Agenda Document Pack - Integration Joint Board - 13/03/2026
North Ayrshire Council · 13 March 2026
Back to Integration Joint Board — 13 March 2026 and its agenda
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Integration Joint Board Meeting Friday, 13 March 2026 at 14:00 Council Chambers, Cunninghame House, Irvine / Hybrid via Microsoft Teams Meeting Arrangements - Hybrid Meetings This meeting will be held on a predominantly physical basis but with provision, by prior notification, for remote attendance by Elected Members in accordance with the provisions of the Local Government (Scotland) Act 2003. Where possible, the meeting will be live-streamed and available to view at https://north-ayrshire.public-i.tv/core/portal/home. 1 Apologies 2 Declarations of Interest Members are requested to give notice of any declarations of interest in respect of items of business on the Agenda. 3 Minutes The accuracy of the Minutes of the meeting held on 12 February 2026 will be confirmed and the Minutes signed in accordance with Paragraph 7 (1) of Schedule 7 of the Local Government (Scotland) Act 1973 (copy enclosed). 4 Director’s Report Submit report by Caroline Cameron, Director (NAHSCP), on developments within the North Ayrshire Health and Social Care Partnership (copy enclosed). 5 2025-26 – Month 10 Financial Performance Submit report by Eleanor Currie, Chief Finance Officer and Section 95 Officer, providing an overview of the Integration Joint Board’s financial performance as at month 10 (January) (copy enclosed). 6 Transformation Plan Update Submit report by Stuart Macmillan, Principal Manager (Planning, Performance & Transformation) on the Transformation Plan (copy enclosed). 1
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7 Revenue Budget 2026-27 Submit report by Eleanor Currie, Chief Finance Officer and Section 95 Officer, on the financial position for the Partnership for 2026-27, including the proposed delegated funding, service budget pressures, plans developed to set a budget and the associated risks.(copy enclosed). 8 Budget Consultation and Eligibility Criteria for Social Care Services (copy to follow) 9 Urgent Items Any other items which the Chair considers to be urgent. Webcasting Please note: this meeting may be filmed/recorded/live-streamed to the Council's internet site and available to view at https://north-ayrshire.public- i.tv/core/portal/home, where it will be capable of repeated viewing. At the start of the meeting, the Provost/Chair will confirm if all or part of the meeting is being filmed/recorded/live-streamed. You should be aware that the Council is a Data Controller under the Data Protection Act 2018. Data collected during the webcast will be retained in accordance with the Council’s published policy, including, but not limited to, for the purpose of keeping historical records and making those records available via the Council’s internet site. Generally, the press and public will not be filmed. However, by entering the Council Chambers and using the press or public seating area, you acknowledge that you may be filmed and that any information pertaining to you contained in the video and oral recording of the meeting will be used for webcasting or training purposes and for the purpose of keeping historical records and making those records available to the public. In making this use of your information the Council is processing data which is necessary for the performance of a task carried out in the public interest. If you have any queries regarding this and, in particular, if you believe that use and/or storage of any particular information would cause, or be likely to cause, substantial damage or distress to any individual, please contact dataprotectionofficer@north-ayrshire.gov.uk 2
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IJB Sederunt Voting Members Joyce White (Chair) NHS Ayrshire & Arran Cllr Chloe Robertson (Vice- Chair) North Ayrshire Council Cllr Tom Marshall North Ayrshire Council Cllr Anthea Dickson North Ayrshire Council Cllr Nairn Angus-McDonald North Ayrshire Council Linda Semple NHS Ayrshire & Arran Tom Hopkins NHS Ayrshire & Arran Marc Mazzucco NHS Ayrshire & Arran Professional Advisors Caroline Cameron Director Eleanor Currie Interim Chief Finance Officer Aileen Craig IJB Monitoring Officer Iain Jamieson Clinical Director Scott Hunter Chief Social Work Officer – North Ayrshire Thelma Bowers Mental Health Adviser Julie Barrett Associate Nurse Director Vacancy Acute Services Representative Dr Louise Wilson GP Representative Sharon Hackney Lead Allied Health Professional Lisa Davidson Public Health Representative Wendy Van Riet Director of Psychological Services Stakeholder Representatives Lorna Sim Staff Rep - NHS Ayrshire and Arran Lynda MacFarlane Staff Rep Paul Smith Carers Representative Vacancy Service User Representative Vacancy Independent Sector Representative Vicki Yuill Third Sector Representative 3
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North Ayrshire Health and Social Care Partnership Minute of Integration Joint Board meeting held on Thursday 12 February 2026 at 10.00 a.m. involving participation by remote electronic means and physical attendance within the Council Chambers, Irvine. Present (Physical Participation) Voting Members Joyce White, NHS Ayrshire and Arran (Chair) Councillor Chloe Robertson, North Ayrshire Council (Vice-Chair) Councillor Anthea Dickson, North Ayrshire Council Tom Hopkins, NHS Ayrshire and Arran Professional Advisers Caroline Cameron, Director of Health and Social Care Partnership Thelma Bowers, Head of Service (Mental Health) (NAHSCP) Eleanor Currie, Chief Finance and Section 95 Officer Scott Hunter, Chief Social Work Officer Sharon Hackney, Lead Allied Health Professional Julie Barrett, Associate Nurse Director/ Lead Nurse Lisa Davidson, Public Health Representative Present (Remote Participation) Voting Members Councillor Tom Marshall, North Ayrshire Council Marc Mazzucco, NHS Ayrshire & Arran Stakeholder Representative Lynda McFarlane, Staff Representative In Attendance (Physical Participation) Elizabeth Stewart, Head of Service (Children, Families & Criminal Justice) Kerry Logan, Head of Service (Health and Community Care) Michelle Sutherland, Partnership Facilitator (Health & Community Care) Karen Andrews, Team Manager (Governance) Stuart MacMillan, Principal Manager (Planning, Performance and Transformation) Seony Ross, Team Manager (Strategic Planning & Equalities) Michael Mclennan, Lead Officer (Alcohol & Drugs Partnership) Raymond Lynch, Senior Manager (Legal Services) Ruth Wilson, Team Leader (Litigation) Craig Stewart, Committee Services Officer John Hutcheson, Senior Communications Officer Agenda Item 3 5
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Apologies Councillor Nairn Angus-McDonald, North Ayrshire Council Linda Semple, NHS Ayrshire and Arran Lorna Sim, Staff Representative NHS Ayrshire and Arran Vicky Yuill, Third Sector Representative Aileen Craig, IJB Monitoring Officer 1. Apologies for Absence Apologies for Absence were noted. 2. Declarations of Interest There were no declarations of interest in terms of Standing Order 7.2 and Section 5.14 of the Code of Conduct for Members of Devolved Public Bodies. 3. Minutes The accuracy of the Minutes of the meeting held on 11 December 2025 were confirmed and the Minutes signed in accordance with Paragraph 7(10 of Schedule 7 of the Local Government (Scotland) Act 1973. 3. Review of Decision relating to Island Communities Impact Assessment for Montrose House Care Home on Arra Submitted a report by Aileen Craig, Head of Service (Democratic Services) on the review of the Island Communities Impact Assessment (ICIA) relating to the decision of 21 August 2025 in respect of provision at Montrose Care Home, Arran. The Island Communities Impact Assessment was set out at Appendix 1, a redacted copy of the review form set out at Appendix 2 and a summary of the views expressed in the written representations was set out at Appendix 3 to the report. The Chair outlined the process for the Island Community Impact Assessment Review and advised that the applicant had declined an invitation to be present to address the IJB in terms of the review application. The position was noted in this regard. The Team Manager (Litigation) then outlined the terms of the review for an Island Communities Impact Assessment and summarised the position, it was also noted the review was of the Impact Assessment itself rather than the decision to redesign the model of care at Montrose House, Arran. The Director (NAHSCP) then addressed IJB in relation to the ICIA undertaken in relation to the decision to redesign the model of care at Montrose House, which included a permanent reduction in bed capacity. Having heard the Chair, the Board agreed that the Island Community Impact Assessment appended to the 21 August 2025 IJB report was sufficient, and no further action was required. There being no amendment the motion was declared carried. 6
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Accordingly, the Board agreed (i) the Island Community Impact Assessment appended to the 21 August 2025 IJB report was sufficient and no further action was required; and (ii) that any relevant statutory notice to reflect the decision of IJB be issued within the appropriate timescales. 4. Director’s Report Submitted report by Caroline Cameron, Director (NAHSCP) on the developments within the North Ayrshire Health and Social Care Partnership. Noted. 5. Alcohol & Drug Partnership Strategy 2025-2028 Submitted a report by Michael McLennan, ADP Lead Officer, on the Alcohol & Drug Partnership Strategy 2025-28, set out at Appendix 1 to the report. Officers responded to members’ questions on various aspects of the report. The Board agreed to endorse the North Ayrshire Alcohol and Drug Partnership Strategy 2025-28. 6. Participation and Engagement Strategy 2026-2030 Submitted a report by Caroline Cameron, Director (NAHSCP) on the updated participation and Engagement Strategy for 2026-2030, set out at Appendix 1 to the report. Officers responded to members’ questions on various aspects of the report. The Board agreed to approve the updated strategy, replacing the Participation and Engagement Strategy for 2022-2025, to support the delivery of the refreshed Strategic Plan for 2026-2030. 7. 2025-26 – Month 9 Financial Performance Submitted report by Eleanor Currie, Chief Finance Officer and Section 95 Officer (HSCP) on the Integration Joint Board’s financial performance as at Month 9 (December). Appendix A to the report detailed the financial overview of the Partnership position, while Appendix B provided an overview of the service changes that did not have financial savings attached and the BRAG status around the deliverability of each saving. Appendix C highlighted the movement in the budget position following the initial approved budget, with further detail on the reserves set out at Appendix D. The proposed recovery action was outlined in Appendix E, while Appendix F highlighted information on the costs of bank and agency staff. Officers responded to members’ questions on various aspects of the report. The Board agreed to (a) note the overall integrated financial performance report for the financial year 2025-26 and the current overall projected yearend overspend of £4.479m reducing to £3.276m after planned recovery actions; (b) note the progress with delivery of agreed savings; (c) approve the proposed and current actions (para 2.14) being taken to progress financial recovery; (d) note the remaining financial risks 7
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for 2025-26; and (e) authorise the Director (NAHSCP) to formally write, on behalf of the Board, to North Ayrshire Council around the £2.9m funding gap that was being forecast and to the NHS Ayrshire & Arran Health Board on the particular issue raised in the ‘Agenda for Change’. 8. Fees and Charges 2026-27 - Social Care Services Submit report by Eleanor Currie, Chief Finance Officer and Section 95 Officer, on the proposed charges for provided adult social care services for 2026/27. The schedule set out Appendix 1 to the report, detailed the current charges, proposed 2026/27 charges and indicative charges for the following two years. Officers responded to members’ questions on various aspects of the report. The Board agreed to approve the proposed charges and remit to a meeting of North Ayrshire Council for formal ratification. 9. Whistleblowing Quarter 2 Report: 1 July – 30 September 2025 Submitted report for information in relation to whistleblowing concerns raised in Quarter 2 (1 July – 30 September 2025). Officers responded to a member’s question on the report. Noted. The meeting ended at 11.40 a.m. The full meeting proceedings can be viewed at https://north-ayrshire.public-i.tv/core/portal/home 8
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Integration Joint Board 13th March 2026 Subject : Director’s Report Purpose : This report is for awareness to advise members of North Ayrshire Integration Joint Board (IJB) of developments within North Ayrshire Health and Social Care Partnership (NAHSCP) Recommendation : IJB members are asked to note progress made to date. Direction Required to Council, Health Board or Both Direction to :- 1. No Direction Required X 2. North Ayrshire Council 3. NHS Ayrshire & Arran 4. North Ayrshire Council and NHS Ayrshire & Arran Glossary of Terms NHS AA NHS Ayrshire and Arran IJB Integration Joint Board HSCP Health and Social Care Partnership CSAE Child Sexual Abuse and Exploitation SCAI Scottish Child Abuse Inquiry UNCRC United Nations Convention on the Rights of the Child PVG Protecting Vulnerable Groups AI Artificial Intelligence HIS Health Improvement Scotland 1. EXECUTIVE SUMMARY 1.1 This report informs members of the Integration Joint Board (IJB) of the work undertaken within North Ayrshire Health and Social Care Partnership (NAHSCP), nationally, locally and Ayrshire wide. 2. BACKGROUND 2.1 This report provides IJB with up to date information on recent activity across the HSCP since the last IJB. Agenda Item 4 9
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3. CURRENT POSITION National Developments 3.1 Accounts Commission Report – Integration Joint Boards : Finance Bulletin 2024/25 Accounts Commission published their report Integration Joint Boards: Finance Bulletin 2024/25 on 26th February 2026 which states Integration Joint Boards (IJBs), together with their NHS and council partners, must urgently take decisions on where to redesign, reduce or discontinue services. The report highlighted that funding to Scotland’s 30 IJBs increased by over two per cent in 2024/25 to more than £12 billion. But this was insufficient to meet rising costs and demands, with many IJBs using dwindling reserves to help meet the almost £450 million gap between demand and available funding. This is not sustainable. Increasing demand, rising costs and a growing number of people with long-term complex needs are placing mounting financial pressures on IJBs. The boards have reached a critical point, with a significant risk they will become financially unsustainable within the next 12 to 24 months. Alongside savings and using reserves, IJBs have been relying on substantial additional funding from their partners in the NHS and councils. IJBs need to plan their finances more realistically to reduce this reliance, as health boards and councils face their own significant financial pressures. A copy of the full report can be viewed on the Audit Scotland website. 3.2 IJB Voting Rights The 40-day Parliamentary process to consider the statutory instrument to revise IJB voting rights has drawn to a close. This means that the instrument will come into effect from September 2026, extending voting rights on IJBs to unpaid carer, lived experience and third sector representatives. Representations from Local Government and partners provided additional scrutiny in Parliament, including a call for written views and oral evidence. IJB members will be kept updated on the changes and implications prior to implementation in September 2026. 10
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3.3 Public Inquiry into Group-Based Child Sexual Abuse Scottish Government announced on 25th February 2026 that Professor Alexis Jay will chair a statutory Public Inquiry to examine Scotland’s response to group-based child sexual abuse and exploitation (CSAE). The Inquiry will focus on the prevalence of group-based CSAE now and in the recent past, whether brought forward by survivors or relating to findings from the independent National Review being led by four Inspectorates. The new Inquiry will be distinct from the Scottish Child Abuse Inquiry (SCAI), chaired by Lady Smith. The Scottish Government will ensure the new Inquiry does not duplicate the valuable work of the SCAI. The scope of the Inquiry and its detailed terms of reference will be finalised and confirmed in due course, following input from Professor Jay. The Education Secretary also announced that the Government intends to establish a Truth Project in Scotland, to enable victims and survivors of CSAE to share their experiences to help inform change and access support. 3.4 National Review of Group Based Child Sexual Abuse and Exploitation As well as the Public Inquiry, a national review into group based child sexual abuse and exploitation also commenced on 9th February 2026. This is following a ministerial request in December 2025. The review will be led by the Care Inspectorate and HIS Majesty’s Inspectorate of Constabulary in Scotland (HMICS), working with Healthcare Improvement Scotland (HIS) and His Majesty’s Inspectorate of Education in Scotland (HMIE) and other scrutiny bodies as appropriate. The review will consider how well public protection partners are working together to prevent, identify and act appropriately on instances of group-based child sexual abuse and exploitation and group-based child criminal exploitation. The review will take a phased approach, with phase one lasting for six months and a report on this is expected by Summer 2026, in accordance with their standard reporting practice. Chief Officers’ Groups have been asked to facilitate the provision of information and supporting evidence regarding how each of the 32 local authority partnership areas recognise, identify, assess and respond to incidences of group-based child sexual abuse and exploitation and group-based child criminal exploitation. Scott Hunter, Chief Social Work Officer has been identified as the co-ordinator for North Ayrshire and will lead the collation of responses and represent the HSCP in any discussions with the inspection team. 11
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3.5 Changes to PVG Scheme Membership Significant changes to the Protecting Vulnerable Groups (PVG) scheme in Scotland are being implemented under the Disclosure (Scotland) Act 2020. From 1 April 2026, there will be a shift from lifetime membership of the Scheme to mandatory five-year renewals, stricter legal requirements for regulated roles, and reduced disclosure levels to enhance safeguarding. From 1 April 2026, PVG Scheme membership In Scotland will change from lifetime membership to a five-year renewable membership. This change applies only to new applications made on or after that date. Disclosure Scotland will begin moving all existing PVG members to the five-year model in phases, starting with those who first joined the scheme in 2011. North Ayrshire have not yet been advised on when our employees will be contacted. An existing PVG member will shift to the new five-year model if they submit a new PVG application on or after 1 April 2026, including: • a new application to join the PVG Scheme, or • an update application due to moving into a role requiring a different PVG category, or an update is required due to a Consideration for Listing. Employees who joined the PVG Scheme before 1 April 2026 will be moved to the new model gradually, based on the year they originally joined. 3.6 Carers Scotland Power of Attorney Day Carers Scotland and Standard Life have joined forces to launch the first ever UK-wide Power of Attorney Day which will take place on Wednesday 22 April 2026. This initiative aims to raise awareness and understanding of powers of attorney, supporting the 627,700 unpaid carers in Scotland who care for someone who is older, disabled or seriously ill. �� Learn more: https://powerofattorneyday.org.uk/ �� General info on powers of attorney: https://www.mygov.scot/power-of-attorney 12
