Medium Term Financial Strategy (MTFS) 2024/25 - 2028/29

Medium term financial planning remains extremely difficult due to significant uncertainty amidst international issues, the national economy and cost of living crisis, coupled with the continuing delays to finance reforms, which are not anticipated until 2025/26 at the earliest.

As part of the 2023/24 finance settlement, the Government confirmed that reforms to the local government funding regime will not be implemented in the current Spending Review period. This exacerbates the short-term approach to funding which is a hindrance to longer-term strategic planning. While the Council will continue to lobby the Government in relation to delays to funding reform, unfairness of the current regime which has no correlation to need, and the short-term nature of settlements, it's likely that the Council will be operating in this environment for the foreseeable future.

Other than some national indications of social care funding for 2024/25, the level of funding beyond 2023/24 has not been specified by Government resulting in greater risks in relation to the localisation of business rates and the local council tax scheme. The delays to the reform of local government funding means that it is unlikely that the 2024/25 finance settlement will provide any sort of multi-year allocation which would enable the Council to develop the MTFS with greater certainty. The unknown impacts alongside the level of risk to finances mean that all forecasts will need to be closely monitored and potentially refreshed more frequently than usual as consequences become clear. Staying the same will not be an option for the Council. The Council will be required to change to deliver its priority outcomes within the estimated funding assumptions. The budget setting for 2024/25 and beyond is set to remain highly challenging.

In response to the impact on the economy that the inflationary pressure is causing, the Bank of England has increased its base rate from 5% in June 2023 to the current rate of 5.25% on 3 August 2023.

Any increase in the base rate or further uncertainty in the economy could translate into increasing the cost of borrowing should the Council need to borrow for the Capital Programme. This will have a corresponding impact on the revenue budget and business cases for projects included in the Capital Programme.

For planning purposes, provision is included for the impact of pay awards and estimated impacts of the National Living Wage which are unfunded by government.

Savings proposals may have staffing implications. These will be managed through the Council's Redundancy Policy and Procedure as necessary. At this stage it is proposed that any cost of redundancy payments and the release of pensions (if applicable) as required by the Local Government Pension Scheme Regulations will be met from within the overall corporate resource position at outturn each year, should the position allow. This position will be kept under review and updated as part of the budget proposals to Cabinet.

Economic growth

Local economies are linked to national economic growth. Our vision for Gateshead is of a fairer, greener and more resilient economy that enables everyone to thrive and delivers good jobs, growing businesses and great places to live and work. The Council aims to promote a strong and sustainable local economy leading to wellbeing and prosperity for residents, communities and businesses. This will be supported by a planned approach to investment to boost local economic growth such as improving local infrastructure and wider transport links. Success in this area will enable the Council to have a stronger medium- and long-term financial position and allow redirection of resource to activities which protect the most vulnerable.

The Council faces challenges with additional burdens relating to Planning and Building Control due to the changes in legislation with the new Building Safety Act 2022 coming into effect early 2023.

From a financial perspective the Council will look to invest resources to generate economic growth that may result in increased business rates and council tax income to the Council. This may contribute to closing the financial gap.

Significant challenges in Social Care

The social care demand and cost pressures estimated at £28.5m (excluding expenditure matching ring-fenced grant funding) over the period of the MTFS represents the biggest cost of the estimated funding gap. Part of the strategy to deliver a sustainable financial position will be to manage this demand through interventions and service transformation.

Adult's Social Care

An ageing population means that a greater number of people in Gateshead are likely to be living with long term conditions and becoming frail in the years ahead, this will increase demand on both health and social care services.

It is difficult to predict future needs of vulnerable groups. However, the Joint Strategic Needs Assessment (JSNA) forms the evidence base for strategic planning which predicts that the number of people aged 65+ with selected conditions/needs which may impact on their physical and mental wellbeing both now and in the future will increase significantly by 2040.

