Cabinet Member decisions

Proposed decision:

i)             Competitively tender a new contract for Independent Adoption Support Services, effective from 1 October 2023 to 30 September 2027 (four years) with an additional two, two-year extensions options.  

ii)            Delegate decisions and necessary actions, including the award and implementation of any contract extensions allowable within the terms and conditions of the contract, to the Corporate Director for Children, Young People and Education, or other Officer as instructed by the Corporate Director for Children, Young People and Education, in consultation with the Cabinet Member.

Reason for the decision:

The proposed decision is regarding the commissioning of independent adoption support services through an activity-based contract from 1 October 2023 to 30 September 2027 (four years) with an additional two, two-year extension options. This will be competitively tendered and will support KCC and Adoption Partnership South East in meeting its statutory duties. 

Background:

In 2015 the Government set out its vision and commitment to deliver a regional adoption system where adoption agencies would come together to deliver adoption services on a larger scale. Adoption Partnership South East (APSE) is a Regional Adoption Agency (RAA) comprising of the London Borough of Bexley, Kent County Council and Medway Council. It launched on 1 November 2020 and delivers adoption services on behalf of the three Local Authorities.

The Regional Adoption Agency is operated under the terms of a Partnership Agreement, which confirms the legal and governance arrangements; the budget; staffing and funding contributions for the three Local Authorities.

Local Authorities, as part of their statutory duties, must take steps to provide assistance to adopted children and adults such as counselling and finding out the details of their adoption.  KCC has a statutory responsibility to safeguard and promote the welfare of Kent Children in Care and ensure best value for money it spends on behalf of the Kent population

The service will meet the requirements of the applicable regulatory framework, the National Minimum Standards (NMS) and APSE’s identified service outcome of “Children, birth parents/guardians and families and adoptive parents and families will be valued and respected.”  

Service Objectives are:

·         To ensure that our strategic partner delivers our statutory obligations regarding the provision of birth parent counselling, access to birth records and intermediary services and ensuring that family time is protected, promoted, and delivered as per agreed Contact Plans.

·         To meet the needs of children, birth families, adoptive parents and adopted adults and all those who are subject to or who are affected by Adoption.

·         To ensure the voices of children, birth families, adoptive parents and adopted adults and all those who are subject to or who are affected by Adoption are sought and listened to.

Available Options:  

1.         Do Nothing

The contract would lapse and the Council would not meet its statutory duties. An alternative means to deliver these statutory services would be required. With no agreed alternative in place, new systems would need to be implemented and additional resource would be required – see Option 3 In-sourcing. 

2.         Competitively tender for a new activity contract

The proposed decision to competitively tender for a new activity contract will cause the least disruption to KCC, its partners and to the market. The contract would be effective from 1 October 2023 to 30 September 2027 (four years) with an additional two, two-year extension options. This option offers stability to the market and a longer contract term requires less procurement activity to be carried out on behalf of the Council’s, thereby reducing costs.  In addition, this commissioning and procurement approach enables the Council to:

·         test the market in terms of innovation on delivering contact through digital platforms.

·         compare costs between tender submissions and identify the provider who demonstrates a value for money approach.

·         promote the reputational benefits of working with an Adoption Support Agency/Voluntary Adoption Agency.

·         ensure strong contract management arrangements are in place with agreed performance and quality levels.

This is the preferred and recommended option which is supported by the Adoption Partnership South East Board.

3.         Bring Services in-house (Insourcing), to commence 1 October 2023

The current commissioned provider’s team who deliver these services would be subject to TUPE.  APSE Partnership Board would be required to make a decision as to which of the three Local Authorities would wish to host the relevant workforce.  Bringing the service in-house would require significant investment to enable the set-up of new systems and processes to support delivery.  Currently APSE lacks sufficient expertise to deliver these services and would require significant upskilling which would take resources away from other parts of adoption support as this was not originally factored into the Partnership.  This option would also mean that the location of teams across APSE may need re-organising to ensure consistency of access and delivery. 

Financial Implications:

The budget for commissioned services sits within the APSE core budget.  The current value of the contract is £426,020 per annum exclusive of VAT, based on these costs the total value of the commission is £3,408,160 for the period of the contract term and extensions (eight years).

It is likely that any tendered prices will be influenced by recent inflation and cost of living pressures and the procurement and pricing strategy will need to consider what mitigations can be applied at the beginning of the contract and how future increases are managed.  Albeit a restricted market, by going out to tender an element of competition is introduced and pricing will form part of the tender evaluation.