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3.7 Update on the Children (Withdrawal from Religious Education and Amendment of UNCRC Compatibility Duty) (Scotland) Bill On 17 February 2026, the Scottish Parliament passed the Children (Withdrawal from Religious Education and Amendment of UNCRC Compatibility Duty) (Scotland) Bill. The Bill has two key parts, this update focuses on Part 2 of the Bill, which will amend the UNCRC Act. Part 2 of the Bill, once commenced, will add an exemption to the section 6 Compatibility Duty in the UNCRC Act. This exemption would make clear that a public authority would not be acting unlawfully under the UNCRC Act where it is required, under an Act of the Scottish Parliament, to act in a way that is incompatible with UNCRC requirements. The exemption would only apply where a public authority has no discretion as to whether to act incompatibly, and the legislation cannot be read or given effect in a way that is compatible with UNCRC requirements (under section 24 of the Act). The Scottish Government has not thus far identified any existing circumstances in which the exemption would apply. The exemption is intended to provide clarity and legal certainty for public authorities where they face conflicting statutory duties. It is designed to avoid situations where a public authority may feel compelled to pause or disrupt the delivery of services because it believes it cannot provide those services in a way that is compatible with UNCRC requirements due to a requirement to act in a particular way by, or under, an Act of the Scottish Parliament. The exemption could also reduce the risk of unnecessary legal challenge against public authorities in circumstances where the issue lies in the legislation itself, rather than in the authority’s actions. The Bill will place a statutory notification duty on public authorities listed under section 19 of the UNCRC Act. Where a listed authority is of the view - when discharging its duties under the UNCRC Act - that it cannot read and give effect to legislation in a UNCRC-compatible way, and is therefore of the view that the exemption applies in connection with the exercise, or potential exercise, of a relevant function, it must notify, as soon as reasonably practicable: • The Scottish Government, • The Children and Young People’s Commissioner Scotland, and • The Scottish Human Rights Commission. The Scottish Government sought views from a number of listed authorities through existing networks. The majority of responses did not raise significant concerns. Many welcomed the fact that the duty would be linked to existing obligations under the UNCRC Act and therefore viewed the approach as proportionate. 13
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A separate notification duty will apply where the exemption is raised in legal proceedings, with notifications issued to the Lord Advocate, the Children’s Commissioner, and the Scottish Human Rights Commission. The Bill will also require Scottish Ministers to report annually, through the Children’s Rights Scheme, on the use of the exemption and any actions they intend to take in response. 3.8 Clinical Governance Standards Healthcare Improvement Scotland have published the Clinical Governance standards. The standards are intended to enhance improvements in health and social care for everyone, regardless of their age, disability, gender identity, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex, sexual orientation, socioeconomic status or any other status. Suggested aspects to consider and recommended practice throughout these standards should be interpreted as being inclusive of everyone living in Scotland. The standards have been developed to provide assurance that organisations are providing high quality and safe healthcare in line with best practice, national policy and legislation. Standards can support internal and external quality assurance. The standards will apply to all clinical services planned, commissioned or delivered within the health and social care system in Scotland. You can read the standards on the HIS website. North Ayrshire Developments 3.9 Feedback – North Ayrshire meeting with Cabinet Secretary I met together with Craig Hatton, Chief Executive of North Ayrshire Council on Thursday 12th February with the Cabinet Secretary and Minister to discuss the financial position of the IJB. This was following a request in December for me to write to set out our challenges and request consideration of further funding for North Ayrshire IJB particularly to meet demands and needs for social care services. The meeting provided the opportunity to discuss and share in more detail our pressures and challenges, including the ability to align resources to meet the needs of our local population, our local demographic drivers of demand, those including remote and rural services, high levels of poverty and deprivation and an ageing population. 14
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I outlined our current year financial position and projections for next year, service performance, including delayed transfers of care and waits within community services and our public consultation approach for social care eligibility criteria. The Cabinet Secretary and Minister acknowledged the difficulties we face and referred to opportunities to work with NHS Ayrshire and Arran on shifting the balance of care and risk-share and hospital at home service developments and confirmed there is no further funding available from Scottish Government. In the absence of additional funding being made available I reaffirmed our commitment to continuing to do the best with the resource we have available including improving performance were possible. 3.10 Magic Notes Trial Mental Health and Learning Disabilities social work teams began a six to eight-week trial of Magic Notes in March 2026. Magic Notes is an AI tool that records conversations and produces draft case notes, helping to reduce administrative tasks so that social workers can remain fully present and engaged during visits. Studies across UK councils show that by removing the need for note taking during meetings, staff are able to focus more on meaningful, person-centred conversations and capture richer, more accurate information. Other UK councils have shown time savings on administrative tasks, consistency in documentation, and improved accessibility for staff with dyslexia or visual impairments. The trial will evaluate how the tool affects the quality of interactions, documentation, and overall practice, including impacts on time spent on administrative tasks, quality of written work and conversations, and practitioner wellbeing. Findings will inform whether a wider roll-out would bring benefits to staff and the people we support. 3.11 Brighter Pathways - New Fostering Scheme – North Ayrshire A new scheme to recognise the hard work and commitment of foster carers - and to positively impact on the recruitment of new carers - is being launched by NAHSCP on April 1. A key part of the new scheme is a review of the financial support offered to foster carers. It will see the fostering fee increased from £200 per week to £250 per week for all Fostering First carers who agree to transfer over to the new scheme, as well as all newly approved carers. The new scheme will also introduce a welcome payment of £1000 for all newly approved foster carers, which will be awarded 12 months after the first child is placed. 15
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North Ayrshire Council is a Fostering Friendly Employer, with its Special Leave Scheme giving greater flexibility to staff for exploring fostering opportunities. Employees who are foster carers (or who are interested in becoming foster carers), as well as kinship carers, can benefit from the time off detailed below: • Assessment and initial training prior to approval as a foster carer - maximum three days • Attendance at panel for approval - maximum one day • Child review meetings, annual foster carer review meeting and training - up to five days You can read more about becoming a foster carer with NAHSCP by visiting the website or emailing adfos-enquiry@north-ayrshire.gov.uk. 3.12 Care Home Staff Training – Ayrshire Hospice A group of twelve Care at Home staff have completed a six-week training programme with the Ayrshire Hospice to increase their knowledge and skills around palliative care. In North Ayrshire, Care at Home teams currently support around 1,900 service users each day, including those with chronic life- threatening illnesses or who have chosen to be at home rather than in hospital in the final stages of life. The programme was delivered over six half-day sessions and aimed to increase skills around practical care for palliative and end of life patients, as well as communication and conversation, symptom management, grief and bereavement, and support for families. Staff also gained invaluable experience from a week spent shadowing staff within the hospice environment. 4. IMPLICATIONS 4.1 Financial None 4.2 Human Resources None 4.3 Legal None 4.4 Equality/Socio-Economic None 4.5 Risk None 16
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4.6 Community Wealth Building None 4.7 Key Priorities None 5. CONSULTATION No specific consultation was required for this report. User and public involvement is key for the partnership and all significant proposals will be subject to an appropriate level of Consultation. Caroline Cameron, Director [Carolinecameron@north-ayrshire.gov.uk/01294 317723] Appendices Nil 17
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Integration Joint Board 13th March 2026 Subject: 2025-26 – Month 10 Financial Performance Purpose: To provide an overview of the IJB’s financial performance as at Month 10 (January). Recommendation: It is recommended that the IJB: (a) notes the overall integrated financial performance report for the financial year 2025-26 and the current overall projected year- end overspend of £2.802m reducing to £2.251m after assumed funding for the reduced working week; (b) notes the progress with delivery of agreed savings; (c) approves the budget reduction in para 2.10; and (d) notes the remaining financial risks for 2025-26. Direction Required to Council, Health Board or Both Direction to: - 1. No Direction Required X 2. North Ayrshire Council 3. NHS Ayrshire & Arran 4. North Ayrshire Council and NHS Ayrshire & Arran Glossary of Terms NHS AA NHS Ayrshire and Arran HSCP Health and Social Care Partnership MH Mental Health MDT Child & Adolescent Mental Health Services BRAG Blue, Red, Amber, Green UNPACS UNPACS, (UNPlanned Activities) – Extra Contractual Referrals NRAC NHS Resource Allocation Committee PAC Performance and Audit Committee MHOF Mental Health Outcome Framework MDT Multi-Disciplinary Team 1. EXECUTIVE SUMMARY 1.1 The report provides an overview of the financial position for the Partnership and outlines the projected year-end outturn position informed by the projected expenditure and income commitments; these have been prepared in conjunction with relevant budget holders and services. It should be noted that, although this report refers to the position at the end of January further work is undertaken following the Agenda Item 5 19
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month end to finalise projections, therefore the projected outturn position is as current and up to date as can practicably be reported. 1.2 The projected outturn is a year-end overspend of £2.802m (0.8%). This is a favourable movement of £1.677m from month 9. Financial balance will not be achieved in 2025-26, the projected outturn position is summarised below with the residual risk following already identified financial improvement actions: TOTAL Health/ NHS AA Social Care/NAC Projected Overspend @ mth10 2.802 0.861 1.941 Reduced Working Week (RWW) funding assumed (0.551) (0.551) - Residual Projected Overspend 2.251 0.310 1.941 The Integration Scheme describes the required approach where there is a projected overspend on the IJB integrated budget, which includes the requirement to agree a recovery plan to balance the overspending budget. Only if the recovery plan is unsuccessful will the Health Board and Council consider making available interim funds. At month 9 following approval by the IJB, the Chief Officer wrote formally to North Ayrshire Council and NHS Ayrshire and Arran to request additional in-year funding to support the remaining overspend. This was subject to pursuing further recovery actions. The amount requested at month 9 is shown below along with an updated month 10 position: Month 9 Month 10 Health / NHS A&A 1.111 0.310* Social Care / NAC 3.368 1.941 TOTAL 4.479 2.251 *assumes full funding of the RWW 1.3 The movement in the projected outturn position for the 2025-26 financial year is illustrated in the graph below, this illustrates the movement in the gross and net projected overspend and the residual overspend or risk split between NHS and LA funding partners. 20
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This demonstrates significant progress in reducing the anticipated overspend since this was first projected at £5.187m in at Period 3 to the current projected outturn of £2.251m at Period 10. This has been achieved through tight financial management controls and the implementation of the actions in the financial recovery plan. As in previous years the impact of financial recovery actions is eroded by new demand and pressures, particularly in relation to social care and low volume high cost placements and areas where service occupancy is high and supplementary staffing costs are incurred. 1.4 From the core projections, overall, the main areas of pressure are: care at home, residential placements for children, physical disability care packages, supplementary staff in wards, staff costs in Montrose House and Unplanned Activities (UnPACs) within the lead partnership for mental health. The main areas of movement from Period 9 to Period 10 are: Favourable: • Care at Home • Physical Disability Care Packages • Lead Partnership for Mental Health • Care Experienced Children • Payroll turnover • Transition slippage • Savings inc contractual inflation Adverse: • Various smaller adverse variances 21
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1.5 The projected IJB outturn position has been adjusted to reflect the impact of Lead Partnership services. The overspend in relation to North Lead Partnership services for Mental Health is not fully attributed to the North HSCP as a share has been allocated to East and South HSCPs, similarly the impact of the outturn on East and South led services has been shared with North, both on an NRAC basis in line with the agreed risk sharing mechanism. There is a requirement for the 3 IJBs to be aware of the position for Lead Partnership services and plans to deliver services from within allocated budge. Note that the information for East and South HSCPs is the previously reported month 9 information as they do not report at month 10. 1.6 Since the setting of the budget in March 2025 the 2025-26 financial position has been adversely impacted by the below factors out-with the control of the IJB. • National Care Home Contract (NCHC) – the increase to the NCHC rate to reflect the impact of the nursing pay award resulted in an additional unfunded cost of £0.175m. • NHS Board allocation for the Employers National Insurance increase confirmed at 60% of funding – full year impact £0.664m • The current allocation for the Agenda for Change costs in relation to the reduced working week are currently being queried with the NHS finance team to ensure we receive our ‘fair share’ of the funding. The current funding allocated is £0.659m, the cost of covering all reduced hours is £1.497m. A recent exercise collated from services on the actual impact and cost indicated that the cost of cover is £1.210m (84% of staff covered) which is £0.551m higher than the current allocation. A request has been submitted to NHS A&A to review the funding allocation on a recurring basis, NHS AA Director of Finance offered a compromise agreement to fund 50% of the shortfall, following the discussion at IJB the Chief Officer has communicated back that this is not acceptable. A response is awaited. • Pay settlements for both NHS and Local Government staff have been agreed for 2025-26. The NHS element has been funded, and the current assumption is that the shortfall between budget planning assumptions and actual settlements will be fully funded for Local Government staff. 2. CURRENT POSITION 2.1 The report includes an overview of the financial position including commitments against the available resource, explanations for the main budget variances and an update on progress in terms of savings delivery. 2.2 FINANCIAL PERFORMANCE – AT MONTH 10 At month 10 against the full-year budget of £339.487m there is a projected year-end overspend of £2.802m (0.8%). The Integration Scheme outlines that there is an expectation that the IJB takes account of the totality of resources available to balance the budget in year. Following this approach, an integrated view of the financial 22
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position should be taken, however it is useful to note that this overall position consists of a projected overspend of £1.941m in social care services and a projected overspend of £0.861m in health services. Appendix A provides the financial overview of the Partnership position. The sections that follow outline the significant variances in service expenditure compared to the approved budgets. Appendix E provides information on the costs of bank and agency staff. 2.3 Health and Community Care Services Against the full-year budget of £99.611m there is a projected overspend of £1.978m (2%) which is a favourable movement of £0.979m and the main variances are: a) Care home placements – net projected overspend of £0.298m (£0.026m favourable). This includes an overspend on placements of £0.760m (£0.014m favourable) which includes a provision for an average of 5 interim beds and reflects the recent increase to the NCHC to reflect the impact of the nursing pay award resulted in an additional unfunded cost of £0.175m. The budgeted number of permanent placements was 765 and at month 10 there were 776 placements resulting in a projected overspend of £0.760m. The plan to manage down the number of permanent placements to reach the target is challenging due to the need to respond to referrals from hospital and to continue to support those in critical and substantial need in the community, this has led to a growing waiting list for access. The overspend is partially offset by income recovered from charging orders and gross funded placements which is projected to be £0.460m over recovered (£0.010m favourable). This income is challenging to predict as it depends on the length of the legal process and time taken to sell the property that the charging order is registered to and access to the funds or estate of service users. b) Care at home is projected to be £0.019m overspent (£1.124m favourable). The position reflects the cost of meeting the significant demand and level of provision for care at home support. The favourable movement is due to the action being taken to reduce the overall level of provision and reflects the contribution to specific SDS care packages from the Unscheduled Care funding received by NHS AA. The level of vacancies in the service has increased and whilst favourable it is coupled with increased levels of unmet need. c) Physical Disability Services – projected overspend of £0.230m (£0.096m favourable) split as follows: £0.963m over in residential placements, £0.416m under in direct payments due to increased clawbacks and £0.317m under in community care packages. 23
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d) Integrated Island Services is projected to overspend by £0.465m (£0.052m adverse). The most significant variance is a projected overspend at Montrose House of £0.358m which relates to the net overspend on agency staff (i.e. net of underspend on employee costs). There is also an under recovery of income and a write off of aged debt. In addition, outwith Montrose House there are overspends across property, continence and medical supplies, admin and transport. The Arran Patient Transfer contract is projected to overspend by £0.035m. e) Specialist Rehab wards – projected overspend of £0.206m (£0.011m adverse) (Redburn ward £0.191m overspend and Douglas Grant £0.015m overspend). The overspend is due to cover costs for vacancies as well as supplementary staffing for patients who require one to one support. f) Wards 1 and 2 – Projected overspend of £0.750m (£0.047m adverse). The overspend is due to increased use of supplementary staffing. All rehabilitation wards are operating at 100% occupancy supporting a high level of patient needs/complexity, which places pressure on staffing levels and the use of bank and agency staff to support additional patient observations. The projection for Health and Community Care services assumes that the allocation of unscheduled care funding will be fully utilised. 2.4 Mental Health Services Against the full-year budget of £118.613m there is a projected overspend of £1.374m (1.2%) which is a favourable movement of £0.346m prior to the re-allocation of the Lead Partnership variance to East and South HSCP. The main variances are: • Learning Disabilities are projected to overspend by £1.188m (£0.011m favourable). This covers for Children and Adults - residential placements, community packages, direct payments, property costs and an under recovery of charging income. • Community Mental Health services are projected to underspend by £0.113m (£0.002m favourable movement). The main reason for underspend in community packages is the availability and capacity of adult community providers to deliver new packages of care. • There is a projected underspend of £0.353m in relation to the cost of Hospital Based Complex Continuing Care (HBCCC), this reflects the impact of change in provision for these services. There were plans to reinvest this in the service, but these plans are on hold as holding the funding was agreed as part of the recovery plan at month 3. 24
