virements have been made and details of approved virements and technical adjustments, showing all movements from the Original Budget, can be found in Appendix A.

Page 6 of 85

1.1.2 Projected outturn and projected variance

Projected spending for the year is £799.816m, which implies a year end variance of £1.461m overspend in comparison to a £673k projected overspend last quarter. This is a £788k increase from the previous quarter.

The current position shows service overspending of £7.086m that is largely offset by one-off central income (£5.625m), which is not sustainable position.

The forecast expenditure takes account of £6.218m of funding intended to be carried forward (chiefly BCF, of £5.049m) to be used next year. This reflects the difference between the profile of funding and spending for Better Care Fund (BCF).

1.1.3 Key Variances by area

Table 2 – Key Movements since the last quarterly reportArea Movement

£000sRef Summary

Adult Care Services 448 2.1 Of which: £654k Older People & Adult Disability

Services (2.1.1) (£150k) Provider Services (2.1.2) (£191) Transport SLA (2.1.3)

Public Health - 2.2 PH are forecasting a £245k underspend which will be transferred to reserves at year end leaving a nil overall variance. This is a movement of (£239k) since Q2

Children’s Services 1,394 2.3 Of which: £1,373k Independent Placements (2.3.3) (£272k) Adoption Direct Spend (2.3.7) £471k Family Services Commissioning

(2.3.9) Environment and Infrastructure

(413) 2.4 Of which: (£345k) Highways Advance Preparation &

Consultation (2.4.1) (£228k) Waste Management (2.4.2)

Resources (14) 2.5 Of which: (£167k) Property (2.5.1) £106k HBS (2.5.2)

Community Protection

(92) 2.6 Of which: (£203k) Response & Resilience (2.6.1) (£86k) Service Support (2.6.2)

Central Items (535) 2.7 Of which: (£484k) Capital Financing (2.7.1) (£51k) Income (2.7.2)

788

Page 7 of 85

1.1.4 Breakdown of Variances by type

The £1.461m forecast overspend table set out in table 1 is further analysed in table 3 to show where items are one-off or ongoing.

This shows that the majority of the variance is due to pressures being realised earlier than originally anticipated (£6.842m) and being offset by one off savings/income, primarily within Central Items.

(Separately, work has been undertaken to ensure that ongoing pressure identified in the monitor is reflected in the medium term financial position set out in the Integrated Plan).

Table 3 – Breakdown of Variances

1.1.5 Hertfordshire County Council Variance TrendThe graph below show how the variance has moved (post carry forwards) each quarter for the last 2 financial years, in comparison to this year:

Q1 Q2 Q3 Q4

-8

-6

-4

-2

0

2

4

2016/172017/182018/19

Forecast Variance trend

£m

Page 8 of 85

1.1.6 Contingency

Based on the forecast position of £1.461m overspend at year end (Table 1), in the event of an overspend, this will be the first call on contingency. The table below proposes allocation of contingency. It should be noted that several requests against the contingency budgets have already been raised.

Table 4 – Contingency Analysis

Item £000sOpening contingency 6,022Projected overspend* (1,461)Budget already committed (113)TOTAL REMAINING 4,448

*The projected overspend includes £472k within Family Services Commissioning, as detailed in 2.3.9. A request has been made against contingency to fund this.

1.1.7 Savings Delivery

To support delivery of the 2018/19 budget and to assist active management of the Integrated Plan (IP), savings delivery has been reviewed. The table below sets out the current savings requirement in the Integrated Plan, along with how these are profiled into service areas. IP Savings are included in the net budget included in Table 1.

Table 4a – Integrated Plan Savings

2018/19 IP, Table 1 (Extract) Savings: 2018/19 2019/20 2020/21 2021/22 £000s £000s £000s £000sExisting Efficiencies - ongoing impact (5,013) (5,807) (5,786) (5,807)Existing Policy Choice - ongoing impact (563) (1,157) (1,862) (1,912)New Efficiencies (21,170) (31,275) (42,763) (54,812)New Policy Choices (2,996) (6,927) (7,418) (8,643)Subtotal - Identified Savings (29,742) (45,166) (57,829) (71,174)

Further Savings Required

- (6,593) (22,416) (28,170)Total Savings Required by IP (29,742) (51,759) (80,245) (99,344)

Page 9 of 85

Delivery of savings are monitored each month and reported to Senior Officers. The table below shows that of £29.742m savings planned for 2018/19, £19.663m are rated as green or blue – meaning that there is a high level of confidence that these planned savings can be delivered. However, amber rated savings equate to £5.587m. Red rated savings, where material risks to delivery have been identified, amount to £4.492m in 2018/19, or 15% of the total planned savings for the year. These are included in the forecast above (Table 1).

Table 5 – Savings ReviewQ3 2018 2018/19

£000sRed (4,492)

Amber (5,587)Green (12,544)Blue (7,119)

TOTAL (29,742)

The objective is to minimise the savings that are appearing as ‘red’ (i.e. at risk of not being delivered) or ‘amber’ (i.e. with some risks to delivery having been identified), and to maximise those in ‘green’ (substantial confidence in delivery) or ‘blue’ (strong confidence of delivery).

It should be noted that savings deliver for future years, and associated RAG ratings, are based on the amounts included within the 2018/19 IP. These have been refreshed in the latest 2019/20 IP which is due to be presented to and approved by County Council in February 2019. All savings planned for in the new IP (covering 2019-23) are currently rated at green or blue.

1.1.8 Invest to Transform

ITT is a fund to enable one off costs of transformation to be met, where a longer term benefit can be achieved. Details of investments in year are set out in Appendix B. There are commitments within 2018/19 of £7.277m.

1.1.9 Risks & Uncertainties

The forecast for this quarter is based upon a number of estimates and judgements about future events and associated costs. The summaries below provide further insight into these and identify areas of risk and uncertainty in the forecast.

Adult Care Services

All care purchasing forecasts include a significant element of client income. Current assumptions include potential income associated with the non-receipt of financial assessment forms and an adjustment for band 20 clients, (whereby clients who have not provided us with the necessary information to undertake a financial assessment are treated as if they were self-funders and invoiced for the full amount of their care). There remains the risk that estimated levels of income for non-receipt of financial assessment could differ from the estimated standard client contributions.

The older people residential forecast assumes that the current increase in short stay placements is temporary and will not continue for the remainder of the financial year.

Page 10 of 85

Care purchasing budgets are high risk due to the requirement to meet statutory care needs and therefore any increase in the support of eligible clients could result in an additional pressure against the current reported position.

Public Health

There is a risk around the Out of Area GUM budget which is demand led. Worst case projection from the budget holder shows that the overspend might be as high as £200k, which has reduced from previous estimated figure by £50k. Work is being done to mitigate this as much as possible with extended capacity at in county (block purchased) clinics and a new hub in Hatfield.

Children’s Services

Early Intervention & Targeted Support - A business case is currently being written to request that funding can be drawn-down from the Thriving Families reserve of £461k (current value of reserve £804k) to fund this year’s pressure. The monitor is currently based on the assumption that this is approved, although if it is not an overspend will be anticipated. The reason for this overspend is due to increased demand on the early help services which has put pressure on existing staff resources and additional staff have had to be brought in to manage the demand and avoid delays. Contacts into the early help service via the Customer Service Centre (CSC) have continued to rise.

Independent Placements – There has been a significant increase in the number of placements being forecast in this area. The worst case scenario is based on an increase in the number of independent fostering placements of five per month and an increase in the number of residential placements to 72. Should this materialise the impact would be an additional overspend of approximately £360k above that currently forecast.

0-25 Together Under 18 Direct Spend - The current forecast assumes some community packages will end as clients are able to access short breaks. If this is not the case and all commitments are realised there would be an additional pressure on this budget.

Environment

Highways RM / Winter - This budget is highly volatile and there is a risk a small change in external factors could result in a significant change in cost. This includes the severity of cold weather during winter, impacting the number of gritting outings and amount of routine maintenance required.

Resources

HFS - trading conditions remain challenging and revenues are coming under pressure as a result of contracting spend across the public sector customer base and an increased level of competition.

Property - Feasibility projects often span several financial years. There are a number of live Feasibility projects as well as a number of pipeline projects which will not be confirmed until March 2019.

Page 11 of 85

Community Libraries – although the roll out of community libraries is forecast to complete in 2018/19 any unachieved saving would be carried forward into the next financial year, which could lead to an overspend in the 2019/20 budget.

Coroner Service – a case has been transferred to the Central Criminal Court to be heard by a High Court Judge due to the nature of the enquiries. It is likely that Counsel to the inquest will be required and therefore there will be additional, unforeseen costs associated with this case (not projected).

Hard Facilities Management (repairs & maintenance) - A review of costs has been undertaken following the transfer of hard FM from the SMS contract to an in-house team in April 2018. The costs have not increased as originally anticipated, resulting in a forecast underspend in the current position, however as a new service there is a lack of history to completely evaluate this.

Property (SMART property) – the Apsley project is now estimated to overspend in future years and Property are actively looking to bring down this overspend through making efficiencies and bring the project in on budget.

Community Protection

Recruitment is underway for new recruits for the vacancies against establishment to be reduced from January 2019. Recruits from the 2017/18 intake have passed out into the whole time service as of July 2018, so the pre-arranged overtime will begin to reduce. However at this stage it is difficult to predict the precise reduction on the Response & Resilience budget.

Page 12 of 85

1.2 Capital Monitor

Capital spend by 31 March 2019 is forecast to be £182.375m, summarised below with commentary on key variances. The capital programme, based on the forecast outturn, will be funded through grants and third party contributions (62% of investment), use of county council funds (4% of investment) and borrowing (34% of investment).

Significant variances against the latest approved budget are shown below. Details of variances over £250k are shown in section 3. The largest current variations are summarised below:

25 by 20 – Acquisition: (£21.2m) underspend relating to the purchase of office accommodation to support the rationalisation of operational assets. When the setting the budget the council wanted flexibility to either be able to purchase the site, or to amend lease arrangements. Following development of the business case, Cabinet approved the lease option. As such the purchase budget is no longer needed.

Land Acquisition – Stevenage: An underspend of (£5.882m) is declared as this acquisition will not be taking place.

Ware Household Waste Site: reprogramming of (£3m) is forecast due to delays in the discharge of planning conditions.

New School Developments & Site Acquisitions: (£6.935m) is forecast to be reprogrammed, based on current project timescales and funding profile of schemes.

Commissioning for Independence (formerly Supported Living): An underspend of (£2.351m) is forecast as it is unlikely that the full allocation of the capital budget for 18/19 will be utilised due to a review of the ACS Accommodation Strategy.

The budgeted capital receipts total for the year is comprised of £10m IP in addition to £3.8m spend to achieve and £5.2m carried forward (where the full target for 2017/18 was not achieved), to give a total budget for 2018/19 of £19.0m. Capital receipts for 2018/19 are forecast to be £3.779m, which is £15.269m less than the budgeted receipts for the year. The shortfall in capital receipts will increase in year borrowing, however this has been offset by reprogramming and underspends.

Page 13 of 85

Table 6 – Capital Programme Summary Position

The latest budget is £227.601m. This includes the reprogramming from 2017/18 that was approved by Cabinet in June 2018 plus reprogramming for Quarter 2 that was approved by Cabinet in December 2018.

Analysis of Variance

LAB 2018/19

£'000Outturn

£'000

Total Variance

£'000

Under-spend£'000

Over-spend£'000

Re-programm-

ing£'000

Children's Services - schools 77,699 65,795 (11,904) (2,269) 24 (9,659)Children's Services – non schools

1,508 1,508 - - - -

Environment 93,495 89,958 (3,537) (210) - (3,327)Fire 2,343 2,443 100 - - 100ACS 11,225 8,119 (3,106) (2,489) - (617)Resources 41,331 14,552 (26,779) (27,159) - 380Public Health - - - - - -

Grand Total 227,601 182,375 (45,226) (32,127) 24 (13,123)

Page 14 of 85

1.3 Schools Monitor

The Schools’ budget is funded from the Dedicated Schools Grant (DSG) and sixth form grant which is received separately from the Education Funding Agency (EFA). The total amount for which the County Council is accountable is £614m, summarised below. This is divided into areas where budget responsibility is delegated to schools, and areas for which the County Council retain responsibility.

A net variance of (£985k) underspend is projected against areas within the control of the County Council. Additional details regarding this variance can be found in Section 4 and is summarised below.

As these budgets are funded by ringfenced DSG and 6th Form Grant, they are required to be carried forward to support the schools budget in future years.

Table 8a – Summary Schools Funding

Schools Funding Budget£'000

DSG Allocation to Hertfordshire County Council 938,796Less: Transfer to Sixth Form Funding re High Needs Places (1,416)Less: Academies (343,589)Add: Carry Forward from previous year 5,821Total DSG 599,612 Sixth Form Funding 13,897Total Schools Grants & Other Funding 613,509

Table 8b – Summary of Key Hertfordshire County Council controlled education budget variances

Key Variances Latest Budget£000s

Variance£000s

Primary Delegated 322,684 (7,047)Secondary Delegated 88,779 (5,465)School Grants & Other Funding (613,509) 8,590

Page 15 of 85

Section 2 – Service Variance/Movements over £250k

The tables below summarise the monitor position for each department, with the graph beneath showing how the variance has moved each quarter for the previous 2 financial years after carry forwards.