Any price review processes will be agreed with Finance before the Invitation to Tender is issued and embedded within the terms and conditions of the new contract.  From the 1 October 2024 and the 1 October in each subsequent year of the contract an automatic price increase to the Contract Price will be applied.  This will take into consideration metrics such as CPI including proportional increases in staffing and non-staffing costs over the previous twelve months.  However, any increase to the contract price will be authorised by our elected Members and agreed across the partners. 

As Cabinet Member for Integrated Children’s Services, I agree to:

i)           Competitively tender a new contract for Independent Adoption Support Services, from 1 October 2023 to 30 September 2027 (four years) with two additional two-year extension options. 

ii)          Delegate decisions and necessary actions including the award and implementation of any contract extensions allowable within the terms and conditions of the contract to the Corporate Director for Children, Young People and Education, or other Officer as instructed by the Corporate Director for Children, Young People and Education, in consultation with the Cabinet Member.

Proposed decision:

Continuation of No Use Empty funding and delegation of authority to Director of Growth and Communities to take appropriate actions to deliver the initiative to 2027-28 and a further update given at that time.

Reason for Decision:

 A decision is required such that:

(a)       Kent County Council (KCC) shall agree to continue the countywide No Use Empty initiative; and

(b)       KCC shall agree how No Use Empty is funded and seek the agreement of the Section 151 officer or the Cabinet Member for Finance as appropriate for approval to spend: and

(c)        KCC shall agree that authority be delegated to the Director of Growth and Communities to take appropriate actions, including but not limited to, entering into legal agreements (loan agreements, equity loans, joint ventures, additional funding opportunities), consider and approve requests which may require consent and discharge of legal charges, as necessary to implement this decision.

Background:

Kent County Council (KCC) launched the No Use Empty (NUE) initiative in 2005 as part of its second round PSA2 commitments to examine better ways of delivering services, and particularly at working more effectively with district councils. The primary aim of the Initiative is to improve the physical urban environment in Kent by bringing long-term empty properties back into use as quality housing accommodation.

Initial focus was on the Urban coastal areas of East Kent (Districts: Dover, Thanet, Folkestone & Hythe, and Swale). Following the success of NUE in East Kent, the initiative was rolled out across Kent in 2008/09.

In October 2021, the unitary authority of Medway Council joined the initiative giving blanket coverage across Kent and Medway. In February 2022 Southend on Sea City Council entered into an agreement with NUE to assist with the delivery of a NUE loan scheme which operates in South Essex to provide administration and legal services. To confirm that Medway Council and Southend on Sea City Council fund these schemes and NUE are paid on a per application arrangement.

Options considered:

(a)       Do Nothing – to proceed as planned which means that the main No Use Empty initiative is phased out after 23/24 and no longer funded under the Capital Programme.

(b)       Do minimum – to proceed as planned with reduced funding coming out of the initiative (£4.7m in 24/25) but look to defer later withdrawals to keep £7m in the initiative.

(c)        Do switch funding – to proceed as planned with reduced funding coming out of the initiative (£4.7m in 24/25 and in later years) but increase the call on Treasury Investment Funds from 24/25 onwards, which would require more of the £40m currently available for investment being allocated to NUE.

(d)       Do defer- to rephase all the repayments under the Capital Programme by 3 years.

(e)       Do optimal – to proceed as planned with reduced funding from the Capital programme but increase the Treasury Investment funding for NUE to £40m over the coming years or increasing the limit for investment opportunities to allow the NUE initiative to be fully funded.

(f)        Do maximum – to increase Treasury Investment funding by £4.7m in 24/25 and in later years to entirely offset the reduced funding from the Capital programme.

Preferred options:

(e) followed by (c)

A reduction in funding for NUE would further impact on the number of empty properties being brought back into use. Districts are already reporting vacancies across their respective housing teams which are not being recruited to due to funding, which limits their capacity to tackle empty properties. use.

NUE supports Framing Kent’s Future by working with a range of partners including the Kent Districts and Medway taking a co-ordinated approach when it comes to tacking empty properties making a valid contribution to two of the four priorities, namely:

Priority 1: Levelling up Kent.

Priority 2: Infrastructure for communities.

Financial Implications:

Revenue - Breakdown of 23/24 expected.

There is no revenue budget allocated for NUE operational costs (staff, legal, web). An administration fee based on the value of the loan is collected and under the main empty property initiative a policy for ‘repeat customers’ was introduced whereby the first loan is interest free and then the next loan is offered on interest bearing terms. This together with the administration fee and interest being collected on the loans provided with Treasury investment funds has allowed NUE to become self-financing.