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• The Lead Partnership for Mental Health is projected to be £0.641m overspent (£0.335m favourable) and the main variances are as follows: • Adult Inpatients – projected overspend by £1.473m (£0.044m adverse) due to very high levels of occupancy, patient mix and complexity and levels of continuous intervention which require additional supplementary staff and enhanced observations (1:1 and 2:1) and use of bank staff. • The UNPACS (Unplanned Activities) budget – projected overspend of £1.103m (£0.079m favourable) based on current placements. UnPACS placements are for individuals with very specific needs that require a higher level of security and/or care from a staff group with a particular skill set/competence. There are no local NHS secure facilities for women, people with a learning disability or people with neurodevelopmental disorder. This can necessitate an UNPACs placement with a specialist provider which can be out-of-area. The nature of mental health UNPACs spend is that it is almost exclusively on medium- or long-term complex secure residential placements which are very expensive so a small change in placements can have a high budgetary impact. Due to the complexity and risk involved, transitions between units or levels of security can take many months. Applications to approve a placement are made to the Associate Medical Director for Mental Health who needs to be satisfied that the placement is appropriate and unavoidable prior to this being agreed. Part of the additional control measures agreed in month 3 was to expand the high- cost care package review group to include all UNPACS placement requests, the projected position includes provision for any new placements approved. • Learning Disability Services – projected to overspend by £0.468m (£0.033m adverse). The overspend relates to the delay in achieving the saving from Ward 7A. Whilst the ward closed there are still legacy costs as the staff are still being redeployed and some patients remain within Woodland View. • Elderly Inpatients – projected overspend of £0.103m (£0.026m favourable) due to the use of supplementary staffing. The elderly mental health wards continue to operate at full occupancy with waiting lists, with several patients who are on enhanced observations and bank costs remain high. • Eating Disorders – projected to overspend by £0.137m (£0.002m adverse) due to the staffing level being higher than the funding 25
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allocation. This is being considered alongside the overall resource allocation. • Enhanced Mental Health Outcome Framework (EMHOF) – projected underspend of £0.624m (no movement). There was £0.624m of reserves held for EMHOF and the recovery plan approved the draw down of these reserves. • Psychiatry – is projected to overspend by £0.355m (£0.040m adverse) mainly due to junior doctor costs. A mitigation plan is being developed and the rota for junior doctors is being reviewed. A wholescale workforce review has been commissioned to determine longer term solutions for sustainability. • MH Pharmacy/Substitute Prescribing – is projected to underspend by £0.219m (£0.283m favourable). The favourable movement is due a further pharmacy rebate of £0.160m. Prior to this rebate there was an overspend due to increased demand and cost of medicines, and particularly the cost of Buvidal. This position is after investing £0.510m on a Pan Ayrshire basis (£0.170m per HSCP). • Action 15 – is projected to underspend of £0.412m (£0.037m favourable). There was £0.487m of reserves held for Action 15 and the recovery plan approved the draw down of these reserves which is the main reason for the underspend. The projected underspend is after considering the legacy costs from the 2024-25 review of funding. Innovation Fund – projected underspend of £0.021m (no movement) assuming that the posts to be redeployed as part of the EMHOF review are actioned. • The turnover target for vacancy savings for the Lead Partnership is held within the Lead Partnership as this is a Pan-Ayrshire target. There is a projected over recovery of the vacancy savings target of £1.412m (favourable movement of £0.065m) in 2025-26. Further information is included in the table below: Vacancy Savings Target (£1.160m) Projected to March 2026 £2.572m Over/(Under) Achievement £1.412m 26
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2.5 Children and Justice Services Against the full-year budget of £42.320m there is a projected overspend of £1.413m (3.3%) which is a favourable movement of £0.214m and the main variances are: a) Care Experienced Children and Young People is projected to overspend by £1.996m (£0.150m favourable). Some of these costs are offset by the contribution from the Home Office for Unaccompanied Asylum-Seeking Children which is detailed below. The main areas within this are noted below: • The children’s residential placements are projected to overspend by £2.874m (£0.096m favourable) based 32 placements in month 10. There are several factors leading to this challenging position: o We have 32 places available in our internal children’s houses, due to demand these have been operating at 100% occupancy or over for some time, leading to increased use of external placements where residential care is required. o There remains an acute shortage of foster carers leading to residential care being necessary in emergency placement situations. o The requirement to support Unaccompanied Asylum-Seeking Children (UASC) under the National Transfer Scheme and to support trafficked young people who have been identified in North Ayrshire. o A number of young people in residential care have requested Continuing Care, whereby a young person can remain in their placement until age 21. o Where appropriate young people are placed to meet their educational needs, the cost of Residential School Placements in the most cases is shared 50/50 with Education services. o Contractual inflation has still to be agreed for 4 providers. If this is higher than the assumed contractual inflation and it is likely that this will increase the projected costs of residential places which is outwith the control of the service. o Children’s Services are continuing to work with other services including Education and Housing to address the challenges through the work of the ‘Brighter Pathways’ Programme and associated workstreams. Note that the costs associated with mobilising Boyle Street are being finalised and will be funded by an underspend in the Service Redesign Fund. • Looked After and Accommodated Children (fostering, adoption, kinship etc) is projected to be £0.820m (£0.031m adverse) underspent. 27
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• Residential respite – placements are overspent by £0.056m (no movement). These short-term placements are used to prevent an admission to full time care or to avoid placement breakdown. • Employee costs – are projected to overspend by £0.055m (£0.059m favourable), largely due to staffing levels in the children’s houses and the outcome of job evaluation for posts. • Care Leavers – projected underspend of £0.046m (no movement) in rent costs. • Section 29 Payments (Throughcare Team) are projected to overspend by £0.130m. b) Head of Service – is projected to underspend by £0.724m (£0.066m favourable). This consists of a projected overspend of £0.158m in relation to the previous staff reconfiguration saving in the children’s houses which was not achieved in 23-24 or 24-25 and this is offset by the grant funding in relation to Unaccompanied Asylum-Seeking Children (UASC), which is projected to amount to £0.779m £0.003m favourable) and which contributes to costs incurred across a number of C&F service areas. c) C&F Health Team – is projected to overspend by £0.127m (£0.010m favourable) mainly in relation to the Band 6 to 7 regrade for Health Visitors and the progression of posts up the Band 7 scale. Part of this recurring cost was incorporated into budget pressures for 2025-26. d) Lead Partnership – Children’s Services – projected underspend of £0.065m as monies carried forward from 2024-25 are being taken towards the overall underspend. In line with the Brighter Pathways Re-Modelling Care Options Plan which was approved by the IJB in November 2025, the budget for care experienced children and young people will be re-aligned moving into 2026-27 with progress monitored in line with the planned reduction and re-alignment of placements. 2.6 ALLIED HEALTH PROFESSIONALS (AHP) The non-employee costs element of the AHP services are projected to be on-line. All underspends in employee costs have contributed to payroll turnover. 2.7 CHIEF SOCIAL WORK OFFICER This is projected to underspend by £0.109m (£0.036m favourable). The favourable movement is due to reduction in spend for young carers. 28
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2.8 MANAGEMENT AND SUPPORT Management and Support Services are projected to underspend by £1.907m (£0.309m favourable which is primarily due to additional vacancy savings), the overall main areas of variance are: • There is projected slippage on the LD and MH transition funding of £0.631m (£0.098m favourable) due to delays in children transitioning into adult services. This involves complex planning by services with service users and families and can change over time based on assessed need when moving into adult services. • The 2024-25 budget included a budgeted deficit on the social care side of £0.437m which is offset by a budgeted surplus of £0.437m on the health side of the budget. • There is also a balance of overachieved savings of £0.181m (£0.044m favourable) and contractual inflation of £0.268m (£0.268m favourable). • NHS shortfall in savings of £0.124m (£0.106m favourable) which is not coded to specific areas and held centrally until recurring savings can be identified. • The funding for the Reduced Working Week (non-Lead Partnership element) is coded to Management and Support pending final confirming of the allocation. It is projected to underspend by £0.293m as the overspends in relation to these costs are shown on other lines outwith Management and Support. • An over-recovery of payroll turnover of £0.450m (£0.300m favourable) for social care services and an over-recovery of £0.469m (£0.187m favourable) for health services as outlined in the table below. The turnover targets and achievement for the financial year for Health and Social Care services outwith the Lead Partnership is noted below: Social Care Health Vacancy Savings Target (£3.400m) (£1.567m) Projected to be achieved by March 2026 £3.850m £2.036m Over/(Under) Achievement £0.450m £0.469m The areas contributing to the health and social care vacancy savings are spread across a wide range of services with vacancy savings being achieved in most areas. As part of the recovery plan, the vacancy scrutiny group has been enhanced with the Heads of Service and professional leads attending. Each post is scrutinised and filled only where deemed necessary with a recruitment freeze now implemented for all non-essential posts. For 2025-26 there will be a further recruitment delay with vacancy scrutiny approved vacancies being held for four weeks before they are advertised to create more payroll 29
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turnover. This will be for all vacancies except clinical or registered services vacancies or those which will incur cover costs. The turnover target for the North Lead Partnership for Mental Health services is detailed separately within the Lead Partnership information at section 2.4. 2.9 Savings Progress The approved 2025-26 budget included £4.019m of savings. BRAG Status Position at Budget Approval £m Position at Month 10 £m Red - 1.000 Amber 2.984 1.027 Green 1.035 - Blue - 1.992 TOTAL 4.019 4.019 Appendix B provides an overview of those service changes which do have financial savings attached to them and the BRAG status around the deliverability of each saving. Any shortfall in relation to the red and amber rated savings are already reflected in the projected outturn. 2.10 Budget Changes The Integration Scheme states that “either party may increase it’s in year payment to the Integration Joint Board. Neither party may reduce the payment in-year to the Integration Joint Board nor Services managed on a Lead Partnership basis…. without the express consent of the Integration Joint Board.” Appendix C highlights the movement in the budget position following the initial approved budget. Reductions Requiring Approval: Ref Description Amount (£000) 1 MAT Standards Funding Adjustment 6 2.11 Pan Ayrshire Lead Partnership services and Large Hospital Set Aside Lead Partnerships: - There is a requirement for the 3 IJBs to be aware of the position for Lead Partnership services and plans to deliver services from within allocated budget. East and South HSCP do not report at month 10 so there is not updated pan Ayrshire report. 30
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Set Aside: - Work has been undertaken with partnerships to progress and develop set aside arrangements to fully implement the legislative requirement. This includes arrangements in relation to the use of Directions, Joint Commissioning Plans and overall progression towards fair share allocations of resources. Further work has been undertaken through the Ayrshire Finance Leads group to establish baseline resources for each partnership and how these compare to the NRAC “fair share” of resources. Ayrshire Finance Leads have now agreed a baseline methodology for set aside budgets which involves using the four full years prior to the pandemic, 2016/17 – 2019/20 inclusive. The HSCPs require to agree their final share of the baseline with each other, however the aggregate will remain unchanged. The table below shows the cost of the historic baseline at 2024/25 prices. The 2025/26 actual usage information is not known until later in the year. IJB Baseline at 2024/25 prices (£) East 31.870 North 39.966 South 34.488 Total 106.324 The annual budget for Acute Services is £496.7million. The directorate is overspent by £30.5 million after 10 months including legacy CRES. This was caused by overspends on medical and nursing staff, together non pay overspends on equipment and supplies. These are required due to the level of operational pressure experienced. Unfunded wards contributed an overspend of £5.7m after 10 months. Within the overall £30.5 million overspend Medicine are over by £12.2 million, Emergency Care by £9.9 million, Surgery by £3.8 million, Labs and Diagnostics by £3.4 million and Women and Children by £2.2 million. There is a material underlying deficit caused by: • Length of Stay (LoS) and emergency admission rates in NHS Ayrshire and Arran acute hospitals are above the Scottish average. • High expenditure on medical and nursing agency staff, high rates of absence and vacancies causing service pressure. • Delayed transfers of care and high acuity of patients. 31
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The IJBs and the Health Board work closely in partnership to maintain service and improve performance. 2.12 FINANCIAL RISKS There are a number of financial risk areas that impact or may impact on the financial position. • Current overspend areas, especially in low volume / high-cost services e.g. Children’s residential placements, UNPACs, and supplementary staffing across community, mental health and learning disability wards. • Growing demand for services. • Staff recruitment and retention challenges across a number of service areas. • The expectation that performance will continue to be maintained or improved despite the significant resource challenges. • Ongoing delivery costs of Scottish Government policy directives, particularly where these are not fully funded or inflation proofed. • Pay settlements for both NHS and Local Government staff have been agreed for 2025/26. The NHS element has been funded, and the current assumption is that the shortfall between budget planning assumptions and actual settlements will be fully funded for Local Government staff. • Unearmarked reserves are depleted, there is no scope to absorb in-year variances, with any overspends requiring additional funding from partners. • The ongoing review of the Integration Schemes, where there is a focus on financial arrangements and risk share. • The wider system financial challenges and impact across the whole system, for example the financial position of NHS AA and the decisions taken to reduce the Board’s deficit may have impacts on other parts of the health and care system. • Removal of brokerage for NHS Boards, NHS AA have been asked by Scottish Government to deliver further financial improvement beyond their Board approved financial plan and have now been escalated to Level 4 of the NHS Scotland Support and Intervention Framework. • The overall sustainability of commissioned care providers, with eNICs compounding historic challenges re financial sustainability, there is a heightened risk of provider failure leading to handing back of care and contracts. • The ongoing ability to source packages of care for service users. • Progress with the work to develop set aside arrangements and the risk sharing arrangements agreed as part of this. • The recurring underlying levels of overspend which may impact on the Partnership’s ability to continue to sustain service levels in the future. • The use of supplementary staffing for enhanced observations across a number of service areas and the use of high-cost agency staff to support frontline service delivery in areas where there are recruitment challenges. • Agenda for Change Pay Reform programme – including Nursing Band 5-6 re- grade, protected learning time and reduction to the working week. 32
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• Scotland Excel inflationary increases for children’s services have been significantly higher than assumed. • There is a risk in relation to recovering recharge income in relation to the LD Assessment and Treatment patients from outwith Ayrshire. • Risk related to NHS Reform investment being allocated by Scottish. These risks will continue to be monitored. Audit Scotland’s recent audit of the IJB Annual Accounts concluded that North Ayrshire IJB has effective financial management and reporting arrangements in place. The audit also highlighted success in achieving approved recurring savings. This demonstrates that the current financial recovery situation is not a result of inadequate financial oversight, poor reporting, or an inability to deliver efficiencies. Instead, the ongoing challenge relates to rising levels of need within the North Ayrshire population and the wider, and national, issue of ensuring the long-term financial sustainability of health and social care services. It is essential that the IJB works with all partners to accelerate and resource service redesign and transformation, in order to provide sustainable care for the future. An Internal Audit review of IJB transformation submitted to the September 2025 Performance and Audit Committee gave an opinion of substantial assurance in relation to the governance of the Transformation Plan. The next planned IJB Audit will focus on Financial Sustainability. 2.13 RESERVES The IJB opening reserves position are summarised in the table below. General Fund Reserve Earmarked Reserves Total Unearmarked External Funding HSCP £m £m £m £m Balance – 1 April 2025 - 2.381 0.780 3.161 Anticipated Drawdown - (2.381) (0.780) (3.161) Balance – 31 March 2026 - - - - The £0.780m HSCP earmarked reserve relates to the Service Redesign and Change Fund which is fully committed in 2025-26. Further detail on the reserves is given in Appendix D. 33