2.1 Adult Care Services (ACS)

LABSpend

to Date

Projected Outturn at Year End

Carry Forwards

Projected Variance after C/F

Variance Last

Quarter

Quarterly MovementACS Ref

£000s £000s £000s £000s £000s £000s £000s

Older People & Adult Disability Services

2.1.1

254,020

189,191

253,336

4,501

3,817

3,163

654

Mental Health Services

2.1.2

16,680

1,155

16,254

548

122 34 88

Preventative Services

14,990

12,504

14,796

-

(194) (197) 3

Provider Services

30,336

24,979

29,712

-

(624) (474) (150)

Transport SLA 2.1.3

4,111

3,345

4,499

-

388 579 (191)

Strategic Centre & Support Services

8,724

6,772

8,731

-

7 (37) 44

Grant Funded Projects

40

(502)

40

-

- - -

Total

328,901

237,444

327,368

5,049

3,516

3,068

448

Page 16 of 85

Q1 Q2 Q3 Q4

-2

0

2

4

6

8

10

2016/172017/182018/19

Adult Care Services- Forecast Variance Trend£m

2.1.1 Older People & Adult Disability ServicesBreakdown of Variance

LAB Projected Spend

Carry Forward

Forecast Variance

Variance Last

QuarterMovement

Early Achievement of IP Savings / Pressures

One-Off

Additional Ongoing Savings/

Pressures£000 £000 £000 £000 £000 £000 £000 £000 £000

254,020 253,336 4,501 3,817 3,163 654 3,956 165 (304)

The care purchasing budgets for the Older People & Adult Disability Service have remained under pressure from demand, increased unit costs from care providers and requests to increase existing care packages. Some of the increase in package costs are due to the lack of availability of homecare which has resulted in some placements having to be made in more expensive residential and supported living establishments.

The main components of the variance are:

1. £5,670k net overspend on the residential / nursing budget. The residential / supported living budget has seen a significant deterioration in the forecast position since the end of the first quarter. This has been due to a combination of demand above expected levels and an increase in the complexity of cases resulting in increases to existing packages. However as a result of reviews undertaken by the operational teams in association with the connected lives programme we have started to see a slow down of these increases. The Government recognise the pressures that adult social care is under and have provided additional monies in 2019/20 pending the green paper on Adult Social Care.

2. (£1,480k) net underspend on supporting people to stay at home (homecare, direct payments, carers direct payments and daycare). The underspend is predominantly as a result of reduced homecare activity against budgeted hours as well as delivery of the demand management reviewing strategy. However there continues to be a client waiting list because of workforce shortages and resolving this through the ACS workforce strategy could increase expenditure in the future.

3. (£300k) underspend in the operational teams budget due to delays in recruitment.

Main reasons for quarterly movement:

1. £1,060k increased overspend on the core care purchasing budgets, primarily as a result of increases to existing

Page 17 of 85

packages within residential and supported living. The movement includes a backdated increase of £145k for a client that was expected to become ordinarily resident in another authority but, as a result of a tribunal ruling, a residential college placement was awarded with liability for funding remaining with Hertfordshire County Council.

2. (£300k) movement due to an underspend in the operational teams budget as highlighted above.

2.1.2 Provider ServicesBreakdown of Variance

LAB Projected Spend

Carry Forward

Forecast Variance

Variance Last

QuarterMovement


One-Off


Pressures£000 £000 £000 £000 £000 £000 £000 £000 £000

30,336 29,712 - (624) (474) (150) (607) (17) -

The main components of the variance are:

1. (£370k) underspend on the In-House daycare budget as a result of vacancy management and less use of agency to fulfil rota's.

2. (£260k) underspend on the In-House Supported Living budget as a result of vacancy management.

2.1.3 Transport SLABreakdown of Variance

LAB Projected Spend

Carry Forward

Forecast Variance

Variance Last

QuarterMovement


One-Off


Pressures£000 £000 £000 £000 £000 £000 £000 £000 £0004,111 4,499 - 388 579 (191) 388 - -

Whilst IP savings have been achieved in relation to the efficient utilisation of drivers and reducing fleet maintenance costs, additional demand for taxi transport is creating an overspend position on this budget. A Best Value Transport officer role has been recruited, and will be responsible for reviewing new transport requests and identifying further scope for using county council fleet to substitute for existing taxi journeys; this role will work closely with those responsible for organising care placements for people to ensure full consideration of transportation requirements as part of the placement planning process.

Page 18 of 85

2.2 Public Health (PH)

In line with grant conditions, public health variations to budget will be taken to the dedicated Public Health Reserve at the year end (for underspending) or funded from that reserve (for overspending), hence reporting nil variances, after carryforwards. The table below is therefore presented before carryforwards to clearly show movements in quarterly forecasts.

LABSpend

to Date


Projected Variance

before C/F

Variance Last

Quarter

Quarterly MovementPH Ref

£000s £000s £000s £000s £000s £000s

Corporate PH 2,522 1,812 2,552 30 (4) 34

Smoking Cessation Service

1,592 697 1,508 (84) (78) (6)

Sexual Health 9,301 5,779 9,501 200 121 79

Drugs & Alcohol 7,280 6,165 7,276 (4) (5) 1

Children 19,340 15,725 19,209 (131) - (131)

Adults 1,143 617 1,128 (15) 18 (33)

District & Partnership Working

1,996 1,833 1,868 (128) (55) (73)

PH Initiatives & Commissioning

5,553 3,381 5,440 (113) (3) (110)

Total 48,727 36,009 48,482 (245) (6) (239)

The graph below shows the PH position excluding carry forwards:

Q1 Q2 Q3 Q4

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

2016/172017/182018/19

Public Health - Forecast Variance Trend

£m

Page 19 of 85

2.3 Children’s Services

LABSpend

to Date

Projected Outturn at Year

End

Carry Forwards


Variance Last

Quarter

Quarterly MovementCS Ref

£000s £000s £000s £000s £000s £000s £000s

Education & Early Intervention

2.3.12.3.2

50,215

40,797

50,011

-

(204)

100

(304)

Children Looked After (CLA)

2.3.32.3.42.3.52.3.6

44,521

37,172

48,581

-

4,060

2,534

1,526

Other Safeguarding & Specialist Services

2.3.72.3.82.3.9

2.3.10

76,622

56,638

77,845

-

1,222

1,050

172

Safeguarding & Specialist Services Total

121,143

93,810

126,426

-

5,283

3,584

1,698

Children’s Services Overheads

212

16

145

-

(67)

(67)

-

Total

171,571

134,623

176,582

-

5,011

3,617

1,394

Q1 Q2 Q3 Q4

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

2016/172017/182018/19

Children's Services - Forecast Variance Trend

£m

Page 20 of 85

2.3.1 Mainstream TransportBreakdown of Variance

LAB Projected Spend

Carry Forward

Forecast Variance

Variance Last

QuarterMovement


One-Off


Pressures£000 £000 £000 £000 £000 £000 £000 £000 £0004,887 4,568 - (320) (259) (61) - - (320)

Mainstream transport is reporting an underspend of £320k. The main reason for this variance is that there has been a reduction in both the mainstream primary and secondary taxi costs due to retendering and combining vehicles. A reduction in students (36), contracts (13) and vehicles (13) from last month has also contributed to the increased underspend.

There has been a further decrease in pupil numbers being transported from this time last year which in turn has led to a reduction in contracts and vehicles required to undertake the service. Mainstream students being transported has reduced by 62, The number of contracts is down by 26 and the number of vehicles in also down by 13. Transport, Access & Road Safety (TARS) workflow analysis has changed between years and makes year on year comparisons difficult to perform any trend analysis.

2.3.2 SEN TransportBreakdown of Variance

LAB Projected Spend

Carry Forward

Forecast Variance

Variance Last

QuarterMovement


One-Off


Pressures£000 £000 £000 £000 £000 £000 £000 £000 £000

14,920 15,666 - 746 721 25 - 746 -

SEN home school transport is forecast to be £746k overspent. This represents a fall from last quarter of £25k. The reason for the reduction is that there has been three large SEN contracts that have been retendered. This is anticipated to result in notional annual savings of £300k. Although the overall pupil numbers being transported this month have increased, 33 more than last month (2,337 vs 2,304), the number of contracts and vehicles required has reduced, 3 less contracts and 7 fewer vehicles.

The following steps, from a recent senior management report, are being taken to reduce spending with some updates on actions:1. Review of approach to medically-trained escorts2. Review of some areas of demand for single-occupancy taxis - Two schools have been identified as having a high number of lone travellers due to individual timetables and discussions are being held with the schools with the aim to return to full-time school and a shared vehicle. Nearly 50% of SEN travellers on sole vehicles have autism (or similar) and advice is being sought from the autism specialist team as to whether there is any training that can be undertaken with PAs/contractors/pupils/parents to allow these children to travel on shared vehicles.3. Appointment of additional travel-training resources - recruitment for a new Travel Training Manager has commenced4. Policy changes round charging

Page 21 of 85

5. Review of entitlements for post-16 transport6. Review benchmarking data produced

2.3.3 Independent PlacementsBreakdown of Variance

LAB Projected Spend

Carry Forward

Forecast Variance

Variance Last

QuarterMovement


One-Off


Pressures£000 £000 £000 £000 £000 £000 £000 £000 £000

23,881 28,611 - 4,730 3,357 1,373 3,980 - 750

The Independent Placement forecast overspend of £4.7m is mainly due to overspends in the following areas:

1) Residential placements: The forecast overspend of £3.5m reflects both a lack of available provision in the independent market and increasing complexity of needs of children and young people. Through a project called Valuing Care work has been carried out to quantify need so that placement costs can be matched against a needs score for individual children. This would, in principle, lead to a better conversation with providers whereby costs could be negotiated on a more informed basis however the lack of sufficiency in the market means that, to date, this has not been possible and we have not yet achieved a position of lower needs score correlating with lower cost. The Independent Children’s Homes Association has reported that they are receiving numerous referrals for every vacancy. As can be seen in the chart below, the budget is set to support 48 full time equivalent (FTE) placements at £3,872 per week. Since the beginning of the year forecasts have exceeded this level and the current forecast is for 65 FTE placements at £4,264 per week. This represents a 36% pressure on placement capacity and 10% on costs.

2) Independent Fostering: The forecast overspend of £785k is mainly driven by higher than budgeted number of placements. The budget can support 143 FTE placements and is currently forecast to fund 161 during the year, representing a pressure of 16% on placement capacity. Independent Fostering Agencies (IFAs) have been invited to work with Hertfordshire under a Framework agreement so that we can better manage both cost and quality. A number of agencies have joined the Framework however they have struggled to recruit in Hertfordshire and are rarely able to offer a placement when approached. 27 IFAs have been invited to meet with commissioners over the next two months with a view to renegotiating costs on long term, settled placements and to consider current referrals and possible ’step downs’ from residential care. The overspend on IFA placements is partly offset by the forecast underspend against in-house fostering budgets shown below.

There are a number of other over and underspends within the budget as shown by the table below.

The service has an action plan in place and is conducting in-depth reviews of all Independent residential placements in order to ensure that care plans are being progressed and that children are in the right placement to best meet their needs. Cases are reviewed at a bi-monthly Panel, the first of which identified the following issues: a number of cases where the therapeutic placement is not being joint funded with health colleagues which is being addressed through the Multi Agency Resources Panel (MAP); several cases where the young person could be prepared for a ’step down’ into less supported, lower cost provision criteria which is being progressed by social workers and several cases where young people were remaining in placement post 18 years due to limited move on accommodation which is being progressed

Page 22 of 85

in partnership with District Housing colleagues. These activities will take time and a significant impact is not expected during the current financial year. ’Step down’ from residential to lower cost placements will also be supported by county council involvement in the Inside Out innovation project alongside Essex and Norfolk county councils, which is going live in April 2019. This project links identified children in residential care with a mentor/coach who develops a close relationship which is not defined by the placement. Once the relationship has been established the young person moves from residential care either into foster care, semi independence or, occasionally, home and the coach continues to work with them. Essex were the first to go live with the project and have seen positive results both for the young people and the costs of the placement.

Work is ongoing to redress the balance between in-house fostering and Independent fostering placements. The service is on track to recruit 45 fostering households this year all of whom fall within the target group of carers who are either able to take sibling groups or teenagers since these are the children who are currently most likely to be placed with IFA carers due to a shortage of in house capacity. The work done previously with iMPOWER on the fostering recruitment pipeline is also being refreshed in order to achieve tighter management of all stages of the recruitment process. .

The service is actively seeking to increase residential placement capacity by working with other Local Authorities to seek a regional solution to placement matching and a number of options are being worked on however pressures on the market and the complexity of children’s needs means that solutions are hard to deliver. Hertfordshire is part of a cross regional arrangement that was promoted as best practice in a national review of residential care however the homes are group care settings and many of the children the service is currently struggling to place require solo occupancy or, at most, one other child in the setting.

A number of other proposals to address the overspend have been identified including:

1) Use of an external consultant to examine current working and financial practices, seeking to identify new and untried methods to reduce the cost of placements.

2) Capital bid during 2019/20 to enable increase of in-house capacity, including the purchase of a property to use in emergencies rather than relying on the independent market, where emergency costs are often extremely high, and the development of semi-independent provision for disabled young people, extending the capacity of Hertfordshire’s home for disabled children.

3) A longer term CLA and residential strategy to meet needs over the medium and long term, including potential engagement with Herts Living and the development of more children’s homes in Hertfordshire where property prices currently deter independent providers (a framework for residential provision was tendered however no providers wanted to join the framework).

The movement of £1.373m from quarter two is mainly due to:

1 - increase in forecast of £909k in residential as a result of both increased numbers of placements (64 as at September compared to 69 at December) and continued high cost of packages, including for emergency placements.

2 - increase in forecast of £256 in disability funded placements due to increases in costs and provision for two new placements starting in January 2019.

3 - increase in Family assessment as a result of an increase in the number of forecast placement weeks.