The Integrated Adults and Social Care Services Living Thriving Lives Plan 2023-2028 sets out a five-year strategy for the service outlining areas of focus, direction and ambitions. The Strategy is underpinned by an action plan and will support the delivery of the Medium Term Financial Strategy by managing the demand for services. The Strategy has 5 main areas of focus:

• Prevent, reduce, and delay the need for support;
  • Information and Advice - good and accessible information and advice, supporting people to make good decisions about their care and support and what is available to them.
  • Promoting Independence through Enablement - enablement gives people the opportunity to live their most independent life. The ambition is to strengthen services and seek opportunities to expand and diversify and embedding an enablement approach in all areas of practice.
  • Promoting Independence through Technology - creating a Technology Enabled Care strategy, working with the market and developer for solutions and working with partners to co-design solutions.
  • Strength Based Practice - Gateshead has a wealth of community assets that can support people at all stages of their life. These community services may help to prevent the need for formal care, or improve the wellbeing offer for people with support needs.
  • Home First - continue to explore the existing and future needs of our population and develop housing options including extra care and other alternatives and embedding technology solutions. Ensure a vibrant domiciliary care market focusing on enablement, making direct payments more accessible and working with partners to ensure caregivers needs are embedded in discharge processes.
• Caregivers - Commitment to improving and developing services to better support unpaid caregivers to help them to continue caring and support their health and wellbeing.
• Workforce - Continue to be a good employer to retain our existing colleagues but to also attract new colleagues into the service, and we strive to create a culture of continuous learning and create opportunities for development amongst our teams.
• Commissioning - Effective commissioning will be driven by a data led, evidence-based approach which also promotes collaboration, integration, and innovation across the Gateshead System to meet identified current and future needs, as well as any gaps in provision. The ambition is to provide a high quality, high performing market through support and collaborative service design with people, providers, and communities.
• The Voice of People and Communities - The ambition is to be a learning organisation that views people and communities as experts in their care and how they can be best supported to improve and maintain their wellbeing.

To deliver the aims of this Strategy will require a review of how people access adult social care, domiciliary care market transformation and investment, a review of and improved access and infrastructure for direct payments, a review of the approach to hospital discharge, a partnership approach to service delivery, development of alternative provision such as expansion of extra care and a refocus of in-house services.

Through Gateshead Cares, a multi-agency alliance of health and social care organisations in Gateshead, there are strong joint working arrangements across system partners which are well embedded to deliver an integrated approach to health and care in Gateshead.

The Better Care Fund (BCF) is part of a wider programme of work to integrate health and care across Gateshead Place for the benefit of local people and their communities. The programmes and services funded through the BCF are focused on shifting the balance of services towards community support with a focus on prevention, early help and self-help to avoid hospital admissions; developing integrated care and treatment for people with health and care needs; minimising the length of stay in acute settings and supporting home first discharge arrangements where feasible.

In addition, the Service intends to adopt the locality working principles to support the Thrive agenda and develop accessible services that support people at place. In delivering all of the outcomes described it will be necessary to create a new social care delivery pathway that puts localities, prevention and people at the heart of what we do and is built on the foundation of strengths based practice and person centred delivery.

Children's Social Care

In Gateshead the numbers of children in care have increased significantly over the last two years from 439 at March 2021 to 529 at March 2023. This is exacerbated by an increase in the complexity of need and a market which is unable to meet the demand. The current cost of living crisis on the back of a global pandemic has had significant and long-lasting impacts on child poverty which is critical to the local context.

There is a lack of placement sufficiency locally, regionally, and nationally resulting in increased cost pressures from children living in higher cost placements.

The frequency of cases of children with complex behaviours is having an impact on the capacity and availability of mental health services. There is a very limited market to accommodate these children and therefore the cost of doing so is significant.

A combined strategy that addresses a reduction in the overall number of children in the looked after system alongside a focus on ensuring that children can live within family units wherever possible and as locally as possible, either within extended family units or with Gateshead's foster carers is in place.

There is a focus on reducing the need for children to come into the care system with a range of strategies and approaches focused on children on the edge of care.

