HEREFORDSHIRE Council goes into its latest budget cycle facing a need for further cuts in a year’s time and just weeks to find where they might be made.

The council’s two scrutiny committees are next week due to get a first look at revised financial plans to 2017.

A review of  planned savings, both in terms of the amount that can be saved and the timing, shows the council can save more over 2015-16 than planned but a lot less in 2016-17, with the overall difference being just over £3.7 million.

That means the council faces finding additional savings on the budget for 2016-17.

At a joint meeting next Monday, the scrutiny committees will see an updated medium term financial strategy (MTFS).

That reflects current spending, reviewed savings plans, contingencies and demographic pressures on the assumption of a assumes a 1.9 per cent increase in council tax.

With central government funding for  2015/16 expected to be announced on December 17, the scrutiny report is based on the indicative funding  settlement announced last year.

Although on target to deliver within the overall budget in 2014/15 the figures indentify some savings and additional pressures in both 2015/16 and 2016/17.

Demand management in social care continues to be a key issue with additional  savings of £2.2 million needing to be found for 2016/17.

 Related commissioning and policy decisions must also be made over the coming months so these savings can be delivered in time.

The council is due to approve its 2015/16 budget in February. It will also approve the MTFS, though this will be refreshed with the new administration between June and October this year to cover the period 2016/17 to 2018/19.

As agreed by the council in February this year, the MTFS set out an estimated £33.7m funding gap arising from increased costs and reduced funding.

Around £15.4 million or 45 per cent of these savings were targeted to be delivered in the current financial year, with an additional £18.3m to be delivered in  2015/16 and 2016/17.

This is in addition to the £33 million of savings delivered 2011/12-2013/14.

Of the overall £67 million savings required 2011/12- 2016/17, some £50 million has been delivered.

Savings have subsequently been reviewed as part of the budget process and revisions made.

This review has highlighted net slippage or a shortfall against the target of  £3.6 million over the two years.

Slippage in 2016/17 is significant, over 50% of savings  have now been removed from the savings plans, this is after some savings have been replaced with new options.

The total revised 2015-17 savings plan amounts to nearly £14.6 million and the slippage £3.7 million.

By directorate, the reasons for the differences are:

Adults

The direct negative impact of pressures within the health system on the planned demand management savings during 2014/15.

From next March, a portion of the budget within adult social care will only paid to the council through the Herefordshire Clinical Commissioning Group (CCG) on the basis of performance in a reduction of admissions to residential and nursing care and a  cut emergency admissions to hospital.

Decisions about additional savings in these areas will have to be negotiated with the NHS locally and nationally.

However, the arrangement does incentivise the CCG and the county’s acute and primary care providers to manage effectively the part of the system that is placing the greatest strain on the adult social care demand.

Collaborative working with public health has been accelerated following integration within the adult and wellbeing directorate, meaning £500,000 planned for delivery in 2016/17 will be delivered a year early.

Children’s

The introduction of social impact bonds – intended to improve the social outcomes of publicly funded services by making funding conditional on achieving results remove a target to deliver £500,000 of savings in 2016-17.

Other savings have been replaced with new ones but require one-off investment of £800.000 to be repaid from additional savings in 2017/18.

Economies, Communities and Corporate

As previously reported, the re-profiling of an estimated £60 million in capital receipts planned to replace borrowing will mean £2.5 million of revenue savings will not be delivered until 2017/18.

This has been partially mitigated by additional support savings amounting to £800,000 over the two years.

The scrutiny committees will be told that detailed analysis of proposed savings plans is underway and alternatives wil be identified where possible.

But that comes with a warning of some savings proving  “difficult” to deliver as, where shortfalls are identified, they will need to be replaced and, with little discretionary budget remaining across the council this will be “challenging.”

The council has allowed for additional contingency in the MTFS to provide for slippage or additional future savings and unforeseen pressures.

Provision for increases in the cost of the waste disposal contract and inflation has not all been required.

These total £2.1 million in 2015/16 with an additional £3.5 million in 2016/17.

Both children’s and adults wellbeing are reviewing changes in policy and investigating options to - at least partially -mitigate identified pressures  such as an expected growth in placements.

It is already acknowledged that new approaches will need to be developed and embedded over the next year otherwise the budgetary pressure will rise in excess of the figures currently assumed due to the numbers currently assumed as needing social care support over the next few years.

Applying these against the net difference in savings and pressures will bring the  2015/16 budget into balance.

But a significant savings gap of £2.2 million in 2016/17 will require additional savings to be identified over the coming weeks.

There is an additional £3 million of unbudgeted risks not provided for in the budget.

Government may also cut the council tax cap to one per cent, requiring another £750,000 in savings over 2015/16.