There have been a number of other smaller changes to the forecast as set out below:

Page 23 of 85

Page 24 of 85

2.3.4 Fostering Direct SpendBreakdown of Variance

LAB Projected Spend

Carry Forward

Forecast Variance

Variance Last

QuarterMovement


One-Off


Pressures£000 £000 £000 £000 £000 £000 £000 £000 £000

10,957 10,468 - (489) (533) 44 - (489) -

In house fostering is forecast to underspend by £489k. This is due to:

1) Forecast underspend of £154k against Family and Friends placements, due to there being 802 fewer placement weeks forecast than budgeted. This is in part due to the increased use of Special Guardianship Orders (SGOs) as shown in the adoption direct spend budget (please see SGO overspend below).

2) Forecast underspend of £331k in Section 23 over 18 placements. This is due to a combination of there being 579 fewer placement weeks forecast than budgeted and lower average weekly cost than budgeted (£54 per week against a budgeted £134 per week).

This forecast reflects transfer of £1m to independent fostering to better reflect the current placement mix in addition to use of £250k to support the Diversion from CLA budget. A review of previous work by iMPOWER on the foster carer recruitment pipeline is going to be conducted in order to identify options for increased recruitment in in house foster carers. At present, however, given national issues in this area the impact of this is uncertain and no financial impact has been built into the forecast position for 2018/19.

2.3.5 UASC Direct SpendBreakdown of Variance

LAB Projected Spend

Carry Forward

Forecast Variance

Variance Last

QuarterMovement


One-Off


Pressures£000 £000 £000 £000 £000 £000 £000 £000 £0002,172 1,599 - (572) (497) (75) (450) (122) -

The overall unaccompanied asylum seeking child (UASC) budget is forecast to underspend by £572k. This is made up of:

1) Forecast underspend of £1,286k against under 18 placement budgets. This is mainly due to there being significantly fewer under 18 UASC than budgeted. At the end of December there are 109 (excluding 7 missing) against a budgeted number by this period of 142. There is availability for 21 placements in block semi-independent contracts where the weekly cost per placement is lower than the budgeted cost for that placement type. These offset other placements where the cost is greater than the available grant.

2) Forecast overspend of £713k against over 18 budgets due to higher numbers than budgeted, including 23 more under 18s turning 18 during the remainder of this financial year.

As a result of lower than budgeted numbers of UASC requiring accommodation a saving of £450k has been identified as part of the 2019/20 budget setting process. There is a risk to delivery of this saving if numbers increase above budgeted

Page 25 of 85

levels. UASC can present either spontaneously in Hertfordshire or can be transferred as part of the national transfer scheme, and in either case children's services has few options to manage numbers.

2.3.6 CLA Client ExpenditureBreakdown of Variance

LAB Projected Spend

Carry Forward

Forecast Variance

Variance Last

QuarterMovement


One-Off


Pressures£000 £000 £000 £000 £000 £000 £000 £000 £0001,618 1,918 - 300 234 66 - 300 -

The overspend in CLA Client Expenditure is due to forecast overspends of:

1) CLA Direct Spend - £110k. Transport costs for CLA continue to be an issue, despite work to reduce expenditure and particularly the use of taxis. This area will be included within the wider work of the Edge Transport review looking at potential supply side savings.

2) Leaving care - £189k. This is due to higher than budgeted costs of setting up home allowances and accommodation costs for care leavers.

2.3.7 Adoption Direct SpendBreakdown of Variance

LAB Projected Spend

Carry Forward

Forecast Variance

Variance Last

QuarterMovement


One-Off


Pressures£000 £000 £000 £000 £000 £000 £000 £000 £0007,965 7,194 - (771) (498) (272) - (771) -

Adoption Direct Spend is forecasting an underspend of £771k as a result of:

1. Adoption allowances forecast underspend of (£371k). There are currently 281 adoption allowances and a provision for 10 new adoptions equally placed between January and March. The budget can support 362 placements but the growth in the number of adoption allowances has been less than budgeted.

2. Child arrangement orders (CAO) / residence order forecast underspend of (£681k). There are currently 76 orders and a provision for 3 new ones during the remainder of 2018/19. The budget can support 180 orders but the trend is for the use of Special Guardianship Orders (SGOs) and not CAO's leading to a lower than budgeted level of these type of allowances.

3. Special Guardianship orders forecast overspend of £607k. There are currently 566 orders and a provision for 19 during the remainder of 2018/19. The budget can support 538 orders and the higher than budgeted numbers are a result of the use of SGOs rather than both CAOs and family and friends placements (please see family and friends

Page 26 of 85

underspend within the in-house fostering budget).

4. Inter-agency adoption forecast underspend of (£326k). This forecast is based on the current level of interagency adoptions and there is a risk this could change based on actual placements taking place during the remainder of the year. During the last quarter there have been an additional 10 inter-agency adoption placements made with Hertfordshire adopters at an average of £18,000, for the first two thirds of the inter-agency fee, and £31,000 (full fee) income per placement

The reduction in forecast of £272k is due to ten additional inter-agency adoption placements being made with Hertfordshire adopters during the last quarter, bringing in additional income to the authority.

2.3.8 0-25 Together Under 18 Direct SpendBreakdown of Variance

LAB Projected Spend

Carry Forward

Forecast Variance

Variance Last

QuarterMovement


One-Off


Pressures£000 £000 £000 £000 £000 £000 £000 £000 £0008,861 10,043 - 1,182 1,199 (17) - 371 811

0-25 Together Childrens direct spend is forecast to overspend by £1,182k. This is a result of:

1) Nascot Lawn - £768k. As a result of the closure of Nascot Lawn a need has been identified to extend the existing West Hyde shorts break facility by an additional two bedrooms at an estimated cost of £423k. There is currently no identified capital budget for this work so expenditure is being shown as an additional revenue overspend. In addition there is an additional overspend forecast of £345k as a result of community packages (including homecare and direct payments) required for this client group. These costs are now shown separately rather than against the base homecare and direct payment budgets,

2) Homecare - £445k. The base budget can support 65,046 hours of care and the current forecast is for 20,675 additional hours to be purchased during 2018/19.

There are a number of other small variances in the service amounting to £31K

In order to address these overspends there is an active review looking at a variety of options including review of packages and the role that community navigation can play in directing people to community based resources instead of specialist resources, as well as a number of other options.

In addition a review of the 0-25 Service is underway and expected to report this financial year in order to identify actions to reduce expenditure both in children's services and ACS. The SEND Invest to Transform project will also have an impact on this area. The head of transformation post has recently been filled which will enable to project to begin in earnest.

Page 27 of 85

2.3.9 Family Services Commissioning Breakdown of Variance

LAB Projected Spend

Carry Forward

Forecast Variance

Variance Last

QuarterMovement


One-Off


Pressures£000 £000 £000 £000 £000 £000 £000 £000 £000

12,557 13,029 - 472 1 471 - 472 -

The overspend forecast on Family Centre Service Mobilisation Costs is due to higher than budgeted costs of redundancies, including pension strain, associated with implementation of the Family Centres. A budget of £1m was set aside for these through savings associated with the retender in 18/19 not being offered up as corporate savings. The new contract will deliver over £2m of ongoing savings from 2019/20 onwards.

The movement is due to confirmation of redundancy costs since the last quarter. Previously a risk of £1m has been identified in the budget monitor as a result of the uncertainty over final costs.

A request will be made for this to be met from corporate contingency.

2.3.10 Other Specialist ServicesBreakdown of Variance

LAB Projected Spend

Carry Forward

Forecast Variance

Variance Last

QuarterMovement


One-Off


Pressures£000 £000 £000 £000 £000 £000 £000 £000 £000153 494 - 341 294 48 - 341 -

The forecast overspend of £341k is due to increased expenditure on preventative work in order to reduce the number of children and young people coming in to care. This work is carried out in the main by six commissioned providers. Those supported by Herts Practical Parenting Programme (HPPP) tend to be children subject to child in need or child protection plans and therefore it is not simple to determine if all these children would become looked after if this support was not offered. All other support is only provided for young people on the edge of care where a request for the child to be looked after has been made by a parent or professional (not by a court), where it is very likely a child would have come in to care without this support being offered.

A review of the effectiveness of these interventions for financial year 2017/18 identified that 134 children were prevented from coming in to care during the year. Therefore although the number of children in care is increasing slightly, from a very low level, the work in this area is preventing the number of CLA from increasing further. Options to identify funding for this area in 2019/20 are being reviewed, including the outcome of the adolescent service project currently underway.

Page 28 of 85

2.4 Environment & Infrastructure

LABSpend

to Date


Carry Forwards


Variance Last

Quarter

Quarterly MovementENV Ref

£000s £000s £000s £000s £000s £000s £000s

Central Management

827

574

827

- -

48

(48)

Highways 2.4.1

42,024

27,078

42,084

190

250

445

(195)

Transport, Waste & Environmental Management

2.4.2

64,688

37,283

64,218

-

(470)

(242)

(228)

Planning, Growth & Infrastructure

2.4.3

2,489

2,012

2,774

-

285

227

58

Total

110,028

66,947

109,903

190

65

478

(413)

Q1 Q2 Q3 Q4

-1

-1

0

1

1

2

2016/172017/182018/19

Environment - Forecast Variance Trend

£m

Page 29 of 85

2.4.1 Highways Advance Preparation & ConsultationBreakdown of Variance

LAB Projected Spend

Carry Forward

Forecast Variance

Variance Last

QuarterMovement


One-Off


Pressures£000 £000 £000 £000 £000 £000 £000 £000 £000848 948 - 100 445 (345) - 100 -

Baldock Bridges, the revenue funding in 18/19 and 19/20 has not yet been allocated, but is required to support the production of the HIF business case and early scheme preparation, particularly Network Rail engagement. This project is being developed by Highways on behalf of Hertfordshire County Council Property.

The pressure on the Highways service previously identified has now been more closely scrutinised. The estimated cost to the Highways service of supporting the Property schemes though HIF this financial year is now estimated at £100k.

2.4.2 Waste Management (incl Waste Aware)Breakdown of Variance

LAB Projected Spend

Carry Forward

Forecast Variance

Variance Last

QuarterMovement


One-Off


Pressures£000 £000 £000 £000 £000 £000 £000 £000 £000

44,655 44,185 - (470) (242) (228) - (470) -

(£240k) - Waste Disposal: Positive news on the operational challenges at the London Energy Edmonton Energy from Waste Facility identified in previous monitors has been reported with the facility now able to receive waste from the Waterdale Waste Transfer Station

(£120k) – There has been an improvement on the performance of diversion of wastes received from general waste and the latest projections suggest that the improvement will result in a (£120k) underspend.

(£85k) – Due to the extended dry period of weather during the summer, it has dramatically affected the previous projections for green garden waste disposal with a reduction of 8,000 tonnes (£55k). Subsequently this has also resulted in a further (£30k) reduction in projected costs for less material being directed for disposal under the transport subsidy model.

(£15k) – The spend against this part of the budget has reduced and is attributed to the latest projections for the income generation by the HWRC re-use network which is set to exceed expectations.

(£10k) – this reduction is due to the resignation of one post holder.

Page 30 of 85

2.4.3 Spatial Land Use and PlanningBreakdown of Variance

LAB Projected Spend

Carry Forward

Forecast Variance

Variance Last

QuarterMovement


One-Off


Pressures£000 £000 £000 £000 £000 £000 £000 £000 £0001,461 1,746 - 285 227 58 - - 285

The forecast now includes the estimated costs of all of the Inquiries and Judicial Challenges that either have taken place, are taking place or are anticipated during the course of this financial year. This is an exceptional level of activity for the Team and there is therefore no budget provision for this level of activity, which we have a statutory duty to participate in and therefore have no choice as to whether we take part.

Page 31 of 85

2.5 Resources

LABSpend

to Date


Carry Forwards


Variance Last

Quarter

Quarterly MovementRES Ref

£000s £000s £000s £000s £000s £000s £000s

Corporate Services 2.5.1

58,523

41,263

55,678

706

(2,139)

(2,018)

(121)

Traded Services 2.5.2

(2,691)

(1,567)

(2,410)

-

281

175

106

Customer Engagement

5,785

4,436

5,813

-

28

7

21

Libraries & HALS

10,408

8,056

10,608

-

200

220

(20)

Total

72,025

52,188

69,689

706

(1,630)

(1,616)

(14)

Q1 Q2 Q3 Q4

-3.5-3.0-2.5-2.0-1.5-1.0-0.50.00.5

2016/172017/182018/19

Resources - Forecast Variance Trend

£m

Page 32 of 85

2.5.1 Property Breakdown of Variance

LAB Projected Spend

Carry Forward

Forecast Variance

Variance Last

QuarterMovement


One-Off


Pressures£000 £000 £000 £000 £000 £000 £000 £000 £000

16,097 13,263 506 (2,328) (2,161) (167) 103 (809) (1,622)

The absolute variance (£2,328k underspend) for Property is broken down as:

• £666k underspend – Central & Shared – A £103k saving was included in the 2017/18 IP in relation to Apsley rent, however the programme for implementation of the office accommodation strategy means the saving won't now be achieved this financial year. This has been offset by a one-off rates refund (£821k) for Leahoe

• £861k underspend – Corporately Managed Properties – Largely due to income (£889k) received for backdated rent review that was not budgeted this year, income from a recently opened residential elderly peoples' home (£177k) and a one-off rates refund (£96k) offset by an overspend on feasibility work (£153k) and one-off fire risk assessments (£210k) for Supported Living properties which haven't been budgeted

• £100k underspend - Staff Housing - Maintenance works have been postponed pending a review of the estate

• £76k underspend - Carbon Reduction Credits - The accumulated effect of previous energy saving works have resulted in a reduction of the required Carbon Reduction Credits.