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2.14 Financial Recovery Plan Since the initial recovery plan was agreed in June 2025 there has been a £2.833m reduction in costs. Whilst the full benefit of this has not been realised in-year in the bottom-line outturn, it has supported the delivery of mitigating a further deterioration to the position introduced through other in-year unexpected financial pressures of £2.168m. This has resulted in a net achievement of £0.665m recovery action per below: Given the proximity to the financial year end there is no new recovery plan action being proposed and instead a focus on continuing to progress the previously agreed actions and enhanced governance, oversight and escalation of spend and approvals. It is anticipated that the management and recovery actions developed during 2024- 25 and 2025-26 will require to continue into 2026-27. PROPOSALS 3.1 Anticipated Outcomes Continuing to closely monitor the financial position will allow the IJB to take corrective action where required to deliver services in 2025-26 from within the available resource, thereby limiting the financial risk to the funding partners. The transformational change programme will have the greatest impact on the financial sustainability of the partnership, the IJB require to have a clear understanding of progress with the delivery of the transformation plan. 3.3 Measuring Impact The final outturn will be reported to the IJB. 34
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4. IMPLICATIONS 4.1 Financial The outturn is an overall year-end overspend of £2.802m (0.8%) . The report outlines the main variances for individual services. The IJB unearmarked reserve balance is zero. This current position poses a financial risk to North Ayrshire Council and NHS Ayrshire and Arran. 4.2 Human Resources The report highlights vacancy or turnover savings achieved during the year. Services will review any staffing establishment plans and recruitment in line with normal practice when implementing service change and reviews as per agreement with the IJB. Tight vacancy scrutiny management arrangements are in place for the HSCP. 4.3 Legal None. 4.4 Equality/Socio-Economic None. 4.5 Risk Para 2.12 highlights the financial risks. The report falls in line with the agreed risk appetite statement which is a low-risk appetite in respect to adherence to standing financial instructions, financial controls and financial statutory duties and a high-risk appetite in relation to finance and value for money. The ‘financial viability of the HSCP’ risk is on our strategic risk register. 4.6 Community Wealth Building None. 4.7 Key Priorities The ability to deliver on our strategic priorities may be compromised due to the greater financial risk faced in 2025-26 and the increased focus required on financial rather than service improvement. This will be kept under close scrutiny throughout 2025-26. If we are unable to successfully develop a financial recovery plan to achieve financial balance, consideration may be given to revising the strategic commissioning plan. 5. CONSULTATION 5.1 This report has been produced in consultation with relevant budget holders and the Partnership Senior Management Team. 35
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5.2 The IJB financial monitoring report is shared with the NHS Ayrshire and Arran Director of Finance and North Ayrshire Council’s Head of Finance after the report has been finalised for the IJB. Caroline Cameron, Director Author – Eleanor Currie, Chief Finance Officer [eleanorcurrie@north-ayrshire.gov.uk] 36
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PUBLIC INFORMATION 2025-26 Budget Monitoring Report–Objective Summary as at 31st January 2026 Appendix A Budget Outturn Projected Over/ (Under) Spend Variance Budget Outturn Projected Over/ (Under) Spend Variance Budget Outturn Projected Over/ (Under) Spend Variance £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 COMMUNITY CARE AND HEALTH 78,717 79,578 861 20,894 22,011 1,117 99,611 101,589 1,978 2,957 (979) : Locality Services 32,539 33,267 728 5,789 5,789 0 38,328 39,056 728 747 (19) : Community Care Service Delivery 41,957 41,730 (227) 0 41,957 41,730 (227) 803 (1,030) : Rehabilitation and Reablement 2,093 2,102 9 0 2,093 2,102 9 51 (42) : Long Term Conditions 904 952 48 10,628 11,584 956 11,532 12,536 1,004 944 60 : Community Link Workers 339 338 (1) 0 0 0 339 338 (1) (1) 0 : Integrated Island Services 885 1,189 304 4,477 4,638 161 5,362 5,827 465 413 52 MENTAL HEALTH SERVICES 41,157 42,242 1,085 77,456 77,745 289 118,613 119,987 1,374 1,720 (346) : Learning Disabilities 32,078 33,266 1,188 727 727 0 32,805 33,993 1,188 1,199 (11) : Community Mental Health 7,069 6,956 (113) 1,801 1,801 0 8,870 8,757 (113) (111) (2) : Addictions 2,010 2,020 10 1,879 1,880 1 3,889 3,900 11 9 2 : HBCCC 0 0 0 353 0 (353) 353 0 (353) (353) 0 : Lead Partnership Mental Health NHS Area Wide 0 0 0 72,696 73,337 641 72,696 73,337 641 976 (335) CHILDREN & JUSTICE SERVICES 36,425 37,801 1,376 5,895 5,932 37 42,320 43,733 1,413 1,627 (214) : Irvine, Kilwinning and Three Towns 3,249 3,292 43 0 0 0 3,249 3,292 43 46 (3) : Garnock Valley, North Coast and Arran 3,598 3,690 92 0 0 0 3,598 3,690 92 83 9 :Intervention Services 1,841 1,839 (2) 0 0 0 1,841 1,839 (2) 0 (2) : Care Experienced Children & Young people 22,791 24,787 1,996 0 0 0 22,791 24,787 1,996 2,146 (150) : Head of Service - Children & Families 1,413 689 (724) 0 0 0 1,413 689 (724) (658) (66) : Justice Services 3,101 3,101 0 0 0 0 3,101 3,101 0 0 0 : C&F Health Team 432 403 (29) 5,015 5,117 102 5,447 5,520 73 82 (9) : Lead Partnership NHS Children's Services 0 0 0 880 815 (65) 880 815 (65) (72) 7 CHIEF SOCIAL WORK OFFICER 1,959 1,851 (108) 0 0 0 1,959 1,851 (108) (73) (35) PRIMARY CARE 0 0 0 53,262 53,259 (3) 53,262 53,259 (3) (3) 0 ALLIED HEALTH PROFESSIONALS 0 11,489 11,489 0 11,489 11,489 0 0 0 MANAGEMENT AND SUPPORT COSTS 8,195 6,922 (1,273) 4,038 3,404 (634) 12,233 10,326 (1,907) (1,598) (309) OUTTURN ON A MANAGED BASIS 166,453 168,394 1,941 173,034 173,840 806 339,487 342,234 2,747 4,630 (1,883) Return Hosted Over/Underspends to East 0 0 0 0 (210) (210) 0 (210) (210) (320) 110 Return Hosted Over/Underspends to South 0 0 0 0 (183) (183) 0 (183) (183) (279) 96 Receive Hosted Over/Underspends South 0 0 0 0 33 33 0 33 33 33 0 Receive Hosted Over/Underspends East 0 0 0 0 415 415 0 415 415 415 0 OUTTURN ON AN IJB BASIS 166,453 168,394 1,941 173,034 173,895 861 339,487 342,289 2,802 4,479 (1,677) Over/ (Under) Spend Variance at Period 9 Movement in variance from Period 9 TOTAL Partnership Budget - Objective Summary Council Health 2025/26 Budget 37
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2025-26 Savings Tracker Appendix B Social Care: Ref Description Deliverability Status at budget setting Deliverability Month 10 2025/26 Saving Previously Agreed Savings (Full year impact) 1 Review of Day Care provision Green Blue 0.100 2 Service redesign (CAAST Team and Corporate Parenting team) Green Blue 0.034 Adjustments 3 Payroll Turnover Green Blue 0.099 Mental Health 4 LD Responder Service Amber Amber 0.150 Children, Families & Criminal Justice 5 Brighter Pathways Amber Red 1.000 Community Care & Health 6 Review of Day Care provision Amber Blue 0.107 7 Care at Home Amber Blue 0.500 8 Care Package Review (all services) Amber Blue 0.200 9 Deletion of vacant posts Green Blue 0.056 10 Increase to charging Green Amber 0.186 11 Admin Post Savings Green Blue 0.114 12 Financial Inclusion Green Blue 0.357 TOTAL SOCIAL CARE SAVINGS 2.903 Cross Service 38
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Health: Ref Description Deliverability Status at budget Deliverability Month 10 2025/26 Saving Adjustments 13 Increase recharge to East Ayrshire for beds at Woodland View Green Blue 0.010 14 Payroll Turnover Green Blue 0.079 Other Savings 15 Admin Savings Amber Blue 0.186 16 Trindlemoss House - move to social care model Amber Amber 0.250 17 EICT/Rehab Amber Blue 0.150 18 Community MH/Wellbeing Review Amber Amber 0.100 19 Ward 7A - Woodland View Amber Amber 0.341 TOTAL HEALTH SAVINGS 1.116 TOTAL NORTH HSCP SAVINGS 4.019 39
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2025-26 Budget Reconciliation Appendix C COUNCIL Period Permanent or Temporary £'m Initial Approved Budget 137.739 Adjustments to baseline 0.039 Revised Budget 137.778 Resource Transfer 25/26 1-3 25.026 Additional Funding - 24/25 Adult Social Care RLW 1-3 P 0.073 Additional Funding RLW 1-3 P 0.126 Additional Funding - Money Smart 1-3 P 0.094 ICT Transfers 1-3 P (0.005) Additional Funding - Whole Family Wellbeing Funds 1-3 T 0.179 CJSW - S27 1-3 P 3.280 Development of People working in Childrens SW 1-3 P (0.390) Change Fund Allocation - HSCP FIO Team 7 T 0.021 Internal Commerical Waste 7 P 0.009 ICT Transfers 9 P (0.004) CSC Pay Uplift 10 0.163 SRA Kinship 10 0.058 Change Fund Allocation - HSCP FIO Team 10 0.047 ICT Transfers 10 (0.004) Roundings 10 0.002 166.453 HEALTH Period Permanent or Temporary £'m Initial Budget exc set aside 161.934 Month 10-12 Adjustments and adjusting for the full year impact of part years amounts and temporary funding. 8.532 Revised Budget 170.466 Resource Transfer 24/25 24.640 Resource Transfer 25/26 (25.026) NORTH NATIONAL INS 25-26 AMBUS 1 0.997 PRESCRIBING 25-26 AMBUSH 1 2.754 PRESCRIBING CRES 25-26 AMBUSH 1 (0.715) Training Grade Adj - April 1 (0.058) Training Grade Rates Adj - April 1 0.030 MH: Anticipate PDS Dementia (North) 25/26 1 0.094 MH: Anticipate Delivery of Veteran Specific 25/26 1 0.105 Anticipated RWW from SG 1 0.659 Anticipate 20% Tranche 2 ADP 1 0.174 Social Care Budget Reported at Month 10 40
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HEALTH Period Permanent or Temporary £'m Training Grade Adj - May 2 (0.013) Bwp 25-26 East Chest Heart Stroke 2 0.001 Bwp 25-26 East Nest Expansion 2 0.023 Bwp 25-26 East - Sds Advice Service 2 0.013 Bwp 25-26 East Sub Prescribing 2 0.170 25-26 South Budget Paper - North Substitute Prescribing 2 0.170 25-26 South Budget Paper - Pan Ayrshire Chest Heart And Stroke 2 0.001 25-26 North Budget Paper - Pan Ayrshire (vision Support Service 2 (0.005) 25-26 North Budget Paper - Pan Ayrshire (communitystore) 2 (0.155) HD52: EARLY INTERVENTION PSYCHOSIS 3 0.100 25-26 Pay Award Increase North 3 1.179 Training Grade Adjustment (Dean Funding) 4 0.011 Medical Pay Award - Senior Medical - Additional 1% 4 0.086 Medical Pay Award - Specialty Doctors - Additional 1% 4 0.006 Virement to Medical Directorate from Mental Health Admin 4 (0.028) Transfer MAT Standards Psychiatrist 0.2 WTE 4 0.029 Primary Care Prescribing Tariff Reduction 4 (0.556) BBV transfer from Public Health 4 0.269 Training Grade Adjustment (Dean Funding) - August 5 0.129 Budget transferred to Capital for INV-3395435821 5 (0.006) Transfer from South - ANP contribution 5 0.030 Primary Care Prescribing Budgets reworked 5 0.130 HD157 3% pay award ADP North 5 0.057 North MDT funding to Arran Medical Group (Virement 11) 5 (0.043) Training Grade Adjustment (Dean Funding) - September 6 0.018 Transfer Methadone LES to East GMS 7 (0.008) Post to Medical records 7 (0.037) GP Prescribing budget adjustment 7 (1.094) ADP MAT Standards Allocation 7 (0.045) ADP ABI to East 7 (0.010) Drug Death Co-ordinator funding returned to PH (retiral - post funding returned) (0.040) BBV funding returned to PH (reduction in hours) 8 (0.008) Training Grade Adjustment (Dean Funding) - December 8 (0.071) Training Grade Rates Adjustment - December 9 0.086 Early Years funding 0.49 WTE Band 4 - MIN Alloca 9 0.020 GP Prescribing budget adjustment 9 (0.365) Training Grade Adjustment (Dean Funding) - January 10 0.019 Junior Doctors Pay Award - additional 0.25% 10 0.008 MAT Standards Adjustment 10 (0.006) ANTICIPATED BUDGETS INCL HERE (NOT IN LEDGER) 10 (1.150) Roundings (0.001) 173.034 TOTAL COMBINED BUDGET 339.487 Health Budget Reported at Month 10 41
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25-26 IJB Reserves Position Appendix D Area of Reserves Balance at 31 March 2025 Earmarked Funds £ : Alcohol & Drug Partnership 353 : Mental Health Action 15 135 : Primary Care Improvement Fund 46 : Service Redesign / Challenge Fund 780 : Family Wellbeing Fund 934 : Breastfeeding Network 36 : MH Recovery and Renewal /Enhanced MH Outcome Framework 365 : Early Intervention in Psychosis 92 : LD funding 82 : Donation (Police Scotland) 1 : Primary Care Improvement Fund IP 303 : GP Premises Improvements - tranches 1 and 2 3 : Dental Practice Improvement 29 : Appropriate Adult 2 Total Earmarked 3,161 42
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Bank and Agency Costs to Month 10 Appendix E 1) NHS 4863 (Registered) 4864 (Unregistered) 4853 (Registered) 4854 (Unregistered) 4865 (Agency Locum Consultant) TOTAL NORTH CORE SLT ADULT 3,098 3,098 WARD 1 WOODLANDS VIEW 47,525 235,032 282,557 WARD 2 WOODLANDS VIEW 25,567 346,633 372,200 ACH REDBURN REHAB WARD NRS 24,251 164,162 188,413 ACH DOUGLAS GRANT REHAB WD NRS 34,699 75,855 110,554 WARD 3 WOODLANDS VIEW NURSING 12,324 328,558 340,882 WARD 4 WOODLANDS VIEW NURSING 1,605 37,804 39,409 NEW CLONBEITH NURSING(JURA) 89,093 144,959 234,052 WVIEW THE GLEN ECT 5,197 11,959 17,156 WVIEW WARD 10 ACUTE MH NRS 5,576 238,505 244,081 WVIEW WARD 8 ACUTE MH NRS 23,316 760,489 783,805 WARD 5 WOODLANDS VIEW 4,033 47,347 51,380 WVIEW WARD 7B REHAB MH NRS 7,419 7,419 NEW DUNURE NURSING(CLONBEITH) 35,937 192,942 228,879 MH BED MANAGEMENT 21,726 21,726 TRINDLEMOSS 60,040 282,690 342,730 ARRAN HOSPITAL NURSING 69,006 41,701 110,707 CAMHS MANAGEMENT 1,944 1,944 CAMHS UNSCHEDULED CARE 1,903 1,903 EARLY YRS-C/F TEAM 1 923 923 EARLY YRS-C/F TEAM 3 974 974 IMMUNISATION NURSING 55,249 17,611 72,860 ARRAN HV 137 137 ARRAN DN 13,862 13,862 PACKAGE OF CARE (P) - AMG 109,773 109,773 PACKAGE OF CARE (P) - LMO 879 879 NC POC TEAM 2 990 990 NC POC TEAM 3 3,843 3,843 THREE TOWNS DN 1,187 1,187 FOXGROVE(NSAIS)ADVANCE RECRUIT 29,246 29,246 NORTH AHP MANAGEMENT TEAM 7,329 7,329 IRVINE DN 16,516 16,516 NORTH WEST COAST DN 31,318 31,318 GARNOCK VALLEY DN 53,541 53,541 LADY MARGARET NURSING 8,467 4,520 12,987 PREVENTION + SERVICES SPT TEAM 4,719 4,719 LD HEALTH CHECKS 12,238 12,238 NORTH CLDT 6,806 164 6,970 LDS MANAGEMENT 2,332 2,332 MHANPS MH UNSCHEDULED CARE 38,721 57 38,778 MHS INPATIENT MGT 15,845 520 16,365 CMHT NURSING-NORTH AYRSHIRE 9,362 5,890 15,252 WVIEW WARD 7C FORENSIC REHAB N 9,224 138,927 371 148,522 INTENSIVE COMMUNITY NURSING TEAM 44,893 3,978 48,871 ADULT MENTAL HEALTH LIASION TEAM 343 343 PCMHT NORTH 4,108 4,108 WVIEW WARD 6 LOW SECURE NRS 53,282 162,602 215,884 WARRIX AVE 110,637 83,409 194,046 ICFN - COMMUNITY PHLEBOTOMY 12,456 12,456 FORENSIC PSYCHOLOGY 3,248 3,248 CHILD HEALTH ADMIN 25,610 1,797 27,407 WVIEW WARD 7A LD A+T NRS 23,436 425,962 1,804 14,532 465,734 WVIEW WARD 9 ACUTE MH NRS 45,418 384,223 226 429,867 WVIEW WARD 11 ACUTE MH NRS 299,680 299,680 ADULT EAST 1,131 1,131 OLD AGE 60,253 60,253 1,063,557 4,605,590 2,401 14,532 61,384 5,686,080 2) SOCIAL CARE Mth 10 Spend 327,922 158,510 15,000 89,483 590,915 Mh Acm Agency Montrose House Brodick Unscheduled Care Funding Ld Acm Bank 43
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Integration Joint Board 13th March 2026 Subject : Transformation Plan Update Purpose : The purpose of this report is to provide an update on the HSCP’s Transformation Plan:- • Awareness • Approval • Discussion Recommendation : The Integration Joint Board are asked to note the contents of the report and progress to date. Direction Required to Council, Health Board or Both Direction to :- 1. No Direction Required 2. North Ayrshire Council 3. NHS Ayrshire & Arran 4. North Ayrshire Council and NHS Ayrshire & Arran Glossary of Terms NHS AA NHS Ayrshire and Arran HSCP Health and Social Care Partnership IJB Integrated Joint Board PMI Property Management and Investment TEC Technology Enabled Care DPIA Data Protection Impact Assessment 1. EXECUTIVE SUMMARY 1.1 This report provides an update to the Integrated Joint Board (IJB) on progress with the HSCP Transformation Plan 2024–27. Following external scrutiny and an internal review, the Plan has been refreshed to improve focus, deliverability and alignment with financial plans, with a reduced number of clearly defined projects now overseen by the Transformation Board. A formal benefits realisation approach has been introduced, strengthening governance, transparency and reporting of cashable and non-cashable benefits. The Programme has delivered £1.824m in savings to date, with total savings of over £4.8m anticipated by 2026/27, subject to successful delivery of projects in progress. The report proposes that the IJB note the progress made and the strengthened arrangements now in place. Agenda Item 6 45
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2. BACKGROUND 2.1 In March 2024, the Integration Joint Board (IJB) approved the Transformation Plan for 2024-27. The Plan was established to deliver transformation projects and programmes across the Partnership. It was agreed that updates on the Transformation Plan would be provided to the IJB every six months. The previous update was in August 2025. In September 2025, Audit Scotland produced its annual audit report of the North Ayrshire Integration Joint Board. The audit highlighted the importance of the Transformation Plan in managing within budget, while also recognising that future recurring savings will be delivered in other areas, such as workforce changes and service reviews. 2.2 Internal Audit carried out an audit of the IJB Transformation arrangements with the final report in August 2025 reporting Substantial Assurance. The objectives of the audit being that there are adequate governance arrangements in place for transformation workstreams, adequate financial monitoring arrangements are in place for the transformation workstreams and that there are adequate programme management arrangements in place for transformation workstreams. Substantial Assurance is an assessment that indicates there is - “A sound system of governance, risk management and control exist, with internal controls operating effectively and being consistently applied to support the achievement of objectives in the area audited.” The audit opinion summarised that: • Overall, substantial assurance was obtained with regard to the governance of the HSCP’s Transformation Plan. The current governance arrangements include clear reporting lines and involve senior managers at an appropriate level. The Transformation Board meets regularly and has a good overview of the projects, including access to a tracker which is summarised in a 1-page dashboard. A low priority action has been recommended to correct a discrepancy in the Terms of Reference for the Board. • Projects have governance arrangements which are appropriate to their size. The documentation required for the projects is clearly laid out and includes the requisite elements to give managers and sponsors the information they require for decision-making. Risk registers are maintained for the projects and regularly reviewed. Exceptions are escalated and appropriate actions put in place. Financial monitoring arrangements are in place that would highlight any significant divergences from budget. 46
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2.3 In light of the scale of challenge faced across the HSCP and critical importance of the transformation plans a further internal review was undertaken of the projects on the Transformation Plan in November. The objective of the review was to: • Rationalise the number of projects on the Transformation Plan to a more manageable set of projects. • Ensure that projects on the Plan were appropriately scoped and detailed, and could be delivered within the lifetime of the Transformation Plan. • Improve reporting mechanisms so that all involved in delivering projects and overseeing governance of the Plan had improved oversight of project objectives. • Improve alignment with HSCP savings plan and financial challenges. A number of outputs have resulted from the review. i. An updated Transformation Plan has been produced ii. A new approach to monitoring the impact of projects has been introduced as part of a new Benefits Realisation approach iii. Improved reporting and governance arrangements (i) Updated Transformation Plan 2.4 The review of Transformation Projects made clear that projects varied in their scope and size. Over time, the number of projects on the Plan had grown to 77. Where some projects were clearly defined with set objectives and savings, others were found to be part of wider workstreams or strategic policy reviews. Some of this activity was also considered business as usual. The following steps were taken as part of the review: • Condensing any workstreams into one singular project with defined benefits. • Closing or accelerating to completion any projects that are nearing their end and/or unlikely to deliver benefits. • Removing items from the Plan which are not projects, e.g. research, reviews, strategy updates. • Ensuring any remaining projects have clearly defined objectives and benefits and support the HSCP’s financial plans. Appendix 1 shows the current new Transformation Plan. The visual diagram provides the following information: • The current status of each project, from proposal status, through to business case and onto benefit delivery • The RAG status of each project that is in delivery, allowing an ‘at a glance’ view of projects • Which projects are anticipated to deliver financial benefits 47