Capital

£11.5m Capital for recycled loans

Reference: Draft Budget Report 2023-24 (due for approval 9 February 2023, Page 6 &10, Row 19 Appendix B – Capital Investment Summary 2023-24 to 2032-33)

In 2024-25, there is a requirement to commence repayment of the original sum provided to NUE (-£4.7m) followed by a further repayment in 2025-26 (-£2.1m). NUE are seeking to defer this to later years or to switch funding so that Treasury Investment funds are used to substitute loss of funding from the Capital Programme.

As Cabinet Member for Economic Development, I agree to support:

a) the continuation of the NUE initiative to at least 2027-28 with a further update to be provided at that time;

b) how NUE is funded and seek the agreement of the Section 151 Officer or the Cabinet Member for Finance as appropriate for approval to spend; and

c) for authority to be delegated to the Director of Growth and Communities to take appropriate actions including, but not limited to, KCC entering into legal agreements (loan agreements, legal charges, personal guarantees, equity loans, joint ventures, deed of priority, deed of postponement), consider and approve requests which may require KCC consent and discharge of legal charges, recovery of loans through legal action, as necessary to implement this decision.

Proposed decision

To enter into the “Safety Valve” agreement with the Department for Education (DfE), enabling Kent County Council (KCC) to receive funding over a 5 year period to substantially fund the accumulated deficit on the Dedicated Schools Grant (DSG) High Needs Block (HNB). The agreement will require commitment to areas of review and improvement identified by Department for Education (DfE) to bring in year spend in line with the in-year budget by 2027/28. A financial contribution from the Council will also be expected.

Reason for Decision

Funding for pupils with special educational needs and disabilities (SEND) and associated support services comes from the Department for Education’s (DfE) Dedicated Schools Grant (DSG) High Needs Block (HNB).  The Council has been spending significantly more on this area than it receives in grant.  The cumulative HNB revenue deficit is predicted to be £147m by the end of this financial year and will continue to grow beyond then if the current trajectory continues.  

The Council cannot subsidise activity funded from the DSG High Needs Funding stream without the explicit permission of the Secretary of State. Therefore, there is a pressing need to ensure that spend is brought within the grant funding made available.

The Safety Valve programme is voluntary and involves DfE providing funding to partly extinguish the cumulative debt arising from existing and forecast overspends on High Needs Funding. This involves the Council reviewing its local High Needs systems so that it is on a more sustainable footing and better placed to respond to pupils’ needs.  This requires ensuring that in-year spend is in line with in-year grant funding within a five year period.

The DfE invited the Council to be part of the Safety Valve programme which is directed at local authorities with large DSG deficits. The Safety Valve arrangements involve substantial funding from DfE, in return for improvements in local systems providing support for children and young people with SEND, that also ensure that spend comes into balance with grant. A financial contribution from the Council will also be expected.

The DfE intend to share a draft Safety Valve agreement with the Council in February and require the agreement to be formally approved in very early March. It is expected that the proposal will identify the sum the DfE is willing to offer towards the cumulative deficit, alongside local service areas that DfE expect to see reviewed. 

An exempt Cabinet report on 1 December 2022 provided more detail and there was a briefing on the current position at Scrutiny committee on 25 January 2023. DfE has communicated that, in principle, the Secretary of State is content to enter into a Safety Valve agreement with the Council.  However, a draft agreement document that contains the financial offer and the service areas that DfE expect to see reviewed is still awaited.

Other options considered

KCC could reject the opportunity to receive Safety Valve funding but this would place the Council at significant financial risk.  This would require substantial service review activity to manage the funding situation to eliminate the deficit, without additional Government assistance, with the potential for negative impact on all areas of children’s service delivery.

How the proposed decision supports the Framing Kent's Future - Our Council Strategy 2022-2026

The proposed decision would primarily support Priority 4: New Models of Care and Support, around the commitment to making rapid and sustained improvements in the support provided to children with Special Educational Needs and Disabilities (SEND) and their families.

Financial Implications

The formal offer of funding from DfE to partly extinguish the cumulative debt is not yet known, but it is expected to be included in the draft agreement. The current cumulative debt is forecast to be £147m by the end of the 2022/23 financial year and will continue to grow beyond then without intervention, so any offer of funding will need to be substantial. The Council will also need to make a significant contribution over the next 5 years which will most likely be funded from general fund reserves. The Council has below average reserves and will therefore need to identify how it will ensure the Council’s Safety Valve agreement contribution does not weaken the Council’s financial resilience. If the Council chose not to accept the Safety Valve proposal, or failed to make an agreement with DfE, it would still need to fund the whole of the cumulative High Needs spending deficit at some point in time. As the cumulative deficit is substantial, any failure to reach agreement would most likely lead to a Section 114 notice being issued. Under the Local Government Finance Act 1988, this is where the Chief Finance Officer makes a report where expenditure in a financial year is likely to exceed the resources available, leading to no new expenditure being permitted, with the exception of that funding statutory services.