• £1,184k underspend - Utilities - actual costs for energy prices have proven to be lower than anticipated due to market volatility. A permanent saving will form part of the 2019/20 Resources IP to bring the budgets back in line

• £164k underspend - Facilities Management - More efficient management of contracts & works

• £100k overspend - Tree management to identify trees subject to infestation across Rural Estates

• £400k overspend - Maintenance backlog across Rural Estates for works that the county council rather than the tenants is liable to fund. A carry forward is to be requested for £314k of work which is now likely to occur in 2019/20

• £107k overspend - Project costs due to a move to SMART working and innovation with the facilities management portal

• £92k overspend - Service Property - Rent and service charge for The Forum

Page 33 of 85

2.5.2 HBS Breakdown of Variance

LAB Projected Spend

Carry Forward

Forecast Variance

Variance Last

QuarterMovement


One-Off


Pressures£000 £000 £000 £000 £000 £000 £000 £000 £000

(1,691) (1,410) - 281 175 106 - - 281

The following Services have not met target:

• Network Print Service - £173k below contribution target – the removal of the “profit element” of the service has left HBS with a pressure of £173k. This pressure has been submitted into the IP process to be removed for 19/20.

• Fleet Service - £226k below contribution target - The service is budgeted to make a surplus of £247,792, which due to diminishing internal demand and the transfer of service provision on a fully funded basis back to ACS/Libraries this surplus cannot be achieved. A combined pressure of £210k has been added to the IP process to remove the majority of this issue, with the balance to be redressed through changes to charging methodologies.

The trading entities are performing as follows:• HFS – Educational Resources - £89k under contribution compared to target• HFS – Facilities Management Services - £46k over contribution compared to target• Reprographics Service - £12k under contribution compared to targetTrading conditions remain challenging, revenues are coming under pressure as a result of contracting spend across the public sector customer base and an increased level of competition. However, customer churn numbers remain consistent, but it must be noted that the acquisition of new business is only running at a third of the level planned; the financial impact of this is being managed through robust operational cost management to minimise impact to profits.

Please note: A balance of £174k one off funding is being utilised to manage the HBS contribution.

Page 34 of 85

2.6 Community Protection

LABSpend

to Date


Carry Forwards


Variance Last

Quarter

Quarterly MovementCP Ref

£000s £000s £000s £000s £000s £000s £000s

Fire & Rescue2.6.12.6.2

30,951

23,043

30,997

28

74

191

(117)

Joint Protective Services

4,490

3,624

4,540

-

50

25

25

Total

35,441

27,256

35,537

28

124

216

(92)

Q1 Q2 Q3 Q4

-0.6

-0.4

-0.2

0.0

0.2

0.4

0.6

0.8

2016/172017/182018/19

Community Protection - Forecast Variance Trend

£m

2.6.1 Fire & Rescue – Response & ResilienceBreakdown of Variance

LAB Projected Spend

Carry Forward

Forecast Variance

Variance Last

QuarterMovement


One-Off


Pressures£000 £000 £000 £000 £000 £000 £000 £000 £000

23,259 22,755 28 (476) (273) (203) - (476) -

Vacancies against establishment within the F&R Service are currently being offset by the use of pre-arranged overtime to maintain service levels. This arrangement is necessary but has been difficult to forecast the resources required in order to maintain the minimum amount of crew on each pump. A recruit course at the beginning of the financial year had fewer pass-outs than anticipated (due to candidates dropping

Page 35 of 85

out part way through the course) so did not produce the expected decrease in the use of pre-arranged overtime. A decision has been made for an additional set of new recruits to start in mid-January, which has been forecast into the budget, but the effect of these recruits on pre-arranged overtime will not been seen until 2019/20 when the recruits pass out into the whole time service.

Management action has been taken to ensure that pre-arranged overtime will now be used to maintain minimum whole time crewing levels (as opposed to full establishment levels) whilst still keeping whole time appliances on the run, and this will lead to a reduction in the amount of pre-arranged overtime required, and the forecast reflects this change.

2.6.2 Fire & Rescue – Service SupportBreakdown of Variance

LAB Projected Spend

Carry Forward

Forecast Variance

Variance Last

QuarterMovement


One-Off


Pressures£000 £000 £000 £000 £000 £000 £000 £000 £0006,666 7,126 - 460 374 86 - 415 45

The overspend is attributable to less predicted income than the budget provides for in Commercial training, additional staffing costs across Service Support due to pre-arranged overtime to maintain response service levels, and significant additional costs in the cleaning of protective clothing and uniforms.

Commercial Training's income shortfall is as a result of HFRS being unable to market services until a trading/commercial unit is created, which is being pursued with the county council. The sales target is historical and sales have been gradually falling over the years due to being unable to pursue new business.

Monthly PPE provision, maintenance and laundry costs have increased by approx. £6k per month. This is due partly to HFRS actively encouraging staff to get uniform cleaned due to research around the increased risks from carcinogens remaining on the uniform and additional contract costs from new recruits.

The summer heatwave and associated increase in operational activity has additionally had an impact on the Technical Services budget, through costs of repairing, maintaining and replacing a greater volume of damaged or used equipment/consumables than originally predicted.

Page 36 of 85

2.7 Central Items

LABSpend to

Date

Projected Outturn at Year

End

Carry Forwards


Variance Last

Quarter

Quarterly MovementCEN Ref

£000s £000s £000s £000s £000s £000s £000s

Central Capital Financing & Interest on Balances

2.7.1

21,010

4,814

19,127

-

(1,883)

(1,399)

(484)

Contingency – General

5,885

-

5,885

-

-

- -

Other Central Items

1,759

(130)

1,759

-

-

- -

Apprenticeship levy

962

1,178

962

-

-

-

-

Income Generating Initiatives

-

64

120

-

120

120

-

Levies

2,046

1,445

2,046

-

-

-

-

Income 2.7.2

-

-

(3,862)

-

(3,862)

(3,811)

(51)

Total

31,662

7,371

26,037

-

(5,625)

(5,090)

(535)

Q1 Q2 Q3 Q4

-8

-6

-4

-2

0

2

2016/172017/182018/19

Central Items - Forecast Variance Trend

£m

Page 37 of 85

2.7.1 Capital FinancingBreakdown of Variance

LAB Projected Spend

Carry Forward

Forecast Variance

Variance Last

QuarterMovement


One-Off


Pressures£000 £000 £000 £000 £000 £000 £000 £000 £000

11,950 10,067 - (1,883) (1,399) (484) - (2,051) 168

Explanation for Overall Variance:Interest received underspend of (£954k).The overall value results from increasing market rates as a result of the increase in Bank of England Base Rate, and higher than budgeted cash balances. The cash balances result from a combination of forward funding received and prior year reprogramming of Capital Expenditure.

Loan Refinancing Saving (£53k)£30m of LOBO loans have been refinanced during the year. The overall saving is net of fees incurred, apportionment of loan premium expense and the interest payable on the replacement PWLB borrowing.

A further underspend of Interest paid underspend (£735k) forecast as no new long-term loans are expected to be taken during 2018/19. As a result interest payable will be lower than budgeted.

Non-investment income underspend of (£533k) results from recovery of forward funding of Watford Sexual Health Clinic, and includes (£354k) expected in respect of interest accrued on backdated settlement from disposal of Wormley School site.

Internal Interest allocation budget overspend £383k. This results from interest rates now expected to be higher than budgeting assumptions, and average value of LEP forward funding balance expected to be £21m higher than previous year due to significant grant funding received.

Explanation of quarterly movement:

The underspend has increased by (£484k).

The forecast for interest payable on borrowing reduced by (£342k) as greater certainty over cashflows for the 4th quarter removes the expectation of any short term borrowing being required this year.

Loan Refinancing Saving (£53k)£30m of LOBO loans have been refinanced during the quarter. The overall saving is net of fees incurred, apportionment of loan premium expense and the interest payable on the replacement PWLB borrowing.

The forecast for internal interest allocation has increased by £30k as a consequence of revised forecast for LEP balances.

The forecast for interest income receivable increased by (£119k), as a result of increased certainty about the amount of cash available for investment for the rest of the year and overall improvement in yields due to increasing market rates and decisions to commit surplus cash for longer periods.

Page 38 of 85

2.7.2 IncomeBreakdown of Variance

LAB Projected Spend

Carry Forward

Forecast Variance

Variance Last

QuarterMovement


One-Off


Pressures£000 £000 £000 £000 £000 £000 £000 £000 £000

- (3,862) - (3,862) (3,811) (51) - (3,811)

£648k - Estimate of the County Council's share of the gain arising from the Business Rates Pool.

£3.214m – Non-Ringfenced Grants:

Additional non-ringfenced grant income from the Department for Education for:- £36k - Extended Rights to Home to School Transport - £55k - Extended Personal Adviser duty Implementation Grant (New Burdens) - £47k - Key Stage 2 Moderation and Phonics Grant - £50k - Extension of role of virtual school head to certain previously looked after children implementation grant - £47k - Rough Sleeper Strategy

Additional non-ringfenced grant income from the Home Office for:- £113k - Firelink Grant

Additional non-ringfenced grant income from the Department of Health:- £162k - Local Reform & Community Voices - £19k - Social Care in Prisons - £96k - War Pensions Scheme Disregard

Additional non-ringfenced grant income from MHCLG: ACS Support (Revenue) Grant - £2.584m

Page 39 of 85

Section 3 – Capital Monitor

3.1 Capital Summary

The projected capital outturn position as at 31st December 2018 is as follows:

£000s

Reprogramming to future years (13,123)

Underspends (32,127)

Overspends 24

Total Variance (45,226)

- Details of significant capital variances are shown in Section 3.2.

- These variances are calculated on the latest budget of £227.601m. This includes the reprogramming from 2017/18 that was approved by Cabinet in June 2018 plus reprogramming for Quarter 2 that was approved by Cabinet in December 2018.

£k £k

Original Budget Per 2018/19 Integrated Plan 244,024

2017/18 Reprogramming 36,049

Month 6 reprogramming (62,907)Local Highways Maintenance Fund - DFT 7,892Increase in Pothole allocation - DFT 2,723School Expansion Budget Adjustments (1,610) Other Budget Adjustments 1,430

Total Budget Adjustments (52,472)

Latest Approved Budget for 2018/19 227,601

Page 40 of 85

Table 2 – Summary Capital Budget Monitor


Latest Approved

Budget 2018/19

Forecast Outturn

Total Variance Underspend Overspend Reprogr

amming

£'000 £'000 £'000 £'000 £'000 £'000Children's Services School Expansions 57,492 45,588 (11,904) (2,269) 24 (9,659)Schools R&M 18,837 18,837 - - - -High Needs projects 1,370 1,370 - - - -Other - Children's Services 1,508 1,508 - - - -

Total Children's Services 79,207 67,303 (11,904) (2,269) 24 (9,659)

Environment Major Projects 6,725 6,489 (236) - - (236)Road Maintenance 59,617 59,617 - - - -Street Lighting 8,849 8,849 - - - -ITP 5,713 5,697 (16) - - (16)Bridge Maintenance 5,325 5,325 - - - -Other - Environment 7,266 3,981 (3,285) (210) - (3,075)Total Environment 93,495 89,958 (3,537) (210) - (3,327) Fire 2,343 2,443 100 - - 100 ACS EPH Provision 250 150 (100) - - (100)Disabled Facilities Grant 3,333 3,333 - - - -

ACS Property 3,959 1,031 (2,928) (2,411) - (517)Home Improvements Agency 2,036 2,036 - - - -

Other - ACS 1,647 1,569 (78) (78) - -Total ACS 11,225 8,119 (3,106) (2,489) - (617) Resources 25 by 20 21,763 1,163 (20,600) (21,200) - 600Acquisitions 6,675 775 (5,900) (5,900) - -Broadband 5,669 5,669 - - - -BMT Projects 772 713 (59) (59) - -Non-School Cap. Maint. 1,750 1,750 - - - -

Co-location of Libraries 1,225 1,225 - - - -

Technology Purchasing 1,262 1,262 - - - -Other -Resources 2,215 1,995 (220) - - (220)

Page 41 of 85


Latest Approved

Budget 2018/19

Forecast Outturn

Total Variance Underspend Overspend Reprogr

amming

£'000 £'000 £'000 £'000 £'000 £'000Total Resources 41,331 14,552 (26,779) (27,159) - 380 Public Health - - - - - - Grand Total 227,601 182,375 (45,226) (32,127) 24 (13,123)

The net variance of (£45.226m) comprises re-programming of (£13.123m), underspends of (£32.127m), and overspends of £24k.

Details of major variances (over £250k) against the revised budget are shown below.

The impact of these variances on total financing including the borrowing requirement is shown in Table 4.

3.2 Significant Capital Forecast Variances

Children’s Services

New School Developments & Site Acquisitions

Breakdown of Variance

LAB£000s

Projected Spend£000s

Forecast Variance

£000s

Variance last

quarter£000s

Movement£000s

Underspend£000s

Overspend£000s

Reprogramming£000s

17,414 10,479 (6,935) (5,393) (1,542) - - (6,935)The main reasons for the variance are:

(£6.935m) is forecast to be reprogrammed, based on current project timescales and funding profile of schemes. This is in addition to the (£5.393m) reprogrammed in Q2.

Primary Expansions PEP6 & Temporary Expansions Sept 2016 – Hertfordshire County Council ManagedBreakdown of Variance

LAB£000s


Forecast Variance

£000s

Variance last

quarter£000s

Movement£000s

Underspend£000s

Overspend£000s

Reprogramming£000s

2,850 1,307 (1,543) (1,709) 166 (967) 24 (600)The main reasons for the variance are:

A underspend of (£967k) is declared as an underspend for the temporary 16/17 expansions. This funding was reprogrammed at year end to contribute towards the £2m allocation for the 18/19 Temp expansions but after reviewing the demand across the County, this is no longer required and can be released back into the funding envelope to support future projects to address the demand for pupil places.

Reprogramming of (£600k) is forecast for Leavesden Green, as a result of a revised forecast for project timescales that has been received from the main contractor. This is in addition to the (£800k)

Page 42 of 85

Primary Expansions PEP6 & Temporary Expansions Sept 2016 – Hertfordshire County Council Managedreprogrammed in Q2.