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The Transformation Plan is reviewed by the Transformation Board every 2 months. (ii) Benefit Realisation 2.5 Introducing a framework to monitor and measure the impacts of projects can help address the recommendations outlined by Audit Scotland. On 4 December 2025, the Transformation Board approved Benefit Realisation and Management Approach. This defines what a benefit is, how it should be measured and also the roles and responsibilities for ensuring benefits are achieved. All projects that have an approved business case will now also have a benefit tracker, which outlines what is the expected benefit of each project. Benefits are defined as: • Cashable • Quantitative • Qualitative. In introducing this framework, the Transformation Board ensures that: • Projects can be appraised on what they are forecast to achieve. • Monitoring of project impact is clear and transparent. • Steps can be taken at an early stage to take corrective action should progress slip. • Evidence can be readily provided to externally bodies examining the impact and progress of transformation and other initiatives. As noted above, all projects on the Transformation Plan will have benefits trackers, to monitor the delivery of all project benefits, including cashable benefits. Appendix 2 provides an example of what a benefit tracker looks like for projects. Three benefits for the Brighter Pathways project have been included to demonstrate the way in which benefits are baselined, tracked and monitored. (iii) Enhanced Governance 2.6 The introduction of benefit trackers has enabled a clearer picture of the financial benefits aligned to projects on the Programme and the progress in achieving these benefits. This is also underpinned by close working with HSCP finance colleagues. While this good working relationship is not new, sharing the position on project progress with cashable benefits contributes to improved planning and coordination. In addition, a new process has been introduced for projects being appraised and approved by Transformation Board, with a move to a streamlined project documentation approach. This is outlined below: 48
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Planning Managers complete Status Update reports every two months for discussion at Transformation Board. These are attached as an appendix and discussed in more detail in section 2.8-2.10. Transformation Update 2.7 In addition to the updates and changes to the Transformation approach outlined above, the following key activities have taken place this period: • The Terms of Reference for the Transformation Board has been updated and approved. This was an action from a recent internal audit. • During March, Planning Managers will receive training on Service Design. Delivered by the Service Design Academy, the training will equip Planning Managers with a new skillset aimed at supporting teams and services through service changes in a collaborative and dynamic way • A new Digital Working group has been established which aims to better coordinate the Partnership’s digital approach. This group will report to the Transformation Board and be a space to share knowledge, issues, updates and best practice with colleagues from IT in the Council and Health Board being core members. • Senior Officers are participating in a corporate trial of Microsoft CoPilot. This is designed to explore the benefits of CoPilot in speeding up routine and every day tasks, thereby improving productivity. Appendix 1 displays all of the projects on the Transformation Plan. Appendices 3-5 provide greater detail on progress within each of the three Services: Children, Families and Justice, Health and Community Care and Mental Health and Learning Disabilities. This section will provide a spotlight on a selected project within each area, to provide members with more detail and information on some of the initiatives currently taking place. 2.8 Children, Families and Justice Project spotlight: Brighter Pathways Brighter Pathways has a number of workstreams established to deliver the programme. The residential placement workstream targets the creation of a new residence for young people supporting them to make the transition to sustain tenancy, Boyle Street. The building will have capacity for 6 young people. Significant activity 49
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is therefore currently taking place to have the new service operational for April. This is happening on a number of fronts including working with colleagues to identify individuals to move into Boyle St, working with Property Management and Investment (PMI) to ensure building works are complete and mobilising the contract and service with the new provider Blue Triangle. Overall, works are progressing well and currently on course for opening in April. It is anticipated this step down model will have a positive impact on use of internal and external residential placements. 2.9 Health and Community Care Project spotlight: Technology Enabled Care Hub The Technology Enabled Care (TEC) Hub is a key element of the refreshed Transformation Plan and supports a shift towards a TEC First approach across North Ayrshire HSCP. The project brings together technology, equipment and professional expertise in a single, community-facing hub, with the aim of supporting earlier intervention, greater independence and reduced reliance on traditional care packages. It aligns with national digital health and care priorities and local ambitions around prevention and sustainability. Our North Ayrshire Hub will be based at Castleview Hub in Ardrossan, co-located with our moving and handling hub for staff and carers. Good progress has been made, with the business case developed and preparatory work underway to establish the hub space, including layout planning, clearance works and early procurement of technology and equipment. The next phase will focus on completing refurbishment, installing and testing technology and moving towards operational delivery, with a clear focus on benefits realisation, including supporting discharge, reducing pressure on care at home services and increasing confidence in the use of technology enabled care. 2.10 Mental Health and Learning Disabilities Project Highlight: Magic Notes Magic Notes is an AI-powered meeting summarisation tool developed specifically for social work. It records, transcribes and summarises meetings into templates built bespoke to suit the requirements of the case management system. With funding from the North Ayrshire Council Change Fund, the HSCP has procured a trial of Magic Notes to test and evaluate the benefits it may bring to Services. The Mental Health and Learning Disabilities teams will trial its use for 6-8 weeks beginning on 2 March 2026. Evaluations from other areas have shown positive time savings, increased quality of interactions and practitioner sentiment. A thorough Data Protection Impact Assessment (DPIA) was completed as part of the procurement to ensure data is processed safely and any risks are mitigated. As a part of this process, a robust consent procedure has been developed and will be followed by staff prior to the use of the product. Assuming positive benefits are achieved from the trial, a 50
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business case outlining expected benefits from a roll out across all social work services will be developed. 3. PROPOSALS 3.1 It is proposed that IJB note the contents of the report and the progress made to date. 3.2 Anticipated Outcomes Informing IJB and the people of North Ayrshire on the progress of the Transformation Plan and also providing assurance of the governance arrangements and that the Transformation Board has appropriate oversight. 3.3 Measuring Impact Stakeholders are assured of progress. 4. IMPLICATIONS 4.1 Financial Some projects on the Transformation Plan will deliver financial benefits and progress towards this has been outlined in section 2.6. 4.2 Human Resources None 4.3 Legal None 4.4 Equality/Socio-Economic None 4.5 Risk None 4.6 Community Wealth Building None 4.7 Key Priorities None 5. CONSULTATION Consultation has taken place with members of Transformation Board, which includes Heads of Service and Planning Managers. Caroline Cameron, Director Stuart MacMillan, Principal Manager stuartmacmillan@north-ayrshire.gov.uk Appendices 51
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• 1. Refreshed Transformation Plan • 2. Brighter Pathways Benefit Tracker • 3. Children, Families and Justice Update • 4. Health and Community Care update • 5. Mental Health and Learning Disabilities Update 52
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Appendix 1 – Transformation Plan 53
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Appendix 2: Brighter Pathways Benefit Tracker Benefit Type Benefit Category Benefit Name Baseline Measurement Baseline Date Baseline Source Benefit Target Value Benefit Target Date Frequency of Measurement Benefits Owner Non-Cashable Quantitative Reduction in the number of external residential placements 34 2025/26 Brighter Pathways Report presented to IJB Nov 2025 (Page 46) 25 31-Mar-27 Quarterly Elizabeth Stewart Cashable Rationalisation Reduction in the cost of external residential placements £8,442,349 2025/26 Brighter Pathways Report presented to IJB Nov 2025 (Page 46) £6,706,621 31-Mar-27 Quarterly Elizabeth Stewart Non-Cashable Quantitative Increase in the number of foster care placements 135 2025/26 Brighter Pathways Report presented to IJB Nov 2025 (Page 46) 138 31-Mar-27 Quarterly Elizabeth Stewart 54
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Appendix 3: Children, Families and Justice update 55
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Appendix 4: Health and Community Care update 56
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Appendix 5: Mental Health and Learning Disabilities Update 57
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OFFICIAL INFORMATION OFFICIAL INFORMATION Integration Joint Board 13th March 2026 Subject: Revenue Budget 2026-27 Purpose: To update the IJB on the financial position for the Partnership for 2026-27, including the proposed delegated funding, service budget pressures, plans developed to set a budget and the associated risks. Recommendation: That the Board: (a) approves the budget for 2026-27 for the Partnership inclusive of all pressures, savings and reserves, noting that the funding position is subject to confirmation of the NHS Ayrshire and Arran budget (b) approves the new hourly rates for commissioned providers and Personal Assistants; and (c) notes the risks associated with this budget. Direction Required to Council, Health Board or Both Direction to:- 1. No Direction Required 2. North Ayrshire Council 3. NHS Ayrshire & Arran 4. North Ayrshire Council and NHS Ayrshire & Arran √ Glossary of Terms NHS AA NHS Ayrshire and Arran IJB Integration Joint Board NAHSCP North Ayrshire Health and Social Care Partnership NAC North Ayrshire Council CAMHS Child and Adolescent Mental Health Services FPC Free Personal Care PCIF Primary Care Improvement Fund ADP Alcohol and Drugs Partnership UnPACs UNPACS, (UNPlanned Activities) – Extra Contractual Referrals SLA Service Level Agreement AfC Agenda for Change 1. EXECUTIVE SUMMARY 1.1 The report outlines the funding allocations from North Ayrshire Council and NHS Ayrshire and Arran, the service pressures, resulting budget gap and the savings plan for 2026-27. The Council budget was set on 25th February and NHS AA will set their budget on 7th April 2026; if the funding assumption from NHS AA changes from the planning assumption set out, the plans for the IJB will require to be re-visited. Agenda Item 7 59
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OFFICIAL INFORMATION OFFICIAL INFORMATION 1.2 The Scottish Government finance settlement set out a number of conditions and requirements for Health Boards and Councils in relation to funding delegated to Integration Authorities. The delegated funding outlined in the report (indicative for NHS AA) meets those Scottish Government requirements. 1.3 The financial context for this budget is exceptionally challenging. Cost and demand pressures across both health and social care continue to grow at a pace that significantly exceeds available funding, and this is compounded by a recurring underlying deficit carried forward from 2025–26. Against that backdrop, the primary focus of this report is to ensure that the IJB is able to set a legally compliant, in-year balanced budget, while being transparent about the scale of risk, the level of reliance on savings and policy decisions, and the implications for future financial sustainability. 1.4 The table below summarises the overall financial position for 2026-27: Social Care (NAC) £m Health (NHS AA) £m Total £m Funding Increase 11.147 4.714 15.861 Service Pressures – Appendix B (17.152) (4.855) (22.007) Budget Gap (6.005) (0.141) (6.146) Funded by: - Savings – Appendix C 1.577 1.239 2.816 2026/27 Budget Position (4.428) 1.098 (3.330) Estimated Opening Gap from 2025-26 (1.400) (1.592) (2.992) 2026/27 Opening Budget Gap Position (5.828) (0.494) (6.322) Note that green highlighted line represents the new in-year budget gap for 2026-27 and the legal requirement to set an in-year balanced budget and in the case of the Health/NHS budget this is a surplus. Further savings are required in recognition that there will be an overspend from 2025- 26 carried into 2026-27 relating to a number of pressures areas regularly reported to the IJB. Approving additional savings at this stage is prudent and necessary to ensure early action is taken to minimise any overspend in 2026-27. 1.5 The Partnership has undertaken extensive community engagement which commenced early December 2025 on the challenges of delivering social care services within budget. There is a separate paper on the IJB agenda for consideration, it is recommended that the remainder of the Social Care/Council gap is met through the review of eligibility criteria for access to funded adult social work and social care services. The remaining budget gap for Health/NHS services is smaller in value and primarily reflects current year pressures recurring to an extent next financial year, rather than a significant pressure on core funding, therefore it is recommended that the remaining health services gap is monitored closely in-year during 2026-27 with further recovery actions identified as required. 60
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OFFICIAL INFORMATION OFFICIAL INFORMATION 1.6 A number of financial risk areas are highlighted in the report and the IJB are asked to note these at this stage; the IJB may be asked during 2026-27 to approve any appropriate action to mitigate or manage these areas. 1.7 The IJB Finance Working Group (FWG) has supported the development of the proposals presented and the financial position and options have been discussed in more detail in that forum; this has supported the opportunity to bring forward some proposals earlier for approval such as the 2026-27 Charges for Services. The FWG will play a critical role as we move into next financial year to provide additional oversight, scrutiny, challenge and support to further monitor the position and develop the budget further. 1.8 The proposed integrated budget for the IJB is £343.390m (inclusive of the estimated Set Aside budget of £42.670m). A summary of the 2026-27 budget and net budget increase is detailed within Appendix A. 2. BACKGROUND 2.1 Key Budget Principles A number of key guiding principles were set out for the approach to developing the IJB budget for 2025-26. We have been guided by these principals in setting the budget for 2025-26, in managing in-year pressures and in developing the budget for 2026-27 and are able to provide examples of how these principals have been taken forward in practice – including the recent budget consultation, review of charging policy, our transformation plans, the roll out of digital solutions, our communications approach and escalations to parent bodies and Scottish Government of our funding challenges. It is recommended that these key principles remain in place, these are set out below: • Maximise income from charging for services to protect the delivery of frontline services, ensuring that only individuals who have the means should pay more for the services they receive directly. • Manage within available budget limits – including re-design to deliver service within available resource. • Maximise efficiencies in the way services are delivered through a structured service review process. • Maximise opportunities for shared service and lead partnership delivery across the Ayrshires. • Values-based health and care– eradicating effort that provides no benefit for the person and a focus on self-management and prevention. • Tighten the eligibility criteria for targeted services to prioritise delivery of services to those with the highest levels of need and risk. • Improve services through digital innovation and maximise the use of digitally enabled care technology, where appropriate • Be transparent and open in our challenges, having honest conversations with our staff and communities. • Advocate for a better funding deal for North Ayrshire for community-based health and care services & actively pursue opportunities for additional funding. 61
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OFFICIAL INFORMATION OFFICIAL INFORMATION 2.2 The Integration Scheme outlines a process of planning for budgets in future years where the Chief Officer and the Chief Finance Officer develop the funding requirements for the Integrated Budget based on the Strategic Plan and present it to the Parties for consideration as part of the annual budget setting process. This includes consideration of pay awards, contractual uplifts, prescribing, resource transfer and ring-fenced funds. The Integration Scheme approved by Scottish Ministers states that following determination of the Council and NHS payments to the IJB, the IJB will refine its Strategic Plan to take account of the totality of resources available and there is an implicit requirement to set a balanced budget prior to the new financial year. In December 2025 the IJB approved a refreshed Strategic Plan to 2030 which updates the HSCPs priorities for delivery and long-term planning. The new vision in the plan is “To empower people in North Ayrshire to live safe, healthy and active lives with fair and equal access to sustainable health and care services”. The new plan will be in place for the new reporting period beginning on the 1st of April 2026. In recent years, the budget process has moved away from that outlined in the Integration Scheme, with Scottish Government directives and expectations in relation to funding levels to be passed on to IJBs. Whilst the IJB are required to engage with the partner bodies in relation to budget pressures and savings, the overall funding allocation reflects an element of ring fencing and settlement conditions in relation to funding for IJBs. This has to some extent in previous years driven or led the approach to local decision making for resource allocation for IJBs across Scotland with the Scottish Government minimum prescribed level of funding being the default. 2.3 The benefits of a delegated funding approach from both partners are: • The IJB can manage the budget process in terms of developing pressures and savings (including providing for those pressures not planned to be funded by partners), providing greater transparency and governance re decision making. • Allows resource to be allocated by the IJB in line with the priorities in the Strategic Plan. • Allows the SG directive to be followed, not only in terms of application of the uplift but also in terms of policy areas to be prioritised (e.g. Mental Health and Drug and Alcohol services). • Facilitates the ongoing in-year management of the IJB financial position in relation to the funding and budget being managed on an integrated way to deliver financial balance. • Supports future years planning and the development of a Medium-Term Financial Outlook, supporting an earlier approach to financial planning and an integrated approach to distribution of resource. • Aligns with the proposals in the review of integration for budget planning and resource delegation for IJBs. 2.4 Scottish Government Budget 2026/27 – Settlement for IJBs For 2026/27 the Health and Social Care Budget and directives to Councils and Health Boards included the following. Local Government: 62