The Pre-birth service was set up in 2022 to work with families who are expecting a baby where there are known safeguarding risks to provide intensive support to prevent the child coming into the care system. As a result of this strategic approach there has been a reduction in children under the age of 1 in the system in the 12 months from 51 in March 2022 to 39 in March 2023.

The edge of care service focused on preventing teenagers coming into care is being refreshed alongside the new contextualised safeguarding team. They are working in collaboration with the new Trusting Hands Team with investment from the Integrated Care Board (ICB) to support older children to remain living at home with support.

Where children do need to come into the care of the Council, a refreshed sufficiency strategy has been developed which is focused on ensuring children can live with extended family on kinship care arrangements where possible, or with our own foster carers.

There has been a significant growth in the use of Independent Fostering Association (IFA's) places in the last year which has risen by 60%, from 57 to 91 placements, due to a lack of in house availability. IFA placements cost twice as much as in house foster placements.

As a result, a refreshed marketing and communication strategy is in place to ensure that the Council recruits as many foster carers into Gateshead as possible as this is better for children and a more cost effective way to care for children. During 2022/23, 20 additional fostering households have been recruited and there is an annual target of a further 30 fostering households each year for the next three years. A regional pathfinder project was launched in early 2023 with funding from the Department for Education (DfE) to support a collaborative approach to recruitment across the North-East.

Two new children's homes have opened in Gateshead in the last five years and a further two are scheduled to open in 2023. The two most recent homes will provide four more places for children. There is a strategy in place to move children in external residential homes back to live locally in Gateshead within our own provision or within externally commissioned provision within Gateshead. Whilst the average cost of a commissioned home is approximately £4,781 per week, this can include costs of over £20,000 per week for children with the most complex needs.

A new commissioning and tendering exercise for supported living provision will go live in October 2023 which will increase the sufficiency of places for older young people which will support independence and provide cost effective living options for young people who do not require care.

The commissioning service have a refreshed approach to market shaping and supporting the market. This will include supporting private providers in Gateshead to care for Gateshead's children; ensuring that relationships with the Local Authority are strong and that wrap around support incentivises private providers to care for local children.

Home to School Transport is also an area of significant financial pressure and one which has seen significant growth in recent years and this is expected to continue. There are a number of reasons for the increase in costs including, complexity of need, location of provision, availability of drivers and appropriately accessible vehicles and fuel prices. Further growth of £1.80m has been factored into the MTFS in 2024/25 in recognition of the overspend last financial year and forecast overspend in the current financial year.

Looking ahead threats

• cost of living crisis and high inflation rates if these continue to rise or do not reduce to BoE estimates
• any unachieved budget savings in the agreed savings programme leading to pressure the following financial year
• continued growth in demand in Adult and Children's Social Care Services and funding reforms and interventions are insufficient to address this
• unfunded pay pressures such as public sector pay award and the Government's National Living Wage aspirations, which also impacts on negotiations with care providers and commissioning costs
• the performance of traded and investment income linked to wider economy
• continuing uncertainties on the pandemic impact on income from business rates and council tax and fees and charges
• challenges in recruitment and reductions/shift in work force from working in social care, linked to competing industries such as retail and hospitality
• addressing the health, employment, and poverty inequalities that the pandemic has added to
• increased demand for welfare, mental health services and debt advice
• increased demand for business advice and support

Looking ahead opportunities

• fundamentally review all Council services to focus resources on the delivery of priority outcomes and shaping the Council to how it needs to be in the future to withstand other pressures and delivery priorities
• continue to embrace and embed new ways of working arising from the pandemic such as putting the customer first, more efficient working practices, staff resilience and adaptability
• opportunity to accelerate climate change targets through reduced building use and travel
• accelerating and building on working with communities in locality hubs alongside the voluntary sector and other partners
• embracing the move to self-service and online services to provide a quick and streamlined service
• opportunities to rationalise Council buildings and assets through the Corporate Asset Management Strategy
• working closer in partnership with key partners such as the voluntary sector, health partners and the Police and Crime Commissioner to help residents to thrive
• following the housing review, the ability to drive forward housing delivery and provide a good service to tenants