£24k overspend relates to final works at Almond Hill.

Primary Expansions PEP7 & Temporary Expansions Sept 2017 - Hertfordshire County Council ManagedBreakdown of Variance

LAB£000s


Forecast Variance

£000s

Variance last

quarter£000s

Movement£000s

Underspend£000s

Overspend£000s

Reprogramming£000s

3,992 3,009 (983) (1,728) 745 (983) - -The main reasons for the variance are:

An underspend of (£714k) is declared as an underspend for the temporary 17/18 expansions. This funding was reprogrammed at year end to contribute towards the £2m allocation for the 18/19 temporary expansions but after reviewing the demand across the County, this is no longer required and can be released back into the funding envelope for future projects to address the demand for pupil places.

A number of small variations are required to the formally published contract sums for the PEP7 permanent expansion programme. These adjustments show a net underspend of (£269k) arising from savings on two project, offset by a small pressure on one project.

This is in addition to the (£1m) reprogrammed in Q2.

Primary Expansions PEP8 & Temporary Expansions Sept 2018 - Hertfordshire County Council ManagedBreakdown of Variance

LAB£000s


Forecast Variance

£000s

Variance last

quarter£000s

Movement£000s

Underspend£000s

Overspend£000s

Reprogramming£000s

2,600 1,481 (1,119) (1,939) 820 (319) - (800)The main reasons for the variance are:

After reviewing the demand across the County, (£319k) is declared as an underspend for the temporary 18/19 expansions and can be released back into the funding envelope for future projects to address the demand for pupil places.

(£800k) is forecast to be reprogrammed to support temporary expansions forecast in 2019/20. This is in addition to the (£1.6m) reprogrammed in Q2.

Secondary Expansions – SEC1Breakdown of Variance

LAB£000s


Forecast Variance

£000s

Variance last

quarter£000s

Movement£000s

Underspend£000s

Overspend£000s

Reprogramming£000s

300 0 (300) - (300) - - (300)The main reasons for the variance are:

(£300k) is forecast to be reprogrammed for a Secondary School Expansion; funds have been set aside in the event of additional planning and Highways works being required.

Secondary Expansions – SEC2Breakdown of VarianceLAB

£000sProjected

SpendForecast Variance

Variance last

Movement£000s Underspend Overspend Reprogramming

Page 43 of 85

Secondary Expansions – SEC2£000s £000s quarter

£000s£000s £000s £000s

9,817 10,292 475 (2,570) 3,045 - - 475The main reasons for the variance are:

£475k reprogramming is anticipated as a result of updated information received by the Independent Certifier. This is in addition to the (£2.570m) reprogrammed in Q2.

Secondary Expansions – SEC3Breakdown of Variance

LAB£000s


Forecast Variance

£000s

Variance last

quarter£000s

Movement£000s

Underspend£000s

Overspend£000s

Reprogramming£000s

13,017 11,518 (1,499) 2,898 (4,397) - - (1,499)The main reasons for the variance are:

• (£1.090m) reprogramming is anticipated as a result of updated information received by the Independent Certifier. This offsets the £2.898m reprogrammed in Q2.

(£409k) is forecast to be reprogrammed for one scheme for which the funding agreement is currently in progress.

Environment

A602 ImprovementsBreakdown of Variance

LAB£000s


Forecast Variance

£000s

Variance last

quarter£000s

Movement£000s

Underspend£000s

Overspend£000s

Reprogramming£000s

2,070 2,400 330 0 330 - - 330The main reasons for the variance are:

There is an in year pressure of £330k due to increased construction costs in 2018/19. It is currently anticipated that these will be absorbed in the overall scheme budget. Reprogramming from 2019/20 will therefore be required, subject to agreement by the LEP Board.

Ware Household Waste SiteBreakdown of Variance

LAB£000s


Forecast Variance

£000s

Variance last

quarter£000s

Movement£000s

Underspend£000s

Overspend£000s

Reprogramming£000s

3,000 0 (3,000) (2,500) (500) - - (3,000)The main reasons for the variance are:

Full discharge of the planning conditions by the Environment Agency (EA) for the Ware Household Waste Recycling Centre has not yet been achieved and officers from both the County Council and the EA are liaising to achieve this as soon as possible. As a result it is requested that all funds be reprogrammed to 2019/20. This is in addition to the (£2.5m) reprogrammed in Q2.

Page 44 of 85

A414 Hertford Major ProjectBreakdown of Variance

LAB£000s


Forecast Variance

£000s

Variance last

quarter£000s

Movement£000s

Underspend£000s

Overspend£000s

Reprogramming£000s

400 0 (400) (1,350) 950 - - (400)The main reasons for the variance are:

The A414 Strategy development period has been longer than anticipated which has delayed start of development work on the Hertford Major scheme emerging from this strategy. (£400k) is forecast to be reprogrammed, this is in addition to the (£1.35m reprogrammed in Q2).

Fire

No major variances

Adult Care Services

Commissioning for Independence (formerly Supported Living)Breakdown of Variance

LAB£000s


Forecast Variance

£000s

Variance last

quarter£000s

Movement£000s

Underspend£000s

Overspend£000s

Reprogramming£000s

3,251 383 (2,868) (2,351) (517) (2,351) - (517)The main reasons for the variance are:

A review of the ACS Accommodation Strategy is being undertaken which includes the provision of supported accommodation for people with care and support needs. Whilst the review is being undertaken and governance processes are set up to ensure effective prioritisation according to service needs, oversight and decision making, it is unlikely the full allocation of the capital budget for 18/19 will be utilised leading to an anticipated underspend of (£2.351m). (£517k) is requested to be reprogrammed to 19/20 for schemes that are currently in development with works anticipated to commence in 19/20.

Resources

25 by 20 – AcquisitionBreakdown of Variance

LAB£000s


Forecast Variance

£000s

Variance last

quarter£000s

Movement£000s

Underspend£000s

Overspend£000s

Reprogramming£000s

21,300 550 (20,750) (22,200) 1,450 (21,200) - 450The main reasons for the variance are:

(£22.1m) variance, of which (£21.2m) relates to the purchase of office accommodation to support the rationalisation of operational assets. When the setting the budget the council wanted flexibility to either be able to purchase the site, or to amend lease arrangements. Following development of the business case, Cabinet approved the lease option. As such the purchase budget is no longer needed.

Work has now commenced on refurbishment works. These are now expected to complete earlier than previously anticipated, therefore £450k is forecast to be reprogrammed from 2019/20. This will offset the (£950k) reprogramming requested in Q2.

Page 45 of 85

Land Acquisition – StevenageBreakdown of Variance

LAB£000s


Forecast Variance

£000s

Variance last

quarter£000s

Movement£000s

Underspend£000s

Overspend£000s

Reprogramming£000s

5,882 - (5,882) (5,882) - (5,882) - -The main reasons for the variance are:

An underspend of (£5.882m) is declared as this acquisition will not be taking place.

Public Health

No major variances.

3.3 Movements in the Capital Budget’s Financing

Table 3 below summarises the changes in financing to support the revised budget and the forecast financing position based on expected outturn against budget. Reprogramming and underspend, except where these are linked to grant funding or external contributions, result in a higher level of capital reserves to carry forward for funding in future years.

Table 3 – Capital Budget Financing

Budget Financing Source

Original Budget

(2018/19 IP)

Funding Movements

Agreed

Latest Adjusted Budget

2018/19

Latest Forecast Outturn

Variance (Additional

Funding Movements)

£'000 £'000 £'000 £'000 £'000Capital Receipts 10,000 5,248 15,248 2,584 (12,664)Capital Grants 81,649 20,193 101,842 89,581 (12,261)Revenue contributions - 1,513 1,513 1,513 - Contributions from Third Parties 48,148 (24,458) 23,689 23,942 253 Specific Reserves 2,761 327 3,088 3,088 - Borrowing 101,466 (19,668) 82,221 61,667 (20,554)Total 244,024 (16,846) 227,601 182,376 (45,225)

3.4 Capital Receipts

£1.201m was achieved by 31st December 2018.

The total budgeted receipts for 2018/19 are £19.048m, which includes £13.8m of capital receipts funding assumed in the Integrated Plan to fund the Capital Programme and Spend to Achieve plus £5.2m shortfall in capital receipts from 2017/18 which has been carried forward to be achieved in the current year.

As at 31st December 2018, a shortfall of £15.269m is forecast.

Page 46 of 85

There is a risk that some of the Capital Receipts forecast to be achieved in this year may fall into 2019/20. A sale expected to achieve £995k is due to go on the market at the beginning of January 2019. There are five small site disposals of which three are currently on the market, two of which are under offer.

Table 4 – Capital Receipts for 2018/19 – 2020/21

Forecast Forecast ForecastReceipts to

31.12.18 2018/19 2019/20 2020/21

£'000 £'000 £'000 £'000

Budgeted Receipts:

Capital receipts funding assumed in IP for Capital Programme 10,000 10,000 10,000

Capital Receipts – Spend to Achieve 3,800

2017/18 shortfall 5,248

Total Budgeted Receipts 19,048 10,000 10,000 Total Targeted Receipts 1,201 3,779 38,095 30,200 Surplus/ (shortfall) (15,269) 28,095 20,200

3.5 Spend to Achieve

The Spend to Achieve Capital Receipts Reserve is a fund that is used to deliver projects that require investment prior to generating a Capital receipt or a revenue income stream. The fund is reviewed monthly. There was a brought forward balance on this fund at 1 April 2018 of £2.594m.

At present, there is forecast spend of £1.195m. This is currently expected to be funded by capital receipts received in year, but in the event of spend being higher than capital receipts achieved; the remaining balance will be funded from the balance brought forward.

3.6 Other Matters

School expansions

Further reprogramming of up to £7m may be required for new school developments as the timing of spend is dependent on a range of external factors. In addition, reprogramming for the Secondary Expansions may be required in 2018/19. These are mainly school managed projects, where the Council have less control over the delivery of the projects and when the payments are due.

Page 47 of 85

Local Highways Maintenance Funding Dft Grant

£7.89m additional Grant was received from the Department for Transport which is required to be spent this within this financial year, otherwise this will be subject to clawback. Highways are putting together a works programme for the funding to be spent this year; however, there are a number of risk factors that could affect delivery such as severe weather incidents and resourcing issues with contractors.

Highways

Across Highways there are a large number of schemes with work scheduled for Quarter 4. There is a risk of reprogramming for these schemes if there is bad weather.

Page 48 of 85

Section 4 – Children’s Services (Schools) Variances

LABSpend to

Date


Carry Forwards


Variance Last

Quarter

Quarterly MovementSCH Ref

£000s £000s £000s £000s £000s £000s £000s

Schools Delegated

4.1.14.1.24.1.34.1.44.1.54.1.64.1.74.1.84.1.9

562,406 456,930 550,368 - (12,039) (13,566) 1,527

Central Element of DSG

4.1.104.1.114.1.124.1.134.1.14

51,102 32,518 50,740 - (362) (1,894) 1,532

Schools Grants & Other Funding

4.1.154.1.16

(613,509) (425,485) (604,919) - 8,590 13,299 (4,709)

Total - 63,964 (3,810) - (3,810) (2,161) (1,650)

4.1.1 3 & 4 Year OldsBreakdown of Variance

LAB Projected Spend

Carry Forward

Forecast Variance

Variance Last

QuarterMovement


One-Off


Pressures£000 £000 £000 £000 £000 £000 £000 £000 £000

57,071 56,171 - (900) (900) - - (900) -

A £900k underspend is projected on 3 & 4 year olds due to slightly lower than budgeted pupil numbers

Page 49 of 85

4.1.2 Primary DelegatedBreakdown of Variance

LAB Projected Spend

Carry Forward

Forecast Variance

Variance Last

QuarterMovement


One-Off


Pressures£000 £000 £000 £000 £000 £000 £000 £000 £000

322,684 315,637 - (7,047) (8,843) 1,796 - (7,047) -

4.1.3 Pre 16 SecondaryBreakdown of Variance

LAB Projected Spend

Carry Forward

Forecast Variance

Variance Last

QuarterMovement


One-Off


Pressures£000 £000 £000 £000 £000 £000 £000 £000 £000

76,298 71,400 - (4,898) (4,925) 26 - (4,898) -

The underspend in Primary Delegated is due to the Academy conversions that have taken place since the submission of the APT in December 2017. Seven Primary schools have converted to Academy status (since the APT submission) with a further one Primary school having a conversion date in place for 2018/19. The underspend reflects the proposed conversions in budget share payments.

Forecasting for variances on schools delegated budgets is based on provisional dates for Academy Conversions. These dates are subject to approval at DfE and the Regional Headteacher meetings. As a consequence they often change, there is therefore constant movement in the forecast. Schools can chose to convert at any point in the year, and any prospective applications are often unknown.

4.1.4 Sixth FormBreakdown of Variance

LAB Projected Spend

Carry Forward

Forecast Variance

Variance Last

QuarterMovement


One-Off


Pressures£000 £000 £000 £000 £000 £000 £000 £000 £000

12,481 11,914 - (567) (554) (12) - (567) -

The underspend reflects reductions in sixth form payments for proposed Academy conversions. There is an offsetting overspend on the Secondary Sixth Form Grant income budget.