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OFFICIAL INFORMATION OFFICIAL INFORMATION For 2026-27 there was no directive in the North Ayrshire funding settlement letter and instead it referred to: • Having listened carefully to the arguments set out in ‘Strong Councils, Strong Communities’, I have sought to balance the desire to ringfence additional funding towards social care with the Verity House Agreement commitment to maximise fully flexible funding. In conclusion, I have allocated as much as possible of the additional revenue funding as General Revenue Grant for Councils to allocate as they see fit. I do, however, recognise the importance of sustainable adult social care services and as I set out in my statement, the government is committed to working together with local authorities on the delivery and improvement of social care. • Following our engagement work over the autumn, I am confident that Local Government will pass more in total to IJBs than is provided as an in-year transfer by Scottish Government. However, I do acknowledge that partnership working will be even more critical this year to ensure that the technical changes applied to the Adult Social Care GAEs are appropriately reflected locally. Health Boards: For 2026-27 there was no directive in the NHS Ayrshire and Arran funding settlement letter: • NHS Boards will receive a 2% uplift on baseline funding in 2026-27. This will provide funding towards the costs of the 2026-27 pay deals and provides a 2% uplift for non-pay costs to support inflationary pressures. Additional funding will be provided to meet the costs of the 2026-27 pay deals where uplifts exceed 3% in line with public sector pay policy, and full funding has been included for the agreed Agenda for Change pay settlement. Pay funding should cover all staff including those delegated to Integration Authorities (IAs). • A further £150 million of recurring funding has been included to support territorial boards’ continued implementation of the reforms committed to as part of the 2023-24 Agenda for Change (AfC) pay deal, including the additional one- hour reduction from 1 April 2026. Together with the £150 million recurring funding issued in 2024-25, this increases total available recurring funding to £300 million for territorial boards. This funding covers all staff under AfC terms and conditions, including those staff working in functions delegated to IAs. • While funding for reform and improvement measures will be routed through NHS Boards, elements will support activity in the community and delivered via IAs. Part of this package will be used to directly support our shared ambition to alleviate pressure across the health and social care system. • There is a specific reference in the NHS Board funding letter to - The funding allocated to IAs should be additional and not substitutional to 2025-26 budgets for services which are delegated. Therefore, Local Authority social care budgets for allocation to IAs must be at least £167 million greater than 2025- 26 recurring budgets. However, this is not reflected in the Local Government settlement and contractility to the position communicated to Local Government directly. Full detail is included in the settlement letters in Appendix D. To ensure some stability in funding for future years, when there is no direction included in the funding circular, then the funding consideration by both partners should be 63
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OFFICIAL INFORMATION OFFICIAL INFORMATION aligned to the Integration Scheme. This includes consideration of pay awards, contractual uplifts, prescribing, resource transfer and ring-fenced funds. This will be considered for budget planning in 2027-28. 2.3 PARTNER FUNDING 2.3.1 North Ayrshire Council North Ayrshire Council met on 25th February to set their budget for the coming year including the contribution to the IJB. There is no direct general investment in the Scottish Government budget for social care and no national directive about the level of resource for Councils to pass on and this will be locally determined. As noted, the settlement letter references “I am confident that Local Government will pass more in total to IJBs than is provided as an in-year transfer by Scottish Government. However, I do acknowledge that partnership working will be even more critical this year to ensure that the technical changes applied to the Adult Social Care GAEs are appropriately reflected locally.” The draft Scottish Government Budget included the transfer additional funding of £167million to Local Government to support social care and integration for 2026-27. This relates specifically funding for the following areas: • Real Living Wage for Adult Social Care • Free Personal and Nursing Care The allocation for the Real Living Wage was reviewed at the draft budget stage with Scottish Government allocating an additional £20m in total to make up the shortfall. This takes the national funding to: • £174.7m for adult social care workers in commissioned services. • An additional £13.4m to improve pay for early learning and childcare workers in commissioned services. • £13.9m to support development of people working in children’s social work. • £7m to support provision of Free Personal and Nursing care. The North Ayrshire share of the additional £20m has still to be confirmed but is included at an estimated £0.500m for the budget estimates. Additionally, in line with the agreed approach North Ayrshire Council have passed through all other funding or adjustments to Social Care allocations in the budget settlement, including: • Adjustments to allocations for Children’s Services, Disability Assistance administration and Justice Social Work • Funding received for the 2026-27 pay settlement difference between 3% and 3.5% - note the core pay settlement of 3% is not directly funded. • Additional funding approved at the Council budget setting meeting on 25th February which reflected North Ayrshire Council’s General Grant uplift and a Council Tax increase of 7% - £4.961m This has resulted in a net increased contribution to the Partnership of £13.759m through the NAC budget setting process. Some elements of this relate to previous years and were already assumed in the Partnership base budget and this is shown in the table below. Category £m 64
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OFFICIAL INFORMATION OFFICIAL INFORMATION Funding to meet new expenditure requirements: Childrens Services Additional Funding 0.651 Scottish Disability Assistance – reduction in grant (0.094) Health & Social Care Uplift – Real Living Wage 4.688 HSCP share of SG Funding to meet pay awards: SG Funding for 26-27 Pay Award 0.441 Baseline additional Uncommitted Funding to HSCP 4.961 Share of the additional £20m funding (estimate) 0.500 Per the HSCP budget plans 11.147 Reconciling Items to the Council Budget Paper Amounts already included in HSCP base budget: - SG Funding for 25-26 Pay Award 0.777 - Criminal Justice Social Work 2.335 Share of the additional £20m funding (estimate) still to be distributed (0.500) Per Council Budget paper 13.759 2.3.2 Adult Social Care GAE – Budget Context The Scottish Government’s Local Government Finance Settlement for 2026-27 includes technical changes to the Adult Social Care Grant Aided Expenditure (GAE) methodology, which underpins the distribution of core local government funding for adult social care across councils. The updating of Population Census variables has resulted in the revision of 3 indicators - Personal & Nursing Care of Older People, Residential Care for the Elderly and Services for Home-based Elderly. Together the indicators distributed about £2.33 billion in 2025-26. Much of the underlying data has not been updated since 2011 or 2001, and the current formulae, which have not been updated since 1997 or 2002, have been found to be either incorrect, or not using needs-based indicator methodology, and so not reflecting the expected numbers of clients in each authority. These changes affect the relative share of funding received by individual councils, representing a redistribution of existing resources rather than the introduction of new, ring-fenced funding for adult social care. Noting that these changes are exceptional in nature and may create volatility between councils, and to mitigate the impact of this the funding floor for 2026-27 has been increased to 0.5% below the average change, limiting the scale of any relative reduction in funding. The Scottish Government has stated an expectation that the technical changes to Adult Social Care GAEs are appropriately reflected locally and has emphasised the importance of partnership working between councils and Integration Joint Boards (IJBs) in this context. While the settlement provides councils with a high degree of flexibility over the use of General Revenue Grant, the policy intent is that revised assessments of adult social care need should inform local resourcing decisions for integrated services. 65
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OFFICIAL INFORMATION OFFICIAL INFORMATION North Ayrshire Position: • For North Ayrshire, the revised Adult Social Care GAE methodology will have influenced the Council’s overall settlement position for 2026-27, with implications for the resources available to support adult social care services. • The shift in Social Care based indicators is an increase of £3.3m based on the previous year. Other GAE indicators for funding have also been updated and have gone up and down in line with distribution. Despite this update for Social Care indicators and a greater relative share for North Ayrshire, what North Ayrshire Council gain through a more up to date assessment of need through the GAE indicators has been negated through less financial support through the floor mechanism in the local government funding settlement. • The extent to which this change is reflected in the Council’s contribution to the Integration Joint Board will be a matter for local agreement, taking account of: • the revised GAE distribution, • existing IJB financial commitments and demand pressures, and • the sustainability of integrated services. North Ayrshire Council has agreed to increase the IJB funding by £4.961m for 2026- 27 which reflects the increase in core revenue funding above the assumed 0% flat cash settlement for the Council overall. Financial Planning Considerations: • It should be noted that changes to the Adult Social Care GAE distribution do not remove underlying demand, cost, or workforce pressures facing adult social care services, however the updated distribution formula does highlight that appropriate funding reflecting demand for adult social care services through the Local Government Finance Settlement has fallen short for a number of years in North Ayrshire. • This increase in funding is not directly passed through to the IJB for the delivery of social care services and is instead part of the overall consideration of the funding allocation to the IJB by North Ayrshire Council. • There remains a risk that any future GAE driven changes to council funding do not fully align with the IJB’s assessed cost pressures, reinforcing the need for early and ongoing engagement between partners as part of budget setting and financial planning. 2.3.3 For years 2027-28 and 2028-29 the financial planning assumption of North Ayrshire Council is that, out with specific funding to be passed though by Scottish Government, that financial pressures facing the IJB will be fully met by savings, i.e. a flat cash financial settlement. This reflects the flat cash position predicted for Local Government in these years. 2.3.4 NHS Ayrshire and Arran NHS Boards will receive a 2% uplift on baseline funding to meet any anticipated pay deal, with pay fully funded and provides 2% inflation on non-pay lines. Additional funding will be provided to meet the costs of the 2026-27 pay deals where uplifts exceed 3% in line with public sector pay policy, and full funding has been included for the agreed Agenda for Change pay settlement. Pay funding should cover all staff including those delegated to Integration Authorities (IAs). NHS Ayrshire and Arran are 66
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OFFICIAL INFORMATION OFFICIAL INFORMATION required to passport the 2% through to IJBs (£2.890m to North Ayrshire) and furthermore the difference in the pay award for Agenda for Change staff from 2% and 3.75% (£1.824m for North Ayrshire delivered services). It is therefore anticipated that an additional £4.714m of funding contribution towards pay and inflation pressures will be allocated from NHS AA. NHS Ayrshire and Arran will meet on 7th April 2026 to set their budget for the coming year, the financial allocation for the IJB will be set at that meeting, however there is minimal risk of a deviation from the Scottish Government directive and allocation methodology from previous years. Additionally, there is funding of £150m nationally for Agenda for Change Pay Reform. A share of this funding will be allocated to the IJB towards the associated costs for NHS staff, this is being followed up for 2024-25 to ensure the correct roll-forward into 2025-26 and it is anticipated at this stage that the costs of the pay reform will be fully funded moving into 2026-27 including the implementation to the final hour reduction to the Reduced Working Week. While funding for reform and improvement measures will be routed through NHS Boards, elements will support activity in the community and delivered via IAs. Part of this package will be used to directly support our shared ambition to alleviate pressure across the health and social care system. Continuing from 2025-26, brokerage will not be available to support overspends, and NHS Boards must work towards a break-even position which remains the statutory responsibility of the Accountable Officer. Historic brokerage remains repayable and has not been written off. Non-recurring sustainability funding of £150 million will be provided to territorial boards on an NRAC basis. This funding must be used in full to reduce pressures and the reported deficit. NHS Boards at stage two and above on 2 the NHS Scotland Support and Intervention Framework for finance will receive additional support in 2026-27 to improve financial sustainability, including non- recurring deficit support funding as notified in early September 2025. The NHS AA financial position for 2026-27 is very challenging, on 13th February 2026 NHS AA Board was escalated to Stage Four of the NHS Scotland Support and Intervention Framework. This applies across three areas financial sustainability, financial control and financial governance and leadership. It is noted that the Board has been at Stage Three on the Framework since 2018 and the financial position remains unsustainable over the short to medium term. NHS AA has the highest level of outstanding brokerage of any Board in Scotland at over £130 million. The Board has also recently had a Section 22 report published by Audit Scotland and are not forecasting to meet their targeted deficit funding in 2025-26. 2.4 2025-26 FINANCIAL POSITION The overall projected outturn position for 2025-26, as at month 10, is a projected year- end overspend of £2.802m (0.85% of the annual budget). This excludes the Reduced Working Week funding request of £0.551m which if awarded in full would reduce the overspend to £2.251m. Since the initial recovery plan was agreed in June 2025 there has been a £2.833m reduction in the projected overspend. Whilst the full-year benefit of the financial recovery plan has not been realised in-year in the bottom-line outturn, it has supported the delivery of mitigating a further deterioration to the position introduced through other 67
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OFFICIAL INFORMATION OFFICIAL INFORMATION in-year unexpected financial pressures and supported addressing or reducing overspends in core services moving into the new financial year. The main areas of budget and demand pressure are: care at home, residential placements for children, physical and learning disability care packages, supplementary staff in wards, staff costs in Montrose House and Unplanned Activities (UnPACs) within the lead partnership for mental health. Demand for services, particularly for social care support is volatile and there are significant costs and risks associated with responding to the requirement for low volume high-cost placements. The graph below illustrates the volatility over the year in the projected outturn position, and the significant improvement made during the year, noting that for 2025-26 financial balance will not be achieved. Many of the underlying overspend areas will continue into 2026-27 and services require to address these or there will continue to be a reliance on other budgets underspending and short-term high-risk measures to cease or delay spend. 2.4.1 2026-27 Opening Position The 2025-26 projected outturn of £2.802m has been reviewed to establish the anticipated impact on the 2026-27 position and any element of recurring over and underspends. Following a robust review by the Finance Team and budget holders the adjusted opening projection for 2026-27 is a predicted £2.992m overspend. This is higher than 2025-26 as the in-year position includes one off underspends due to a draw on reserves as part of the recovery plan. This reflects the full year impact of part year cost reductions achieved in 2024-25, including - care at home, Brighter Pathways, care packages, vacancy management and supplementary staffing – targeted improvement in other areas. Further information is contained in the Financial Monitoring Report for Period 10 which is also on the IJB agenda. 68
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OFFICIAL INFORMATION OFFICIAL INFORMATION It assumes all mitigations and controls established in 2024-25 and 2025-26 continue throughout 2026-27 as it is recognised that the same uncertainty and risks remain into 2026-27 and there needs to be tight grip and control over expenditure overall. The opening projected overspend for 2026-27 is predicated on maintaining Financial Recovery Plan Controls, and: • Removing the care home overspend and manging the number of placements in line with the budgeted level. • Reducing agency costs at Montrose House on Arran • The Brighter Pathways programme of work bringing children’s placement budgets into line across different settings including residential, fostering, kinship – recognising the impact of the change programme and new supports in place for 2026-27. • Significant reduction or removal of overspends on supplementary staffing across wards through focussed improvement work supported by the General Manager, Lead Nurse and responsible Senior Managers The main areas of continued risk and where overspends are anticipated as part of the £2.992m are: • Physical Disability Care Packages • Integrated Island Services • Learning Disability Care Packages • Section Payments • Inpatient Ward Staffing – for Community Rehab and Mental Health Wards • UnPACs • Psychiatry There are inherent risks in moving into 2026-27 with the level of overspends across a range of service areas and focus will remain across services to manage these, the IJB will receive regular updates through the financial monitoring report for 2026-27 on progress and on the final outturn position for 2025-26. 3. PROPOSALS 3.1 2026-27 REVENUE BUDGET PLANS The NA HSCP 2026-27 integrated budget is expected to be £300.720m (excluding Set aside) and £343.390m (including Set Aside budget of £42.670m). A summary of the 2026-27 total budget and net funding increase is detailed within Appendix A. The pressures and savings are detailed separately in Appendices B and C respectively. Sections 3.1.1 to 3.1.5 provide an overview of the pressures and savings. 3.1.1 BUDGET PRESSURES Service cost and demand pressures are detailed within Appendix B. Total net budget pressures for health and social care services total £22.007m. These have been developed in partnership, with Finance supporting front line services to identify current and emerging financial pressures, considering historic demand and costs and potential future variations. 69
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OFFICIAL INFORMATION OFFICIAL INFORMATION The provision of funding for pressures has the impact of increasing the budget gap to be addressed through savings, therefore the pressures are only included in budget plans where these are assessed as being absolutely unavoidable. The pressures are noted below with full detail in Appendix B: Category Social Care (NAC) Health (NHS A&A) TOTAL £m £m £m Pay pressures 10.325 4.262 14.587 Demographic Pressures 0.420 0.420 Transition Pressures 1.056 1.056 Contract Inflation 4.902 0.025 4.927 Lead Partnership Pressures: Pan Ayrshire Pressures 0.077 0.077 Other Pressures 0.449 0.491 0.940 Total New 2026-27 Pressures 17.152 4.855 22.007 Note that this excludes any expectation or plan for any debt repayment to North Ayrshire Council or NHS AA for the 2025-26 overspend, the Council and NHS Board would require to consider on what basis they would plan to fund any year-end overspend, i.e. through an additional contribution or repayment basis. Provision has been made for Health pan-Ayrshire pressures recognising the North Ayrshire contribution towards pressures faced for services led by East or South. These pressures were agreed with the Chief Officers and Chief Finance Officers with an agreement that the IJBs have a shared responsibility to fund. These will be monitored during the financial year. 3.1.2 LIVING WAGE The Living Wage will increase from £12.60 per hour to £13.45 per hour from April 2026. This uplift will be applied in the same way as the £10.90, £12 and £12.60 uplifts in the last three financial years. This will mean an uplift will be applied to a set percentage (national weighting) of contract values, in line with the average full workforce costs for residential and non-residential services. A separate agreed weighted percentage has been set for Personal Assistants who are paid directly through SDS Option 1 budgets. After the weightings are applied and the national insurance increase is taken into account the hourly rates being paid to providers and personal assistants as follows: 70