Data Protection implications

DPIA not relevant at present – service review requirements as part of the Agreement may prompt further review.

Decision:

Cabinet agrees to;

a) approve the Dedicated Schools Grant ‘Safety Valve’ Agreement between DfE and  Kent County Council (KCC);

b) endorse the progression of plans to deliver against the range of required activity detailed in section 2 of the report; and

c) note that various service level and portfolio-specific Executive decisions may be required to implement subsequent policy changes.

d) delegate authority to the Corporate Director of Finance, in consultation with the Leader, the Deputy Leader and Cabinet Member for Education & Skills to resolve any minor technical issues to the text, which do not materially alter the substance of the agreement; and,

e) delegate authority to the Corporate Director for Finance, in consultation with the Deputy Leader and Cabinet Member for Finance, Corporate and Traded Services, to take relevant actions, including but not limited to entering into contracts and other legal agreements, as necessary to implement the decision.

Proposed decision:

Approve the fee uplifts for Adult Social Care Providers for 2023/2024 and delegate authority to the Corporate Director Adult Social Care and Health to take relevant actions, including any changes to the percentage uprates, as necessary to implement the decision.

Reason for the decision: 

In previous years, practice has been to increase provider fees across services at a standard, blanket, percentage rate, in accordance with stipulations in the contracts, either relating to average changes in the CPI (Consumer Price Index) or other review clauses. Constraints in available funding coupled with both the cost-of-living crisis and recent increasing inflationary pressures have had a material impact on the profitability and, in some cases, the viability of care providers in the light of current fees paid by local authorities.

The proposed allocations are those which are affordable in the Council’s recently agreed budget.

Due to various market pressures facing the sector it is proposed that the percentage fee increase paid to framework providers, varies according to the service provision, in line with the budget availability and the Adult Social Care Making a Difference Every Day approach. Leads from Commissioning and Finance have scoped the impact of each service, applying the percentage award to fees based on market sustainability factors.

The Homecare sector has the greatest current issues with supply and cost control owing to market pressures specific to it. This has led to an increasing reliance on non-contractual spend, with 45% of homecare packages purchased off contract in January 2023 compared to 18% at the beginning of the 2021/22 financial year.

Conversely, failing to increase fees for framework providers sufficiently leads to a reduction in framework capacity and supply, an increasing reliance on non-framework provision, and significantly increased costs. To a lesser extent, there have been similar impacts on the Older Person’s residential and nursing care market. It is therefore proposed to apply differing standard percentage rates to different services to ensure markets are managed appropriately. 

Options (other options considered but discarded):

• Apply standard percentage uplift across all service provisions: this was discarded as it would not allow sufficient funding to be allocated to homecare provision to address the specific market pressures highlighted above, so that off-framework contract spend can be controlled in an effort to reduce overall costs.

• Apply no uplifts across all services: this was also discarded as market pressures and inflationary costs are already leading to placement officers having no choice but having to purchase more expensive packages of care off contract.

How the proposed decision supports the Framing Kent’s Future:

The decision supports Priority 4 of the ‘Framing Kent’s Future’, to ensure the sufficiency of the market of social care in Kent, and work with providers to address the supply issues in certain parts of the county where geographic or workforce challenges impact on provision”.

Financial Implications:

Table 1 below shows the proposed percentage fee uplift, as a proportion of the overall provision in the budget. The first section represents those services where a standard percentage uprate will be provided to all framework providers.

Providers on individual (non-framework/INDI contracts) will receive no automatic uprate to their fees although, additional funding is available for individual price negotiations. Allocation of this funding will be governed by the development of a standard approval process based on the financial viability and benchmarking of the provision in question.

The exception to this is Equipment provision for which provision has been made based on 5% of the net equipment forecast and included as part of the provision for other price negotiations.

Table 1 – Price Uplift – Budget Impact 2023/2024

** The general uprate is 6% for framework provision across Supported Living (SL) and Supporting Independence (SIS) Services, but within this, service elements relating to sleep night rates will be increased by 9. 68% to maintain parity with the National Living Wage.

Data Protection implications:

A Data Protection Impact Assessment is not required as there are no material changes to the way in which personal data is handled, nor the way in which it is used. Similarly, this work does not involve data profiling or changes to the way in which special category data is handled.

As Cabinet Member for Adult Social Care and Public Health, I

APPROVE the fee uplifts for Adult Social Care Providers for 2023/2024; and

DELEGATE authority to the Corporate Director Adult Social Care and Health to take relevant actions, including any changes to the percentage uprates, as necessary to implement the decision.