Page 50 of 85

4.1.5 Top UpsBreakdown of Variance

LAB Projected Spend

Carry Forward

Forecast Variance

Variance Last

QuarterMovement


One-Off


Pressures£000 £000 £000 £000 £000 £000 £000 £000 £000

21,623 21,435 - (188) (787) 600 - (188) -

Forecasting for Special Schools top up and residential funding is completed based on the outcomes of panel meetings. These meetings are not scheduled in line with quarterly forecasting, the first provisional forecast not being available until late in the summer term, and the second quarter late in Autumn. Third quarter reporting is not available until the January monitor in February

4.1.6 ContingencyBreakdown of Variance

LAB Projected Spend

Carry Forward

Forecast Variance

Variance Last

QuarterMovement


One-Off


Pressures£000 £000 £000 £000 £000 £000 £000 £000 £000

78 428 - 349 899 (550) - 349 -

The Contingency budget is forecast to overspend by £349k due to agreement at Schools Forum to carry forward the underspend on the primary schools element of £349k from the schools contingency budget in 2017/18. This is shown as an overspend in 2018/19, as it is not included within the budget.

The decision has been agreed to approve the funding provision for the deficit for the two secondary schools who converted in 2018/19 with Academy Orders is to be drawn down from the School Improvement and Brokering Grant.

4.1.7 Growth Funding & Falling Rolls FundBreakdown of Variance

LAB Projected Spend

Carry Forward

Forecast Variance

Variance Last

QuarterMovement


One-Off


Pressures£000 £000 £000 £000 £000 £000 £000 £000 £0007,182 6,930 - (252) (209) (44) - (252) -

The Growth Fund allocations were agreed by Schools Forum in June 2018. There is a net underspend of £252k, however £750k of the expenditure is offset by additional DSG. This relates to the requirements to make allocations to academies for the Summer term (as academies are funded on an academic year basis). Adjusting for this, there is an

Page 51 of 85

underspend on the Growth Fund of £1,002k and this is due to:

- a lower number of bulge classes than originally anticipated,

- a delay in opening new free schools,

- an underspend on infant class size funding as some of these schools are expanded.

4.1.8 Disapplication FundBreakdown of Variance

LAB Projected Spend

Carry Forward

Forecast Variance

Variance Last

QuarterMovement


One-Off


Pressures£000 £000 £000 £000 £000 £000 £000 £000 £000

- 2,356 - 2,356 2,360 (4) - 2,356 -

In 2017/18 the Authority requested a Disapplication approval for schools with significant lagged pupil funding and was granted approval to apply DSG in disapplication funding, in specific relation to five schools who had intentions to convert to Academy Status and are in a period of exceptional growth which requires financial stability in relation to lagged pupil funding. Only one of those schools converted in 2017/18, so further approval was sought to carry this forward for those four schools, who hadn't converted into 2018/19, which was agreed.

The approval to disapply Schools Funding regulations means an approval to overspend the budget. Therefore the overspend reported in this monitor represents the amount approved to the schools converting this year.

Three of the four remaining schools included in the disapplication request have confirmed dates to convert in 2018/19. Two converted in September, one in January and a further one expected in February.

Sir Frederic Osborn (£1,023k) and Adeyfield (£655k) converted on 1st September 2018.

Cavendish (£331k) is expected to convert on 1st January 2019.

The remaining school Barclay (£340k) is expected to convert 1st February 2019

Page 52 of 85

4.1.9 Special Unit & BasesBreakdown of Variance

LAB Projected Spend

Carry Forward

Forecast Variance

Variance Last

QuarterMovement


One-Off


Pressures£000 £000 £000 £000 £000 £000 £000 £000 £0004,738 4,394 - (344) (378) 34 - (344) -

SEN are currently consulting on the re-commissioning of Units and Bases as part of a specialists provision work stream. As a result of this period of transition, levels of services are limited. Budgets included in this underspend are currently those that have no commissioned service and location, and only direct employee expenditure is being incurred.

The results of the re-commissioning is expected to provide a level of service that supports the needs of more complex Children and Young People. During the transition and recommissioning process there is an anticipated underspend whilst current arrangements are funded based on a current level of provision.

The consultation is due to be completed during this financial year, with an implementation date of 1st April 2019.

4.1.10 Early Years SEN Development FundBreakdown of Variance

LAB Projected Spend

Carry Forward

Forecast Variance

Variance Last

QuarterMovement


One-Off


Pressures£000 £000 £000 £000 £000 £000 £000 £000 £000600 - - (600) (600) - - (600) -

Due to the SEND Transformation across all age ranges, it has been decided to put the EY SEND support review for early years providers work on hold and therefore the £600k budget will not be spent this financial year

Page 53 of 85

4.1.11 SEN Strategy Development FundBreakdown of Variance

LAB Projected Spend

Carry Forward

Forecast Variance

Variance Last

QuarterMovement


One-Off


Pressures£000 £000 £000 £000 £000 £000 £000 £000 £0001,377 - - (1,377) (2,077) 700 - (1,377) -

The SEN Strategy Development Fund was established to support new initiatives, including key priorities within the SEND strategy. It is currently expected to underspend in full. As an uncommitted resource, the fund also provides useful flexibility in managing budget risks.

£700k was included within this budget as a reserve for potential pressures within the Education Independent Placements budget. This budget has now been moved to the Independent Placements budget causing an LAB movement of £700k.

4.1.12 Out of County Top UpsBreakdown of Variance

LAB Projected Spend

Carry Forward

Forecast Variance

Variance Last

QuarterMovement


One-Off


Pressures£000 £000 £000 £000 £000 £000 £000 £000 £0001,199 1,599 - 400 - 400 - 400 -

The Out of County top up is expected to overspend by £400k due to the increase in number of placements outside the county.The numbers of pupils placed by SEN in mainstream and specialist schools over the Herts border has increased since 2016 as shown in the table below.

A few of these will be pupils who are Children Looked After, where they are living in a foster placement or children’s home, and attend local schools. A minority will be placed in schools across the border as the OLA school may be their closest to home.However the increase in placements in schools in OLAs is mainly due to the shortage of spaces in Hertfordshire schools, particularly in our specialist provision.

The Movement of £400k is due to the increase in expenditure for the number of placement outside the county. An analysis of the increase compared with prior years is represented below:

Page 54 of 85

Year Attending OLA Mainstream Attending OLA Special Pupils Attending OLA

2016 66 76 142

2017 83 94 177

2018 106 135 241

4.1.13 Colleges High Needs FundingBreakdown of Variance

LAB Projected Spend

Carry Forward

Forecast Variance

Variance Last

QuarterMovement


One-Off


Pressures£000 £000 £000 £000 £000 £000 £000 £000 £0005,536 5,815 - 279 - 279 - 279 -

Placements have now been confirmed and returns received from Colleges for 2018/19. The details of pupils attending has now caused a forecast overspend. The average cost of a placement is £12,200. The current budget will fund 448 full year places. There are currently 471 places and a further 23 placements are estimated to start before the end of the financial year. The increasing pressure on this budget has been recognised and further funding is expected to be added to the budget for 2019/20.

4.1.14 High Needs CapitalBreakdown of Variance

LAB Projected Spend

Carry Forward

Forecast Variance

Variance Last

QuarterMovement


One-Off


Pressures£000 £000 £000 £000 £000 £000 £000 £000 £000750 1,950 - 1,200 1,220 (20) - 1,200 -

Overspend of £1,200k is a result of several of the 2017/18 Special School capital schemes, to increase capacity in special schools, having slipped into 2018/19. As a result there was an underspend in 2017/18 and there is a corresponding overspend of £1,220k in 2018/19, as this is not included within the 2018/19 budget.

Page 55 of 85

4.1.15 Dedicated Schools GrantBreakdown of Variance

LAB Projected Spend

Carry Forward

Forecast Variance

Variance Last

QuarterMovement


One-Off


Pressures£000 £000 £000 £000 £000 £000 £000 £000 £000

(599,612) (591,588) - 8,024 12,745 (4,721) - 8,024 -

The £8,024k overspend against budget is made up of:

£11,945k relates to delegated budget shares, less grant will be received by the authority as when maintained schools convert to academy status, the authority is no longer required to make Budget Share payments to converted schoolsplus (overspend) £787k retrospective adjustment to 2017/18 early years DSG to reflect the January 2018 early years pupil data. less (underspend) £2,861k expected additional High Needsless (underspend) £196k extra high needs DSG relating to 2018/19 (the extra £474k Early Years DSG relating to 2018/19 has been reflected by adjusting the budget)less (underspend) £307k adjustment to rates that are recouped by the EFSA less (underspend) £750k of additional funding received for Growth Funding Allocations made to Academies in the summer termless (underspend) £594k saving due to Katherine Warrington Free school not opening in September 2018.

The majority of the significant movement in this quarter relates to the expected additional High Needs Allocation that was advised in December 2018

4.1.16 Sixth Form GrantBreakdown of Variance

LAB Projected Spend

Carry Forward

Forecast Variance

Variance Last

QuarterMovement


One-Off


Pressures£000 £000 £000 £000 £000 £000 £000 £000 £000

(13,897) (13,330) - 567 554 12 - 567 -

Less sixth form grant will be received by the authority as when maintained secondary schools convert to academy status, the authority is no longer required to make the sixth form funding payments to converted schools. There is an offsetting underspend on the Secondary Sixth Form budget.

Page 56 of 85

Section 5 – Other Financial Information

5.1 Treasury Management Report

The Council’s Treasury management activities in this period were undertaken in an environment marked by uncertainty over the UK’s future relationship with the EU, geopolitical tensions, and the influence of expectations around the potential for fiscal tightening in the US and EU.

During Q3 Consumer Price Index [CPI] inflation was 2.1%, from 2.4% during Q2, and is expected to remain above the 2% Bank of England target. Inflationary pressures subsided during the period, primarily due to a 25% reduction in the price of oil in December 2018 when compared to prices in summer 2018. UK wage growth adjusted for inflation was 1.0% during the period.

The rise in quarterly GDP growth to 0.6% in the third calendar quarter from 0.4% in the second was due to weather-related factors boosting overall household consumption and construction activity over the summer. At 1.5%, annual GDP growth continues to remain below trend. Following the Bank of England’s decision to increase Bank Rate to 0.75% in August, no changes to monetary policy have been made since.

Investment yields have increased during the period. The 7-day LIBID benchmark was 0.53% for the quarter, increasing from 0.51% in the previous period.

During the third quarter of 2018/19 the Council held an average investment portfolio of £170.77m, and achieved an investment return of £0.578m or 1.35%.

The projected interest earned on treasury investments for 2018/19 is £2.323m, which represents additional income of £0.954m compared to budget. This projection is based on an expectation that the strategic pooled fund investments will continue to provide stable returns, along with cash balances and interest rates both higher than were foreseen when the budget was set. This has enabled more cash lending to other local authorities for durations between one and nine months, which has had a positive effect on credit risk and yield metrics.

The overall rate of return for the second quarter was 1.35%, which represents an increase of 0.02% compared to the previous quarter. Underlying this, the pooled fund investments returned 4.15% (a reduction of 0.51%) while the remaining, mainly short-term investments returned 0.76% (increase of 0.13%). This reflects seasonality in dividend payments from pooled equity investments, which peak during the first quarter in line with the financial reporting year end for many corporate entities, and some volatility due to market conditions. Overall pooled fund returns for the year are considered likely to remain broadly stable and deliver a return exceeding the 4% target level for these investments.

Average investment balances were lower during the period, in part due to action taken to refinance two of the Council’s LOBO loans. Two loans, with a total value of £30m, at an average rate of 4.13%, were repaid on 6th November 2018, and replacement borrowing at 2.16% was arranged on 6th December 2018. The timing difference between repayment and refinancing allowed the Council to benefit from interest rate fluctuations in the short-term. The lower rate of interest on the refinanced loans results in a net saving of £0.05m during 2018/19, with annual savings exceeding £300k in future years.

Page 57 of 85

5.2 Debt Management Report

A summary of the debt position for the third quarter of 2018/19 is provided below.

The following table summarises the aged debt position for invoices at end of the previous quarter and shows the in-quarter change in total outstanding.

As at 30/09/18

As at 31/12/18

£ m

Debt Recovery Status

£ m% of Total

Description

Quarterly Change

£ m

24.69 Within Payment Terms 21.68 44.88Invoices that have not reached the due date for payment

(3.00)

2.26Under 1 Month Overdue

3.63 7.52Invoices where reminders have been issued

1.37

5.70 1-3 Months Overdue 2.77 5.73 (2.93)

5.72 3-9 Months Overdue 8.41 17.41 2.69

10.64 >9 Months Overdue 11.89 24.46

Invoices where active debt recovery is in progress or awaiting budget manager/holder decision 1.18

49.01 Total 48.31 100.0 (0.70)

Total debt at 31st December 2018 was £48.31m – this is a decrease of £0.70m from the previous quarter.

The value of invoices not due for payment was £3m lower than in the previous quarter.

The value of invoices less than one month overdue increased by £1.37m. The significant movements which contribute to this were from invoices related to CCG Income - £0.36m - and Invoices raised by Herts Fullstop - £0.52m

The value of all other overdue invoices (i.e. for periods greater than 1 month) increased by £0.94m. This value is significantly influenced by the value of invoices related to deferred payment agreements within Adult Care Services, where backdated accounts have been raised to clients. These aren’t due until their properties are sold. The impact of these invoices is shown in the following table:

Debt Recovery StatusQuarterly

Change£ m

Movement in Property Charge

Invoices

Net Quarterly

Movement

Within Payment Terms (3.00) (0.92) (2.08)Under 1 Month Overdue 1.37 0.48 0.891-3 Months Overdue (2.93) (1.94) (0.99)3-9 Months Overdue 2.69 1.89 0.80

Page 58 of 85

Debt Recovery StatusQuarterly

Change£ m

Movement in Property Charge

Invoices

Net Quarterly

Movement>9 Months Overdue 1.18 0.43 0.75

(0.70) (0.06) (0.63)

HertsFullstop invoices account for a further £0.51m of the reduction in debt 1-3 months overdue. HertsFullstop debt in the 3-9 months overdue category has increased by £0.21m, which provides an indication of progress in recovering outstanding income.