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OFFICIAL INFORMATION OFFICIAL INFORMATION *The 2026-27 rates continue to align with those which are proposed by East Ayrshire and South Ayrshire, ensuring a consistent pan-Ayrshire funding approach for our commissioned providers. 2025-26 Rate Per Hour 2026-27 Rate Per Hour Care at Home and Housing Support £23.08* £24.44* Sleepovers £15.45 £16.50 Personal Assistant Day Time Hourly Rate £16.94 £18.02 Personal Assistant Sleepover Hourly Rate £15.83 £16.89 3.1.3 NEW FUNDING GAP FOR 2026-27 The table below summarises the overall new funding gap for 2026-27: Social Care (NAC) £m Health (NHS AA) £m Total £m Funding Increase 11.147 4.714 15.861 Service Pressures – Appendix B (17.152) (4.855) (22.007) Budget Gap (6.005) (0.141) (6.146) £6.146m is the new budget gap for 2026-27 only and does not include the £2.992m underlying deficit from 2025-26 which also requires to be addressed through savings plans, the table below demonstrates the full budget gap which requires to be met through savings. Social Care (NAC) £m Health (NHS AA) £m Total £m Funding Increase 11.147 4.714 15.861 Service Pressures – Appendix B (17.152) (4.855) (22.007) Budget Gap (6.005) (0.141) (6.146) Estimated Opening Gap from 2025-26 (1.400) (1.592) (2.992) Total 2026/27 Opening Budget Gap (7.405) (1.733) (9.138) 3.1.4 BUDGET SAVINGS Savings in relation to NAC and NHS commissioned services are detailed within Appendix C. The savings are RAG rated informed by an overall assessment of the ease of delivery and the impact on services, indicating an overall risk of deliverability. The savings are split into: • Previously agreed savings • Adjustments (payroll turnover and recharges) • Operational savings • Policy – Models of care or efficiency • Policy – Service reduction or cessation • Eligibility Criteria – Subject to a separate report 71
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OFFICIAL INFORMATION OFFICIAL INFORMATION The IJB are recommended to approve the savings proposals. Approval will allow: 1. The IJB to work towards a balanced budget – with all savings being recurring. 2. Give the maximum time to implement the savings. 3. Reduce the risk around financial sustainability. 4. Reduce the risk to our funding partners. These savings proposals do not fully address the funding gap, as illustrated below: Social Care (NAC) £m Health (NHS AA) £m Total £m Budget Gap (6.005) (0.141) (6.146) Funded by: - Savings – Appendix C 1.577 1.239 2.816 2026/27 Budget Position (4.428) 1.098 (3.330) Estimated Opening Gap from 2025-26 (1.400) (1.592) (2.992) 2026/27 Opening Budget Gap Position (5.828) (0.494) (6.322) RAG Deliverability Status Social Care (NAC) £m Health (NHS A&A) £m Total £m Red - - - Amber 0.100 0.041 0.141 Green 1.477 1.198 2.675 TOTAL 1.577 1.239 2.816 The Partnership has undertaken extensive community engagement which commenced early December 2025 on the challenges of delivering social care services within budget. There is a separate paper on the IJB agenda for consideration, it is recommended that the remainder of the Social Care/Council gap is met through the review of eligibility criteria for access to funded adult social work and social care services. The remaining budget gap for Health/NHS services is smaller in value and primarily reflects current year pressures recurring to an extent next financial year, rather than a significant pressure on core funding, therefore it is recommended that the remaining health services gap is monitored closely in-year during 2026-27 with further recovery actions identified as required. 3.1.5 LEAD PARTNERSHIP MENTAL HEALTH SERVICES The North partnership lead on acute and specialist Mental Health services across Ayrshire and therefore require to ensure that the services have plans to balance the budget moving into 2026-27. We have developed plans to ensure that lead partnership 72
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OFFICIAL INFORMATION OFFICIAL INFORMATION Mental Health services are sustainable and are not impacted by pressures elsewhere in services. The overall position for the lead partnership element of the North managed budget is summarised below: £m 2026-27 Baseline Increase 2.550 Pay Pressures (2.557) Demand Pressures (0.029) Budget Gap/Savings Requirement (0.036) Previously agreed savings - Adjustments (payroll turnover and recharges) 0.090 Operational savings 0.016 Policy – Models of care or efficiency 0.272 Policy – Service reduction or cessation 0.511 Net position – surplus 0.853 Estimated Opening Gap from 25/26 (0.892) Net position – deficit (0.039) 3.2 ACUTE SET ASIDE BUDGET Each Health Board, in partnership with the Local Authority and IJB, must fully implement the delegated hospital budget and set aside budget requirements of the legislation, in line with the statutory guidance published. The full implementation of the set aside arrangements is key to delivering a commitment to planning across the whole unplanned care pathway and partnerships must ensure that set aside arrangements are fit for purpose and enable this approach. Work has been ongoing with partnerships to progress and develop set aside arrangements to fully implement the legislative requirement. This includes arrangements in relation to the use of Directions, Joint Commissioning Plans and overall progression towards fair share allocations of resources. Further work has been undertaken through the Ayrshire Finance Leads group to establish baseline resources for each partnership and how these compare to the NRAC “fair share” of resources. Ayrshire Finance Leads have now agreed a baseline methodology for set aside budgets which involves using the four full years prior to the pandemic, 2016/17 – 2019/20 inclusive. The HSCPs require to agree their final share of the baseline with each other, however the aggregate will remain unchanged. The table below shows the cost of the 2024- 25 activity at 2025-26 prices inflated by 2% for 2026-27 prices. Note that this is estimate pending final information being available. IJB 2024-25 Activity at 2025- 26 prices inflated by 2% for 2026-27 East 34,003 North 42,670 73
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OFFICIAL INFORMATION OFFICIAL INFORMATION South 34,844 Total 111,517 The NHS AA Chief Executive had previously requested the development of a joint strategic commissioning plan to enable the setting of directions to provide to NHS Ayrshire and Arran for Unscheduled Care, aligned with the Set Aside resources. The NHS AA Chief Executive had previously requested the development of a joint strategic commissioning plan to enable the setting of directions to provide to NHS Ayrshire and Arran for Unscheduled Care, aligned with the Set Aside resources. Furthermore, seeking the support from the 3 IJBs in the review, and onward approving and monitoring of the delivery of a Strategic Commissioning Plan in line with the provisions laid out in the Integration Schemes, as outlined below: The NHS Board will consult with the Ayrshire Integration Joint Boards to ensure that any overarching Strategic Plan for Acute Services and any plan setting out the capacity and resource levels required for the Set Aside budget for such Acute Services is appropriately coordinated with the delivery of Services across the Ayrshire and Arran area. The parties shall ensure that a group including the Director for Acute Services and Chief Officers of the three Ayrshire Integration Joint Boards will meet regularly to discuss such issues. The initial Set Aside base budget for each Integration Joint Board will be based on their historic use of Acute Services. The actual unit cost which would apply as part of any change to activity or service redesign is dependent on the scale of change planned and requires agreement in advance by all Parties. Any redesign of service requires to be agreed across the three Integration Joint Boards and be reflected in the Strategic Plans. In year pressures in respect of Set Aside budgets will be managed in year by the Health Board, with any recurring over or underspend being considered as part of the annual budget setting process. In any joint strategic commissioning plan each IJB will consider and outline a clear framework for commissioning, at a strategic level, the urgent and unscheduled care service funded from the ‘set aside’ budget. There is an ambition that the commissioning plan will indicate an expectation of service delivery that will see sustained and affordable improvement in relation to performance outcomes for the citizens of Ayrshire and assure best value to support the financial balance of urgent and unscheduled care provision through a review and system wide redesign of the preferred models of care. This work remains ongoing and there is an opportunity to refresh this alongside the national focus on NHS Renewal for Unscheduled Care. There have been recent discussions on a Pan Ayrshire and the recent establishment of an Ayrshire Transformation Board with representation from the 3 HSCPs, 3 Councils and Health Board to progress this work during 2026-27. 3.3 NHS RENEWAL – Operational Improvement Plan – Unscheduled Care In January 2025, the First Minister described plans to renew the health service and deliver the change that people in Scotland need. This Operational Improvement Plan is the first component, to be followed by publication of a population health framework 74
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OFFICIAL INFORMATION OFFICIAL INFORMATION and a health and social care service renewal framework. Together these plans will progress reform to ensure long-term sustainability, reduce health inequalities, further harness the benefits of digital technology, and improve population health outcomes in Scotland. They will set out how we will plan our services for our whole population over the short, medium and longer term. This Operational Improvement Plan describes a number of commitments and actions across NHS Scotland that are needed to improve the experience of patients. The plan brings focus to four critical areas that the Government is committed to delivering: • improving access to treatment • shifting the balance of care • improving access to health and social care services through digital and technological innovation • prevention – ensuring we work with people to prevent illness and more proactively meet their need NHS Boards, in collaboration with Health and Social Care Partnerships, were asked to evidence how they would deliver whole-system and sustainable improvement through the £100 million to deliver the Operational Improvement Plan. In 2025-26 the level of funding requested from Boards across Scotland exceeded the total additional funding available and the Scottish Government were unable to approve the entirety of each NHS Boards plan. In June 2025, the Scottish Government confirmed £10.079 million additional funding for NHS Ayrshire & Arran for 2025/26. This allocation is designed to support whole- system transformation and is broken down as follows: • £1.681m – Hospital at Home (H@H) expansion, including virtual capacity and care closer to home. • £6m – Discharge without Delay (DwD) and Frailty Services, embedding early discharge planning and front-door frailty models. • £2.399 million – Core Unscheduled Care funding to maintain essential flow and resilience. North Ayrshire HSCP has £1.081 million ring-fenced within this allocation as follows: • £746k – Enhanced hospital-based multi-disciplinary team (MDT) to deliver seven-day working, front-door frailty, and discharge-to-assess. • £335k – Mental Health Officer (MHO) capacity to address statutory compliance and reduce Adults with Incapacity (AWI)-related delays. The NHS Renewal allocation of £10.079m for Ayrshire & Arran, including £1.081m ring-fenced for North Ayrshire, has enabled progress on enhanced hospital-based MDTs and MHO capacity. However, delays in approval and recruitment have limited impact to date, and the non-recurring nature of funding poses significant risks to sustainability. Revised improvement trajectories show slower progress than originally planned, with delayed discharge numbers projected to remain high into mid-2026 unless additional interventions are implemented. Community unmet need is also escalating, with average waiting times for care packages for those who experience a delay in the community exceeding 120 days. 75
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OFFICIAL INFORMATION OFFICIAL INFORMATION Funding is conditional on achieving agreed outcomes such as embedding DwD principles, implementing front-door frailty services, and expanding virtual capacity, with robust monitoring and trajectory reporting required to secure future recurrent funding. The Scottish Government budget for 2026-27 includes £100m across Scotland, the individual allocations to Health Boards and IJBs have not been received to date. There remains a risk of recurring funding to meet the existing financial commitment in North Ayrshire of over £1m in addition to the further release of funds to take forward investment in other areas which would support hospital demand and flow. 3.3 FINANCIAL RISKS There are a number of ongoing financial risk areas that may impact on the 2026-27 budget during the year, these include: • Growing demand for services. • Staff recruitment and retention challenges across a number of service areas. • The expectation that performance will continue to be maintained or improved despite the significant resource challenges. • Ongoing delivery costs of Scottish Government policy directives, particularly where these are not fully funded or inflation proofed. • Unearmarked reserves are depleted, there is no scope to absorb in-year variances, with any overspends requiring additional funding from partners. • The ongoing review of the Integration Schemes, where there is a focus on financial arrangements and risk share. • The wider system financial challenges and impact across the whole system, for example the financial position of NHS AA and the decisions taken to reduce the Board’s deficit may have impacts on other parts of the health and care system. • The ability to re-pay funding partners in-year for previous year overspends given continued financial challenges. • The overall sustainability of commissioned care providers • Progress with the work to develop set aside arrangements and the risk sharing arrangements agreed as part of this. • The recurring underlying levels of overspend which may impact on the Partnership’s ability to continue to sustain service levels in the future. • The use of supplementary staffing for enhanced observations across a number of service areas and the use of high-cost agency staff to support frontline service delivery in areas where there are recruitment challenges. • Agenda for Change Pay Reform programme – including Nursing Band 5-6 re- grade, protected learning time and reduction to the working week. • Risk related to NHS Reform investment being allocated by Scottish Government on a payment by results basis and in arrears. • A risk of meeting legal obligations to deliver a balanced budget set against continued increased demand for services, inflationary impacts on the cost of care and the more difficult decisions which are required to reduce spend. These risks will be monitored during 2026-27 and any financial impact reported through the financial monitoring report. 76
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OFFICIAL INFORMATION OFFICIAL INFORMATION 3.4 IJB RESERVES The IJB is established as a Local Government body therefore has the ability to hold reserve balances. Reserve balances are held as part of an approach to good financial management, the purpose of reserves is as follows: a) As a working balance to help cushion the impact of uneven cash flows. b) As a contingency to manage the impact of unexpected events or emergencies; and c) As a means of building up funds, often referred to as earmarked reserves, to meet known or predicted liabilities. The balance of reserves should be considered as part of the budget setting process. The IJB has a reserves policy in place which outlines an optimum value of reserves to be held uncommitted in contingency, this is currently set as 2% to 4% of net expenditure, based on the lower value this would be around £6.014m of the 2026-27 budget (exc set aside). The IJB reserves position projected to 31st March 2026 is summarised in the table below. This reflects a significant in-year draw on both earmarked and unearmarked reserves. General Fund Reserve Earmarked Reserves Total Unearmarked External Funding HSCP £m £m £m £m Balance – 1 April 2025 - 2.381 0.780 3.161 Anticipated Drawdown - (2.381) (0.780) (3.161) Projected Balance – 31 March 2026 - - - - The final position for reserves will be outlined in the year-end outturn report in June 2026 and in the Annual Accounts, however at this stage it is anticipated that the IJB will not carry any reserves moving into the new financial year. Whilst the ambition would be to plan to replenish the contingency reserves for the IJB in future years, the reality is in the current financial operating environment there is not the ability or scope to plan for this in the short term. 3.5 2027-28 and 2028-29 3.5.1 A detailed Medium-Term Financial Outlook was presented to the IJB in December 2025. At that time the projected position for 2027-28 and 2028-29 was as follows: 77
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OFFICIAL INFORMATION OFFICIAL INFORMATION 3.5.2 The MTFO uses three possible scenarios to estimate what our additional funding could look like across the financial years 2027-28 and 2028-29. These are as follows: • Best Case – an annual uplift of 2% for social care and health. The funding assumptions have been scaled back based on the Scottish Govt Medium Term Financial Strategy 2025. This includes a forecast 3.3 per cent real-term average growth per annum, however, this is before required savings and efficiencies. • Medium Case – this allows for 1% uplift in 2027-28 and 2028-29. This is linked to the midpoint between Best- and Worst-case scenario. • Worse Case – flat cash from both Council and NHS Board. The MTFO sets out a range of cost pressures across each of the financial years. These cover pay inflation, demand and demographic pressures across health and social care services, and the possible costs of delivering national priorities. As Scottish Government budgets continue to be for one year only, assumptions are made for future years. Cost pressures are currently estimated at £11.536m for 2027-28 and £11.592m for 2028-29. 3.5.3 The modelling from December 2025 has been updated to reflect updated pressures and savings (full year impact of 2026-27 savings). This has been carried out across best, medium and worst-case scenarios has identified the following potential positions for 2027-28 and 2028-29: 78
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OFFICIAL INFORMATION OFFICIAL INFORMATION 3.5.4 Our budget position for 2026-27 has proven to be closest to the medium and the worst- case scenario which was previously projected for that year and it would be prudent to assume a similar position for the following years. • For 2027-28 this would mean identifying savings between £7.971m and £10.761m • For 2028-29 this would mean identifying savings between £5.842m and £11.592m. Cost pressures have continued to be assumed on a consistent basis with 2026-27 excluding the impact of the increased to employers’ superannuation contributions in 2026-27. 3.5.5 On that basis, it is highly likely that the IJB will continue to face significant budget gaps which will require to be addressed in order to set a balanced budget. The IJB Finance Working Group will continue to meet regularly and will be presented with opportunities and options to work towards a sustainable financial position for future years. 3.6 NATIONAL FINANCIAL POSITION OF IJBs AUDIT SCOTLAND FINANCE BULLETIN 2024-25 (published 26-02-26) Local government in Scotland: Financial bulletin 2024/25 | Audit Scotland 79
