HEREFORDSHIRE Council is forecasting a break even position by the end of the current financial year as pressures on directorates are balanced by under spends in the corporate budget.

This time last year, the council faced a projected overspend of £4.5 million.

An external audit has already said the council is in a “much stronger position” financially than it was a year ago and offers value for money.

Next week, the council’s cabinet will hear that in year pressures into millions of pounds are ongoing in both adults and children’s services.

But the £2 million “managing change” budget will  underspend by an estimated £1m as voluntary leavers reduce the need for redundancies.

The overall budget made allowance for  slippage on savings, taking into consideration the reductions required, of £15m.

This will mean the 2014/15 budget remains on target.

However, cabinet will be warned  of caution in reviewing the “realism” of savings and budgets set out in the medium term financial plan when examining the 2015/16 budget over the coming months.

This may mean other savings initiatives need to be considered above those planned.

As well as the revenue contingency, the council budget includes £1.6m set aside for the anticipated overspend in 2013/14 that could be used if other unforeseen items occur.

Adults and Wellbeing remains an area of major pressure with the latest forecast predicting an over-spend against budget of £972,000 at the year-end.

The Directorate has a target of £5.5 million in savings to deliver in 2014/15 and the majority of transformation and project plans are underway to address these efficiencies.

Of the £5.5m savings target the main shortfalls in delivery relate to £1.1m demand management savings and £900k that was assumed to be delivered from reassessments leading to exits from care.

But the main area of risk still lies in growth in adult social care, specifically residential and nursing home admissions.

Additional cost associated with young people moving into adult social care is £300,000 higher than forecast.

The trend of increased activity within nursing and residential care, and demand for social care assessment across older people, is reflected across the county’s health system and in particular the acute and urgent care system.

During August, Hereford County Hospital reported its highest level of occupancy and had to activate major incident plans due to demand.

This led to pressure on the adult social care system to move more people into residential and nursing care rapidly, rather than look at alternative community based options.

Other areas that require further investigation and action put in place are community equipment, older people and working age mental health costs. Actions have already been put in place to accelerate savings plans in these areas.

The majority of the contracts in Public Health need to be procured in 2014/15. The commissioning and procurement programme is now in place with the first tendering process due to start in October 2014.

In Children’s Wellbeing, the latest forecast predicts an over-spend against budget of £484,000 at the year end, an increase of £364,000 since May.

The Directorate has a target of £2.5m savings to deliver in 2014/15.

Main shortfalls in delivery - and also growing pressures - relate to £986,000 of children in care costs and £480,000 of staffing costs in Safeguarding Services.

These two areas remain the highest areas of risk for the service budget.

The number of children in care currently stands at 265, up 12 per cent on this time last year.

 Cost control work has seen a cut in the use of independent foster agency placements which are more costly than the Council’s own fostering service; no new residential placements since May; and little variation in spend for the last six months.

A new placement support service has now been commissioned to start in the autumn, with a specific remit to reduce costs and improve outcomes in this area of the children’s system.

However, the council  still has a planned significant reliance on long term agency staff, though the  turnover of permanent staff has slowed down.

A commitment to keep caseloads at a manageable level has led to an increase in the number of front line staff with related budgets being reprofiled to ensure the year end forecasts accurately reflect savings.

In the past six months, staffing costs have remained relatively stable despite halving the number of cases per worker and achieving a positive outcome from OFSTED.

The Directorate is finalising a series of further transformation projects to address - over the medium term - underlying pressures within the Children’s budget, which currently has an overreliance on individual grants.

In Economy, Communities and Corporate a projected £225,000 under spend is forecast after providing £400,000 for additional grass cutting of £400k; £250k for children's play areas and £150k for verge cutting. This was partially funded by use of £200k corporate revenue contingency  funds.

Car parking income is expected to exceed budget by £225,000 while income from the Old Market site is  expected to increase the forecast under spend in future months.

Planning Income continues to rise and is currently expected to exceed income budget by £510k with more large applications expected over the next two years.

Pressures are evident in relation to property repairs and maintenance (£125,000), energy costs (£120,000) and legal services (£90,000).

The treasury management budget is forecast to under spend by £530,000 as a result of deferring the take up of prudential borrowing and going for short term loans at a lower interest rate.

Capital spending is expected to be £8.8 million higher than budgeted (£85.3m for 2014/15) with changes relating to government grants or re-profiling spends between years.

Earmarked reserves and contingency budgets are set-aside by the council for in year pressures.

 Some £600,000 is being transferred to Children’s Wellbeing from the capital contingency towards the temporary building costs of Colwall School.

An increase of £3.87 million on highways improvements relates to additional funding announced by the Department for Transport.

This consists of Pot Hole Funding (£2.57 million) and severe weather repair funding (£1.3 million).

An additional £1.3m relating to the purchase of wheeled bins will be funded by a transfer from the Waste Reserve.

Re-profiling of expenditure on leisure centre improvements means an increase of £2m to £5.3m in 2014/15 with a corresponding reduction in 2016/17.

In a report to the council’s audit and governance committee last month, external auditor Grant Thornton assessed financial arrangements  as adequate with “improved” financial discipline and “stronger” budget monitoring.