Invoices to NHS Bodies account for £0.50m of the reduction in invoices 1-3 months overdue, and £0.66m of those 3-9 months overdue. This is indicative of the often lengthy payment approval processes for NHS bodies, where disputed information at individual client level can result in larger overall invoices passing through to longer-term aged debt categories before settlement. As such this change is not considered to be significant.

Page 59 of 85

Appendices

Appendix A – Approved Virements & Technical AdjustmentSummary Revenue Budget Monitor as at 31st December 2018

SERVICE Original Budget

Approved Virements & Tech Adj

Latest Approved Budget

£’000 £’000 £’000

Explanation of Approved Virements & Technical Adjustments

Adult Care Services 321,690 7,211 328,901

o Apprentice Levy Charge (-246k) MAYo 2018/19 Pay Inflation ( +1,772k) MAYo 2017/18 Grant Drawdowns (+1,115k) JUNEo BCF & IBCF Drawdowns (+5,054k) JUNEo Drawdown from ADASS Reserve (+262k) JULYo Drawdown from ITT Fund (+2k) JULYo Transfer to Resources (-16k) JULYo Transfer to ADASS Reserve (-524k) AUGUSTo Redundancy Costs Funded from Central Items (+14k) AUGUSTo Transitions Staff Budget to 0-25 Staff Budget (-222) DECEMBER

Public Health 47,612 1,115 48,727 o Apprentice Levy Charge (-12k) MAYo 2017/18 PH Drawdown (+1,127k) JUNE

Children's Services 169,984 1,587 171,571

o 2018/19 Pay Inflation ( +1,457k) MAYo Apprentice Levy Charge (-338k) MAYo 2017/18 CS Grant Drawdowns (+£26k) JUNEo Drawdown from Bowes Lyon House Reserve (+£25K) JULYo Redundancy Costs Funded from Central Items (+39k) AUGUSTo Pension Strain Costs Funded from Central Items (+17k) AUGUSTo CS Grant Allocation (+161k) SEPTEMBERo RCCO Contribution from CS for Potten End Scheme (-31k) NOVEMBERo Transitions Staff Budget to 0-25 Staff Budget (+222k) DECEMBERo Drawdown from CS E&EI Reserve (+9k) DECEMBER

Page 60 of 85

Summary Revenue Budget Monitor as at 31st December 2018



Latest Approved Budget Explanation of Approved Virements & Technical Adjustments

£’000 £’000 £’000

Environment & Infrastructure 107,762 2,266 110,028

o 2018/19 Pay Inflation ( +314k) MAYo Apprentice Levy Charge (-54k) MAYo Various 18/19 Scheme Savings (+1,085k) MAYo Contribution for Development Services for Growth & Infrastructure (+371k) MAYo Drawdown from Members Highways Locality Reserve (+321k) JULYo Drawdown from Strategic Planning Authority Reserve (+187k) AUGUSTo Pension Strain Costs (+19k) SEPTMEBERo Redundancy Costs (+24k) NOVEMBER

Resources 70,940 1,085 72,025

o 2018/19 Pay Inflation ( +1,220k) MAYo Apprentice Levy Charge (-182k) MAYo Contribution to Development Services for Growth & Infrastructure (-371k) MAYo 2017/18 Property Drawdown (+90k) JUNEo Drawdown from Corporate Carry Forward Reserve (+44k) JULYo Transfer from ACS (+16k) JULYo Contribution to Hemel Public Service Quarter (PSQ) (-5k) AUGUSTo Drawdown from Herts Property Carry Forward (+247k) SEPTEMBERo Redundancy Costs (+25k) SEPTEMBER

Community Protection 34,983 458 35,441

o 2018/19 Pay Inflation ( +152k) MAYo Apprentice Levy Charge (-130k) MAYo Transfer to POCA (-39k) OCTOBERo Drawdown of Tesco Bags Help Grant/MTFA Grant (+31K) NOVEMBERo Firefighters pay award (+443k) DECEMBER

Page 61 of 85





£’000 £’000 £’000

Central Items 51,605 (19,943) 31,662

o Apprentice Levy Charge (+962k) MAYo 2018/19 Pay Inflation ( -4,915k) MAYo 2017/18 Business Rates Pooling Drawdown (+140k) JUNEo Transfer to Transition Reserve (-5,960k) JULYo Transfer to ITT Fund (-6,428k) JULYo Other movements to reserves (-211k) JULYo Redundancy Costs (-52k) AUGUSTo Pension Strain Costs (-17k) AUGUSTo Redundancy Costs (-25k) SEPTEMBERo Pension Strain Costs (-19k) SEPTEMBERo CS Grant Allocation (-161k) SEPTEMBERo Carry forward transferred to Reserve (-2,789k) SEPTEMBERo Redundancy costs (-25k) DECEMBERo Firefighters pay award (-443k) DECEMBER

NET REVENUE BUDGET 804,577 (6,222) 798,354

Funded from Balances - 6,187 6,187

o Transfer to Environment for Various 18/19 Scheme Savings (-1,085k) MAYo 2017/18 Carry Forwards transferred to 2018/19 (-7,552k) JUNEo Transfer to Transition Reserve / ITTF (+11,920k) JULYo Other movements from reserves (-443k) JULYo Transfer from Strategic Planning Authority Reserve (-186k) AUGUSTo Transfer for ADASS Reserve (+524k) AUGUSTo Transfer of Carry Forward to Property (-247k) SEPTEMBERo Carry forward transferred to Reserve (+2,789k) SEPTEMBERo Transfer re POCA (+39k) OCTOBERo Drawdown of Tesco Bags Help Grant/MTFA Grant (-31K) NOVEMBERo Drawdown from CS E&EI Reserve (-9k) DECEMBER

Page 62 of 85





£’000 £’000 £’000

Contribution to Capital - 36 36

o Contribution for Hemel Public Service Quarter (PSQ) (+5k) AUGUSTo RCCO Contribution from CS for Potten End Scheme (+31k) NOVEMBER

COUNTY FUND TOTAL 804,577 - 804,577

Page 63 of 85

Appendix B – Invest to Transform

Live Schemes (approved before 2018/19

Spend to 31/03/2018

2018/19 Estimated Spend

Future Years Total Future Commitments Project Update

Completed Schemes (22,631)

-

-

-

Telecare (1,840)

(87)

(78)

(165)

This investment has funded the provision of preventative telecare to a cohort of circa 1,000 people with low to moderate needs at the time of assessment. Preventative telecare supports the delivery of savings by enabling people to live more independent lives and delay the progression to more expensive forms of care. There is scope to realise efficiencies/savings through the application of modern digitally enabled assistive technologies. A project team has been created to lead on delivering Hertfordshire’s Assistive Technology strategy and to pilot digitally enabled technologies which will inform and more modern and efficient assistive technology offer across the County post April 2021.

Broadband (Funding ring-fenced)

-

(1,500)

-

(1,500)

The ITT reserve will be spent in 2018/19.

It is currently anticipated that BT/Open Reach will meet all project milestones in 18/19

Broxbourne Land Acquisition

(211)

(289)

-

(289)

Planning application was submitted in Autumn 2018, Housing Infrastructure Funding (HIF) being pursued by way of Green Book Appraisal, works still going forward

Page 64 of 85


Spend to 31/03/2018



Web-site Upgrade (including £120k Intranet)

(783)

(78)

(133)

(211)

The council’s public-facing website hertfordshire.gov.uk replaced hertsdirect.org to deliver online services and information more effectively to customers. Since the main implementation we have seen a decrease in calls to our Customer Service Centre, increase in customer satisfaction volumes and ratings and are using cheaper technology. This improved platform has prevented the need for services to use other websites, and current improvements to accessibility for users and continuing iteration and development is underway.

Library Strategy Review (AKA Inspiring Libraries)

(612)

(928)

(4,460)

(5,388)

It is estimated that the approx spend for 2018/19 will be £928k. This budget will be used to support agreed Library Property Projects at St Albans and Knebworth, plus agreed improvements in Library Technology. It will also be used to supplement funding for the Co-location of Library projects.

E- commerce Project (209)

(16)

-

(16)

Phase 1 services are now all migrated and being fully supported. All 3rd party integration has been completed with some outstanding issues being resolved. All agreed chip & pin machines have been deployed with the procurement of a new Merchant Card provider delayed due to the opportunity to secure a better deal with current provider.

Families First (635)

(64)

-

(64)

Although work is taking place which is reducing the number of contacts, the savings are not cashable. If successful, the impact will be to prevent further increase in spend on CLA, so should be treated as cost avoidance. Cashable savings are to be found from elsewhere in the service.

Page 65 of 85


Spend to 31/03/2018



E-allowances (Development of e-allowances)

(28)

(74)

-

(74)

Q3 18/19 Monitor - The Provider Portal - phase 1 was rolled out to 2 of the 7 fostering groups from mid-September. A significant issue has been identified requiring a system upgrade before the roll out can continue. We are waiting for Serco to identify costs of providing support to users going forward. The upgrade to ContrOCC is at the end of February, so the roll out will not continue until the new financial year.Phase 2 has been impacted following the delay in phase 1 and the increased supplier costs for delivering phase 2. This is under review and will not be completed before year end.Softbox Decommissioning - All Carer allowance payments have been transferred from Softbox to LCS/ContrOCC. Work is progressing on data extraction and a report has been specified, report testing is underway and all data will be extracted by the end of the financial year when the license will be discontinued.

Local Authority Trading Company for Adult Care Services (LATC)

(51)

(93)

-

(93)

Herts at Home Limited has been incorporated and work is now underway to look at options for putting in place a plan to mitigate the risks of a significant market failure - a support at home provider (home care) not being able to continue to provide services. This includes an assessment of the risks and associated mitigating factors as well as the potential to commence service provision via the LATC.

Page 66 of 85


Spend to 31/03/2018



A414 Strategy Studies -

(150)

-

(150)

The A414 Strategy is well advanced and will be put to Cabinet for adoption in Q4 18/19, following an autumn (Q3) Public Consultation. The Strategy will set out a preferred route corridor for a Hertford Bypass and identify a series of interventions and improvements along the length of the A414 corridor to reduce congestion and support economic growth and development. The Strategy will provide a basis for the develop of a forward works programme, support funding bids and the development of business cases for priority schemes as well as enabling informed discussions with developers.

Adult Care Services - Business Process Efficiency

(48)

(10)

-

(10)

The technological approach to citizen engagement within ACS will be reviewed with suppliers to develop the online offering to service users and families, improve information flow and reduce transaction costs.

Adult Care Services - Transport Co-ordinator (Learning Disabilities)

(47)

(2)

-

(2)

ITT fund ended May 2018. Current Officer [GB] has now left county council. New post being recruited within service / commissioning to extend remit of reviewing both cost & volume outcomes of Transport arrangements across ACS to managing cost outputs.

Adult Care Services - Occupational Therapists (3 posts)

(75)

(53)

-

(53) All 3 Occupational Therapists are in post

Promoting county council Land to Emerging Local Plans.

(17)

(107)

(26)

(133)

Work has started on project and Vincent Gorbing are undertaking the STA technical module works and technical drawings

Introduction of Job Families

-

(30)

-

(30)

HR have confirmed that they have plans in place to utilise some of this in the next quarter.

Page 67 of 85


Spend to 31/03/2018



Learning Disability Transformation

(147)

(768)

(227)

(995)

All ADS efficiency projects have been identified and are managed via two boards, Day Opportunities and Optimal Accommodation. Financial reporting on the overall ADS budget and spend is also monitored at these boards on a monthly basis. Boards are chaired by the Operations Director and the Assistant Director of Planning & Resources. Related work streams such as assistive technology, and income opportunities, such as CHC are also monitored to ensure there is a joined up approach to achieving both efficiencies and on-going preventative spend.

Smart Digital - Customer Facing Services

(39)

(68)

(43)

(111)

Started Sept 17 - projects include:• Online van permit system for recycling centres• Events and booking system• Investigating customer account login need and feasibility• Market research on the use of artificial intelligence, robotics and voice assistants to streamline services and provide broader access to services and information via emerging channels.• Business analyst appointed, and Digital Product Manager started Dec 17. These roles support a range of digital projects, including e-payments and an internal / external event booking system.

Page 68 of 85


Spend to 31/03/2018



Herts Full Stop ICT Infrastructure Investment

-

(130)

(1,837)

(1,967)

The business has completed a full pre market engagement exercise and will be going out to tender for the full requirements in February, with the intention to award the contract to start in April 2019. Full delivery of the solution will be April 2020.

Hertfordshire Art Collection

(21)

(33)

-

(33)

The disposal of the majority of Art Works will be complete by the end of the financial year either through auction or gifting to local Hertfordshire organisations and school. The Auction will take place on 21st March.Plans are progressing to conserve and improve display of the 300+ works that the county council will retain, however this is likely to continue into the first six month of 2019/20.

ACS Implementation Capacity(See below)

-

-

-

-

ACS Implementation Capacity - 1. Older People's Accommodation

-

(219)

(1,108)

(1,327)

Recruitment has been brought forward for all 3 Programme Managers and the 3 Project Managers

ACS Implementation Capacity - 2. LD Transformation - Commissioning

-

(256)

(224)

(480) Majority of posts are now filled

ACS Implementation Capacity - 2. LD Transformation

-

(508)

(438)

(946) Majority of posts are now filled

Page 69 of 85


Spend to 31/03/2018



ACS Implementation Capacity - 3. Income

-

(253)

(331)

(584)

The project manager is working exclusively on income and debt related projects. The four ITT-funded SLOs have now been in post for several months and have integrated well into their respective teams. There have been number of issues in their introduction which may have affected their impact to date. For the most part these issues reflect those identified within the current ACS debt process and structure project: differences in processes between services; no overall line management to coordinate across teams; and a lack of clarity around the role and responsibilities of Service Link Officers. The new ACS debt policy and process, which is being implemented in February/March 2019, will address these issues more broadly and steps have been taken in the interim specifically for the four ITT-funded SLOs, including the provision of training, establishing support structures, and ensuring consistency in processes between OP East and OP West. Encouragingly, despite the issues discussed above, preliminary data suggests that these new roles are having a positive impact upon ACS debt. An evaluation framework is currently being developed that will allow a more rigorous and systematic measurement of impact.

