Caroline Holland, Director of Corporate Services, said that the report provided an analysis of savings categorised by subjective area as requested by the task group, with a brief explanation of the main causes for shortfalls.

Task group members said that the table setting out the subjective category for unachieved savings (on page 8) was very helpful. Caroline Holland undertook to repeat this format in future monitoring reports and to incorporate achieved savings by subjective category either in the same or a separate table.

ACTION: Director of Corporate Services

In response to a question about the unachieved savings in Greenspaces, Caroline Holland confirmed that these would be recouped next year through Phase C.

Simon Williams, Director of Community and Housing, provided an overview of the approach taken to savings in the department and the reasons why some savings had not been achieved. He said that staffing cost savings had generally been achieved as had savings on contracts for specific services, though some of these savings were delivered late. Savings through generating increased income had become more difficult, particularly for services provided to people in their own homes. There had been successes in reducing procurement costs for support packages in care homes and at home (“placements” - a statutory service) prior to 2014/15 but subsequently there had been cost pressures for providers (such as the minimum wage) and the department had struggled to achieve these savings. The main pressures therefore are the unit costs of care packages rather than increased demand – despite demographic pressures, managed demand has been held down other than in the areas of transitions and, more recently, home care hours.

In response to a question Simon Williams said that around 2,000 people were supported in their own homes at any one time and that reviews of individual care packages were based on an assessment of need. He confirmed that he had considered purchasing places in homes outside London but had found that this would have to be at an unfeasible distance before savings could be made. However his team were assessing whether taking a greater direct stake in the market might lead to lower fee increases: this would be subject to a clear business case if it was progressed.

Task group members asked a number of questions about the achievability of savings and whether a different approach to the budget might be required. Simon Williams said that some of the previously agreed savings in relation to placement costs remain unachievable at present but he is doing everything he can to retrieve the budget situation, including through regular monitoring of a detailed action plan.

Caroline Holland added that, in contrast to Community and Housing, the budget pressures in Children Schools and Families were demand led. She stressed that the expectation is that alternatives would be put in place for savings that could not be achieved through the initial review of the business plan in accordance with the timetable.

In response to a question Simon Williams said that his professional advice was that given the scale of the predicted overspend in 2016/17 he does not believe that it will be possible to retrieve the overspend and achieve all of the  previously agreed savings as well as meeting the council’s statutory duties in relation to adult social care.

Task group members asked what calls had been made upon the mitigation fund that had been established. Caroline Holland said that the original purpose of the £1.3m fund was to mitigate unintended consequences of delivering savings. As the savings had not been made there had been no call on this fund so far and it is still available for use, particularly when you look at the current revenue overspend at Month 6.

In response to a question about the Better Care Fund (BCF) Simon Williams said that the Merton Clinical Commissioning Group (CCG) provided about £2m above the statutory requirement this year, which was about average for London. He confirmed that the CCG was not obliged to pass on increases in funding from government ( approx. £200k) and had not done so due to funding pressures within the NHS.

Simon Williams said that there were difficult negotiations regarding the BCF going on across the country. In Merton, the council is in negotiation with the CCG regarding the level of BCF funding for 2017/18. The CCG has indicated that it is not minded to continue the current level of funding if the council does not take the adult social care precept for 2017/18. Caroline Holland added that three London CCGs had indicated they were reducing  the BCF funding to councils and that one of these councils had successfully challenged this. However, NHS London may have a stronger role to play in Merton’s CCGs finances. 

In response to a question, Caroline Holland confirmed that the council’s medium term financial strategy included an assumption of an increase in council tax of 3.75% in 2019/20 and 2020/21.