ACS Implementation Capacity - 4. Assistive Technology

-

(346)

(288)

(634)

Majority of posts are now filled. Two organisations have been contracted to provide pilots for the project.

ACS Implementation Capacity - 5. Programme Management

-

(396)

(531)

(927)

The ACS connect programme PMO is now fully up and running with project monitoring and exception reporting including quarterly reports which covered projects, service

Page 70 of 85


Spend to 31/03/2018



plans, risk monitoring, audit actions, IP savings and ITT updates.The ITT funded project managers are supporting the following projects• Social care access 2021 as part of the next gen. programme• Direct payment strategy• Herefordshire home share• Post hospital review team implementation evaluation and reviewall of which are projects with a prevention/enablement focus except DPs where there are associated audit recommendations and budget pressures

Children's Services - SEND Transformation

-

(514)

(2,499)

(3,012)

The main progress as at quarter 3 has been in recruiting to posts – for the Programme Implementation (FSC) and for the digitalisation (Customer Service team). The Head of Transformation: SEND post has also been appointed to. During the current ‘understand’ phase we are gathering background information about services, teams and structures in readiness for co-producing options for development in the New Year.

Libraries Alternative Delivery Model

-

(20)

(480)

(500)

This is a pipeline scheme and the bid has not yet been submitted.

Music Schools Alternative Delivery Model

-

-

(500)

(500)

The detailed business case for an alternative business model is due to go to Cabinet in December. Once the business case has been produced, it will be known as to whether an ITT bid is required and at what value, this is currently just a pipeline scheme.

Page 71 of 85


Spend to 31/03/2018



Integrated Transport Development (Head of Integrated Transport Development post)

-

(21)

(97)

(118)

Approved July 2018The Programme Manager Integrated Transport Development role was filled on 1st January 2019 at a PMC grade

Office Accommodation Strategy (preparatory work at Apsley and Mundells)

-

(183)

(317)

(500)

The project has now commenced and is in the initial consultancy/planning stage. The Project Manager and Senior Change Manager started in November 2018. The initial move of staff from Apsley 1 to Apsley 2 is due to occur in January 2019 with staff moving back to Apsley 1 in March 2019.

Total Estimated Spend (27,394)

(7,197)

(13,617)

(20,814)

Completed schemes payback to 31/03/18

2,371

-

-

-

LED Street Lighting Phase 1 & 2 (ongoing payback)

3,084

1,196

9,727

10,923 Ongoing payback

Total Estimated Payback 5,455

1,196

9,727

10,923

Prior year carry forward + funding 42,821

26,114 20,114

Net Position 20,882

20,114

16,223

Page 72 of 85

Appendix C – Prudential Indicators

1. Capital financing Indicators

Indicator Description Integrated Plan

Ref.

2018/19

IP

2018/19

Q1

2018/19

Q2

2018/19

Q3

2018/19

Q4

Indicators 1 to 3 demonstrate the affordability and sustainability of the capital programme. The projections for financial years 2019/20 to 2021/22 are set out in the Integrated Plan at the reference shown in the table below.

Capital Expenditure

1Monitors capital expenditure for 2018/19 against the projections set out in the Integrated Plan

2.4

Table 1£244.02m £215.34m £187.04m £186.61m

Capital Financing Requirement (CFR)

2Monitors the Council’s underlying need to borrow for capital purposes for 2018/19 against the projections set out in the Integrated Plan

2.13

Table 3£642.16m £633.42m £614.50m £610.97m

Page 73 of 85


Ref.

2018/19

IP

2018/19

Q1

2018/19

Q2

2018/19

Q3

2018/19

Q4

Ratio of financing costs to net revenue stream

3Monitors the percentage of revenue budget set aside to service capital financing costs (borrowing costs net of lending income) for 2018/19 against projections set out in the Integrated Plan.

2.14

Table 42.61% 2.52% 2.45% 2.34%

Treasury Position:

The Treasury Management Prudential Indicators are set to contain lending and borrowing activities within approved limits. The indicators are set at a level that will provide enough flexibility for effective treasury management whilst managing the risk of a negative impact on the Council’s overall financial position in the event of adverse movements in interest rates or borrowing decisions. The indicators are also used to demonstrate that Net Borrowing does not exceed the Capital Financing Requirement. The projections for financial years 2019/20-2021/22 are set out in the Integrated Plan.

Net Borrowing 4A

Monitors actual borrowing less actual lendingNA NA £75.34m £79.57m £110.77m

Net Borrowing Less than CFR 4B

Comparison of net borrowing to CFRNA NA

Page 74 of 85


Ref.

2018/19

IP

2018/19

Q1

2018/19

Q2

2018/19

Q3

2018/19

Q4

Borrowing: Indicators 5 and 6 control the overall level of borrowing. The limits for 2018/19 to 2020/21 are set out in the Integrated Plan. The Authorised Limit is the maximum amount that may beyond which borrowing is prohibited without Member Approval. The Operational Boundary is an estimate for the external debt for the financing year – this is not a limit but an indicator to ensure the authorised limit is not breached.

Total Borrowing in Place at Quarter End Borrowing in £ at Q End £258.78m £258.78m £258.78m

Maximum Borrowing Exposure in Quarter Quarter Maximum in £ £258.78m £258.78m £258.78m

Authorised Limit Limit £545m £545m £545m5

Compliance Indicator Complied?

6 Operational Boundary Indicator £515m £515m £515m

Compliance indicator

6.5 Table 10

Complied?

Page 75 of 85

2. Treasury Management Indicators

Indicator DescriptionIntegrated Plan Ref.

2018/19

Budget2018/19 Q1

2018/19

Q22018/19 Q3

2018/19 Q4

Interest Rate Exposure:

Indicators 7 and 8 limit the Council’s exposure to both fixed and variable interest rate movements.

The limits for 2017/18 to 2020/21 are set out in the Integrated Plan.

Upper limit on Fixed Interest rates (against maximum position)

7 Monitors the limits set for 2018/19 for the volume and value of the (lending)/borrowing portfolios that may be committed for fixed interest rate investments or borrowing

6.7

Table 12

£445.00m

(LIMIT)£258.78m £258.53m £258.83

Upper limits on variable interest rates (against maximum position)

8 Monitors the net limits set for 2018/19 for the volume and value of the (lending) /borrowing portfolios that may be committed for variable interest rate investments or borrowing

6.7

Table 12

£133.50m

(LIMIT)(£183.44m) (£179.45m) (178.25m)

Maturity structure of fixed rate borrowing (against maximum position):

Indicator 9 limits the Council’s exposure to large fixed rate sums falling due for refinancing in the same period.

Page 76 of 85


2018/19

Budget2018/19 Q1

2018/19

Q22018/19 Q3

2018/19 Q4

The indicators are set relatively high to give the council enough flexibility to respond to opportunities to repay or reschedule debt during the financial year, while remaining within the parameters set by the indicators.

9A Under 12 months 50% 0.00% 0.10% 0.65%

9B 12 months to 2 years 50% 0.10% 0.00% 0.55%

9C 2 years to 5 years 60% 2.09% 2.28% 3.93%

9D 5 years to 10 years 80% 5.60% 5.41% 10.10%

9E 10 years to 20 years 85% 7.10% 7.10% 12.18%

9F 20 years to 30 years 90% 9.88% 9.88% 8.94%

9G 30 years and above

6.8

Table 12

100% 75.24% 75.24% 63.65%

Investments greater than 364 days (against maximum limit):

Indicator 10 measures the Council’s exposure to investing for periods greater than one year.

This indicator is required to ensure that the Council is aware of the cashflow implications for long term investments.

This includes deposits at risk in Icelandic Banks.

10 Investments greater than 364 days (Maximum Limit)* 6.9 £50m £30.61m £30.60m £30.60m

Page 77 of 85


2018/19

Budget2018/19 Q1

2018/19

Q22018/19 Q3

2018/19 Q4

Table 13

*Includes Pooled Fund investments, which can be withdrawn in less than one year but the intention is to hold for the long-term to minimise the risk of capital value volatility, as agreed at Full Council on the 25th November 2014.

Page 78 of 85

3. Treasury Management Performance and Activity Measures


2018/19 Q1

2018/19 Q2 2018/19 Q32018/19

Q4

The CIPFA Treasury Management Code of Practice requires the Council to set performance indicators to assess the treasury function. Group A measures performance for “Security, Liquidity and Yield” and Group B measures the performance of “Operational Activities”

GROUP A: Security, Liquidity and Yield

Average Investment Portfolio

Monitors the average amount Hertfordshire County Council has had invested in third parties.

7.3

Table 15£164.10m £194.58m £170.77m

Average borrowing portfolio

Monitors the average amount Hertfordshire County Council has as long term borrowing during the quarter

6.3

Table 9 £258.78m £258.78m £248.99m

Security Indicator: Average Credit Rating of Investments held

Measured on a 1 to 10 scale, where 1 is a very good Credit Rating, i.e., government guaranteed

Section 6.10 3.63 3.56 3.79

Page 79 of 85


2018/19 Q1

2018/19 Q2 2018/19 Q32018/19

Q4

Liquidity Indicator: Weighted Average Maturity of investments held

Measures the liquidity/accessibility of investments in average daysSection 6.10 15.65 34.30 45.44

Yield Indicator: Interest Earned*

Monitors the interest earned on Hertfordshire County Council investments. Shown as the actual amount (in quarter) and equivalent annual percentage of amount invested

7.3

Table 15

£0.574m

1.40%

£0.612m

1.26%

£0.578m

1.35%

Yield Indicator: Interest Paid

Monitors the interest earned on Hertfordshire County Council investments. Shown as the actual amount (in quarter) and equivalent annual percentage of amount borrowed

7.2

Table 14

£3.09m

4.79%

£3.12m

4.84%

£2.98m

4.10%

*includes Pooled Fund investments, see Yield section below for further information for rate excluding Pooled Funds

Page 80 of 85

Security, Liquidity and Yield

Security - Exposure to Risk

The Treasury Management Strategy was approved on 20 February 2018 as Part C of the Integrated Plan. This maintained the range of investment types approved for use in 2017/18. The approved instruments were last changed in 2014/15 to enable greater diversification of the investment portfolio; these changes introduced greater flexibility in use of investment instruments whilst continuing to maintain security and liquidity of investments.

The following diagrams illustrate the credit rating breakdown of all investment instruments by credit rating grade and investment type for the Council’s investment portfolio as at 31st December 2018.

Page 81 of 85

Investment Portfolio and Activity

The greater proportion of the investment portfolio is held in highly liquid money market funds and call accounts. This reflects the need to ensure adequate liquidity in the management of cash balances to meet daily cashflow requirements.

Investments in pooled funds consist of the CCLA Property Fund, two bond funds, two multi-asset funds and one equity fund.

7 new fixed term deposits were made, and 5 matured, during the period. 1 was with the Debt Management Office and the remainder with Local Authorities.

Liquidity

Cash balances have been high during the first half of 2018/19. A significant amount (approx £75m) relates to forward funding being held on behalf of the Local Enterprise Partnership.

During the first quarter of 2018/19, as a result of uncertainty about cashflows for capital expenditure a large proportion of the portfolio was held in short-term investments – and the DMADF was used during periods of high cash balances. As time has passed, the level of certainty about liquidity needs has increased, allowing an increase in the use of fixed-term loans to other local authorities was possible during the second quarter, and further investments have been made in the latest period.

Diagram 3 provides a graph showing the liquidity of the Council’s investments portfolio as at 31st December 2018.

Page 82 of 85

Liquid < 1 month 1-3 months 3-6 months 6-12 months£0

£10£20£30£40£50£60£70£80

Diagram 3: Investment Portfolio Liquidity ProfileAs at 31st December 2018

Mill

ions

The potential capital volatility of the pooled fund investments means that they are intended to be held for 3-5 years, but in the graph below these investments are shown on the basis of their accessibility. These funds are all classified as “liquid”, except the Property Fund which accessible on 30 days’ notice.

Yield

Yield: Short-Term Investments

The benchmark used for assessing the performance of return on short-term lending is the 7-Day London Interbank Bid Rate (LIBID). Diagram 4 shows yield against the benchmark for the last four quarters (solid lines, right-hand axis) and the actual cash earned (dashed line, right-hand axis).

Page 83 of 85

LIBID was 0.53% during the quarter, and the return excluding pooled fund interest increased to 0.76%. The overall rate of return increased during the quarter as the result of new fixed term investments, which yield higher returns than instant access investments, and higher prevailing rates.

Page 84 of 85

Yield: Pooled Funds

The performance of the Council’s strategic investments is benchmarked against the target yield level of 4.00%, which forms the basis of the income budget. Diagram 5 shows yield against budget for the last four quarters (sold lines, left-hand axis) and the actual cash earned (dashed line, right-hand axis).

The Pooled funds have continued to provide returns exceeding expectations, with a yield of 4.15% during the second quarter.

Page 85 of 85

Pooled fund returns have been relatively volatile during 2018/19. The drivers for this volatility are:

1) Short-term reduction on bond-yields following a market correction reported during the final quarter of 2017/18.

2) Exceptional equity yields during the first quarter of 2018/19.

Overall returns from these strategic investments remain relatively stable and are expected to be in line with the previous years and exceed the 4% target for these funds.

Documents

HERTFORDSHIRE COUNTY COUNCIL RESOURCES AND …...is £798.355m (principally due to a net £6.223m contribution to reserves/contributions to capital - see appendix A. This is line with