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OFFICIAL INFORMATION OFFICIAL INFORMATION Key Messages for IJB Members: • Despite a 2.3% real-terms increase in funding, IJB finances continue to deteriorate as cost pressures outstrip available resources. • Total IJB reserves are now lower than the forecast 2025/26 budget gap, reducing financial resilience. • Audit Scotland is explicit that difficult decisions are unavoidable, including potential changes to service models, eligibility criteria, charging, or withdrawal of non-essential services. National Financial Position (2024/25) • Net cost of IJB services: £12.5 billion • Savings delivery: 78% of planned savings achieved nationally • 22 of 30 IJBs reported an in-year deficit • Increasing reliance on additional in-year partner contributions, which Audit Scotland considers unsustainable Reserves and Financial Resilience • Total reserves at year-end: £404 million (of which £316 million is earmarked) • Reserves fell by 12% compared to 2023/24 • Almost half of IJBs hold no contingency reserves • Only two IJBs meet the commonly referenced 2% contingency reserve threshold Savings and Transparency • Savings targets increased to £364 million in 2024/25 • Public reporting remains inconsistent, particularly on recurring versus non- recurring savings • Reliance on non-recurring savings (e.g. vacancies) presents significant financial risk 2025/26 Financial Outlook • Forecast national budget gap: £449 million • Average gap: 3.6% of net service costs • Gap-bridging plans include unidentified savings (10%) and use of reserves (5%), which is not sustainable Governance and Leadership • 86% of IJB audits raised financial sustainability risks • Over 50% of IJBs experienced senior leadership turnover in 2024/25 • Leadership instability undermines long-term financial planning and transformation Implications for IJB Decision-Making Audit Scotland concludes that maintaining current service levels within existing resources is not feasible. IJBs will need to lead strategic service redesign, review eligibility thresholds, consider charging and prioritisation, and engage transparently with communities about the impact of change. 3.6.1 Presentation of position There is regular reporting by IJBs of the individual and collective financial position thorough internal governance mechanisms but also through audit and directly through returns to Scottish Government Health Finance directorate. Chief Officers met with the Cabinet Secretary on 5th March 2025 to present an overview of the national picture for IJBs, some of the context around the rising pressures and cost of services, and to bring to life the impact of a critically challenging financial position for service delivery, risks and performance expectations in the coming year. 80
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OFFICIAL INFORMATION OFFICIAL INFORMATION North Ayrshire IJB is not alone in facing these challenges and whilst there is variation around the scale of the gap for IJBs, there are many similarities in the pressures facing us across Scotland. The Cabinet Secretary received a presentation which highlighted: • 2025-26 projected budget gap, including the worsening position for reserves. • Historical funding settlements for IJBs • Trends in health and adult social care spend. • Risks to the financial position, service provision and performance • Scale of the impact in terms of service provision levels • Social Care provider sustainability risks • A case study from an area illustrating the link between financial resources and delayed discharge performance. • Priority of need and risk management • Links to national priorities and policy directives Chief Officers set out a number of asks in relation to: • appreciated the opportunity to share the scale of the collective challenge and have this understood and heard – and want the opportunity to build in more regular visibility of this • recognise there is limited resource available which has not already been committed on other priorities – however would seek to influence decision making around priorities for future resources. Currently working within local systems on the whole system plans to inform the NHS Renewal submissions. Chief Officers would ask that consideration is given to the priority for investment in community services and that any resource asks from IJBs are prioritised • Would ask that there is a greater appreciation that there is local variation and complex reasons for this, the solutions and decisions required across areas may therefore be different • Lastly, seek that our positions are understood and appreciated at a national and local level, and that there is a level of understanding and honest reflection of the reality of the financial pressures and difficult decisions required. Would ask for support to manage public and political expectations around the scale of change, service impacts and implications for performance. COSLA highlighted a significant gap for social care services moving into 2026-27 and called for an urgent £750million investment to stabilise the sector and prevent service crisis. Raising concerns of a structural financial crisis facing social care, warning that failure to invest results in reduced care packages and increased pressures on families. This investment is not reflected in the Scottish Government budget for 2026-27. The North Ayrshire IJB Chief Officer met together with Craig Hatton, Chief Executive of North Ayrshire Council on Thursday 12th February with the Cabinet Secretary and Minister to discuss the financial position of the IJB. This was following a request in December 2025 for the Chief Officer to write to set out our challenges and request consideration of further funding for North Ayrshire IJB particularly to meet demands and needs for social care services. The Cabinet Secretary and Minister acknowledged the difficulties we face and referred to opportunities to work with NHS Ayrshire and 81
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OFFICIAL INFORMATION OFFICIAL INFORMATION Arran on shifting the balance of care and risk-share and hospital at home service developments and confirmed there is no further funding available from Scottish Government. 3.7 Strategic Risk Register The Strategic Risk Register (SRR) is normally made available on the same agenda as budget setting, with the IJB last reviewing this is in June 2025. The SRR helps to ensure the IJB are proactive in identifying and managing the risks to the successful delivery of our Strategic Plan. The scoring of risks on the SRR are informed by the severity of risk multiplied by the likelihood of it happening. Given the significant budget challenge and significant recommendations to balance the financial position the SRR will be reviewed following the budget meeting and presented to the next IJB. The current risks on the SRR are: SRR01 Financial Sustainability SRR02 Infrastructure (ICT Integration) SRR05 Transformational Change Programme SRR06 Governance SRR07 Demography and Inequality Pressures SRR08 Workforce SRR09 Local Impact of Scottish Government Policies SRR12 Clinical and Care Governance SRR13 Provider Failure (commissioned services) SRR14 Asylum Arrivals SRR15 Risk of Harm SRR16 Growth and expansion of specialist complex care developments 3.8 Anticipated Outcomes There are a number of outcomes anticipated in relation to the 2026-27 Budget: • The proposed plans will work towards a balanced budget for 2026-27. • Transformational Change for financial and service sustainability will feature at the forefront of the IJB and NAHSCP agenda throughout 2026-27 and beyond. • The remaining financial gap will require further decisions to be considered in relation to eligibility criteria for social care services, this will overall lead to a reduction in the level of care delivered next year. 3.8 Measuring Impact • Full year financial outturn forecasts will be compiled monthly with variance analysis and relevant explanations. • Regular financial review sessions will be undertaken with the Director, all Heads of Service and relevant senior managers in NAHSCP to ensure timely action is being taken where needed to stay within budgets. • Regular financial performance reports will be presented to the IJB to ensure it is kept fully informed of performance and importantly any major areas of concern requiring corrective action. • The Transformation Board will meet regularly to review progress with savings and any corrective action required to bring any plans back online. 82
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OFFICIAL INFORMATION OFFICIAL INFORMATION 4. IMPLICATIONS 4.1 Financial It is essential that the IJB and NAHSCP operate within the 2026-27 delegated budget, this is supported by approving a balanced budget before the new financial year. The report outlines estimated delegated funding and the pressures required to be met from within the overall integrated budget. It is estimated there is a requirement to deliver £9.138m of planned savings during 2026-27 alongside dealing with a number of other known pressures and the risk of managing fluctuating demand for services. There remains a balance of £6.322m of savings to be approved, with most of this aligned to the requirement to re-set eligibility criteria for access to social care. The estimates are based on a robust understanding of the additional resources available, the risks and challenges faced by the Partnership and the anticipated budget pressures. Appendix A shows the total 2026-27 IJB Budget Appendix B shows the proposed service pressures. Appendix C shows the proposed savings. Appendix D shows the Scottish Government Finance Settlement letters. 4.2 Human Resources There will be full consultation with the Trade Unions as appropriate. 4.3 Legal The IJB has an implicit obligation to funding partners to set a balanced budget prior to the start of the new financial year. The financial position and funding as detailed out would result in both partners complying with the Scottish Government directives re delegated funding for Integration Authorities. Legal advice has been sought on proposals aligned to the budget, to ensure alignment with the Council and Health Board continuing to meet their statutory duties and obligations. 4.4 Equality/Socio-Economic All budget proposals are assessed for any potential impacts using Equalities and Children’s Rights Impact Assessment (ECRIA) Screenings. If any potential impacts are identified, a full assessment is carried out. The previously agreed savings were assessed as part of the 2025-26 budget. A copy of all the relevant assessments across the budget savings categories is available. 4.5 Risk Failure to operate within the delegated budget would impact on the overall financial sustainability and reputation of the partnership and would expose both funding partners, North Ayrshire Council and NHS Ayrshire and Arran to additional financial risk. The IJB has no reserves available to mitigate the risk to partner bodies. 4.6 Community Wealth Building Effective delivery of services as per the 2026-27 budget and associated plans should allow key strategic priorities to be met which should maximise benefits for the North Ayrshire community as a whole but also benefit those areas of the community most in 83
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OFFICIAL INFORMATION OFFICIAL INFORMATION need, with a focus on ensuring HSCP resources are directed to those most in need in our communities. 4.7 Key Priorities The IJB approved a refreshed Strategic Plan in December 2025, this plan highlighted the fiscal constraints and impact and risk on achieving outcomes and ambitions. Whilst the HSCP Strategic Plan Priorities would remain unchanged a follow up assessment will be carried out to review the performance and service delivery ambitions in light of the significant financial saving requirement and impact on service delivery. 5. CONSULTATION 5.1 The budget plans detailed in this report have been produced in consultation with relevant budget holders, the Partnership Senior Management Team, the Finance Working Group and IJB members. The funding assumptions align with information shared and agreed with the Head of Finance at North Ayrshire Council and the NHS AA Director of Finance. The financial position, outline savings proposals and approach to reviewing and budget consultation was shared with NHS Ayrshire and Arran and North Ayrshire Council. Engagement has been undertaken with all Elected Members as part of North Ayrshire Council’s budget planning process including an HSCP hosting an all members session in January 2026. Extensive public engagement has been undertaken on proposals relating to social care eligibility criteria with further details included in the separate report on the agenda. For more information please contact: Eleanor Currie, Chief Finance Officer at eleanorcurrie@north-ayrshire.gov.uk 84
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OFFICIAL INFORMATION OFFICIAL INFORMATION Appendix A North Ayrshire Health and Social Care Partnership 2026-27 Total Budget NAC £m NHS AA £m Total £m Baseline Budget 140.359 144.500 284.859 Baseline Funding Increase 11.147 4.714 15.861 2026-27 Budget excluding set aside 151.506 149.214 300.720 Draft set aside budget - 42.670 42.670 2026-27 Budget including set aside 151.506 191.884 343.390 2026/27 Budget 85
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OFFICIAL INFORMATION OFFICIAL INFORMATION Appendix B North Ayrshire Health and Social Care Partnership 2026-27 Budget Pressures Council NHS (non lead) NHS (lead) TOTAL Basis of Budget Pressure £m £m £m £m Pay: Pay awards 3,067,090 1,604,007 2,406,010 7,077,107 Council 3.5% NHS 3.75% Superann increase impact 7,243,087 7,243,087 Reflects the increased rate of 17.5% employer contributions Apprenticeship Levy 15,335 8,020 12,030 35,385 0.5% of the payroll increase NHS ENICs shortfall 92,800 139,200 232,000 This is the shortfall carried forward from 25-/26 TOTAL PAY PRESSURES 10,325,512 1,704,827 2,557,240 14,587,579 Non Pay: Demand Pressure Mental Health 139,747 139,747 Reflects historic demand Transition Pressure Mental Health 162,113 162,113 Reflects historic demand Demand Pressure Learning Disabilities 280,000 280,000 Reflects historic demand Transition Pressure Learning Disability 893,874 893,874 Reflects historic demand NCHC Pressure 1,579,373 1,579,373 Estimated increase (final increase TBC when the 2026-27 rate is confirmed ) Contract Inflation outwith the NCHC 3,322,721 25,000 3,347,721 Reflects the increase in the Living Wage Care at Home Management System 75,000 75,000 Additional annual contract cost (full year) Analogue to Digital 80,000 80,000 Additional hardware costs Brighter Pathways Programme 785,313 785,313 Net cost of Boyle Street, new foster scheme and achieving an online position Resource Transfer inflation 490,960- 490,960 - 2% applied TOTAL NON PAY PRESSURES 6,827,181 515,960 - 7,343,141 Pan Ayrshire Pressures : Palliative Care Service 18,000 18,000 : Mattress Replacement 25,000 25,000 50,000 : Office 365 increased costs 4,263 4,263 8,526 TOTAL PAN AYRSHIRE PRESSURES - 29,263 47,263 76,526 TOTAL 2026/27 PRESSURES 17,152,693 2,250,050 2,604,503 22,007,246 Agreed on a pan Ayrshire basis with East and South 2026/27 86
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OFFICIAL INFORMATION OFFICIAL INFORMATION Appendix C North Ayrshire Health and Social Care Partnership 2026-27 Savings Council NHS (non lead) NHS (lead) TOTAL RAG Deliverability Status Description Adjustments and Previously Agreed Savings: Inflate Payroll Turnover 107,348 60,150 90,225 257,723 Green Increased target to reflect the pay award Recharge to East for Ward 2 beds - 25,000 - 25,000 Green Increased charge to reflect the pay award Financial Inclusion Review 32,500 - - 32,500 Green Full year impact of the 2024/25 saving Social Care Model at Trindlemoss House - 175,000 - 175,000 Green Moving from a nursing led model to a social care led model 139,848 260,150 90,225 490,223 Operational Council NHS (non lead) NHS (lead) TOTAL RAG Deliverability Status Description Social Care Fees and Charges 5% increase 100% included 120,000 - - 120,000 Green Increased income to reflect the 2026/27 charges LES Payment - Buckreddan Care Home 43,000 - - 43,000 Green Service will be ither cease or be funded by the care home LES Payment - Toddhill 22,000 - - 22,000 Green Service will cease Third Sector Capacity Building 34,000 - - 34,000 Green Reduction of a post Business Admin - Phase 1 - Quick wins 251,979 - - 251,979 Green Reduction in 6.8 WTE posts Moving and Handling post 55,000 - - 55,000 Green Reduction of a post Business Admin Team - senior structure - 40,000 - 40,000 Green Saving following a retiral and resultant revised structure Carers UK Annual Subscription 3,500 - - 3,500 Green Cease the subscription NADARS NHS non staffing budget - 26,771 - 26,771 Green Saving in non staffing costs Pan Ayrshire Alcohol & Drug Services Management Team - 16,478 16,478 32,956 Green Saving in staffing costs Removal of SW Trainee Post 54,000 - - 54,000 Green Removal of a SW trainee post Child Health Assessment - Charge for Out of Authority cases - 6,000 - 6,000 Green New charge for Out of Authority health assessments Children and Families Throughcare Review 87,000 - - 87,000 Green Reduction in staffing (WTE TBC) Support Services outwith business support 100,000 - - 100,000 Amber Reduction in staffing (WTE TBC as it is a target) 770,479 89,249 16,478 876,206 87
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OFFICIAL INFORMATION OFFICIAL INFORMATION Policy - Model of Care or Efficiency Council NHS (non lead) NHS (lead) TOTAL RAG Deliverability Status Description Roslin House - shared respite/residential model 300,000 - - 300,000 Green Moved to respite and residential model. Assumes 4 external placements will move to Roslin House Trindlemoss - review of care delivery model 116,989 - - 116,989 Green Review of care delivery model. Budget reduction regarding the Pan Ayrshire Prevention & Service Support Team - - 40,817 40,817 Green Saving in non staffing costs Phase 1 - Children and Families -quick wins re: retirements, WLB and vacant posts 250,000 - - 250,000 Green Reduction in staffing (7 WTE) Phase 1 - Psychology - - 231,138 231,138 Green Reduction in staffing (2.5 WTE and a reduction in grade for 1 post) 666,989 271,955 938,944 Policy - Service Reduction/Cessation (all agreed with East and South HSCP) Council NHS (non lead) NHS (lead) TOTAL RAG Deliverability Status Description DBI - Distress Brief Intervention service - - 157,500 157,500 Green Cessation of the Distress Brief Intervention service (7mths assumed) MH Innovation Fund (reduction of posts) - - 41,331 41,331 Amber Reduction of Innovation Funded posts. 3mths of savings assumed as the posts will be redeployed. (2.7 WTE) RISE Team - Resilience in Stressful Events - - 192,131 192,131 Green Reduction in the RISE service Mental Health Practitioners (MHPs) in GP practices - - 120,000 120,000 Green Reduction in the MHPs ( est 3 WTE posts) - - 510,962 510,962 TOTAL DRAFT SAVINGS PROPOSALS 1,577,316 349,399 889,620 2,816,335 88
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OFFICIAL INFORMATION OFFICIAL INFORMATION Appendix D SCOTTISH GOVERNMENT FUNDING LETTERS 2026-27 89
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1 Directorate for Health and Social Care Finance Fiona Bennett, Interim Chief Finance Officer E: Fiona.Bennett@gov.scot Chief Executives, NHS Scotland Copy to: NHS Chairs NHS Directors of Finance Integration Authority Chief Officers Integration Authority Chief Finance Officers Issued via email 13 January 2026 Dear Chief Executives Scottish Government Budget 2026-27 Following the announcement of the draft Scottish Government Budget for 2026-27 by the Cabinet Secretary for Finance and Local Government in Parliament today, I am writing to provide details of the indicative funding settlement for NHS Boards. A breakdown of the total is provided in Annex A to this letter. The budget aligns to and supports our improvement and reform priorities across the Operational Improvement Plan, Service Renewal Framework and Population Health Framework. We must continue to work as a whole system and across boundaries to improve outcomes and deliver the best possible care within our available resources. As in previous years, the budget announced will be subject to any amendments agreed through the Scottish Parliament’s Budget Bill process. Budget Uplift NHS Boards will receive a 2% uplift on baseline funding in 2026-27. This will provide funding towards the costs of the 2026-27 pay deals and provides a 2% uplift for non-pay costs to support inflationary pressures. Additional funding will be provided to meet the costs of the 2026-27 pay deals where uplifts exceed 3% in line with public sector pay policy, and full funding has been included for the agreed Agenda for Change pay settlement. Pay funding should cover all staff including those delegated to Integration Authorities (IAs). Funding of £32.8 million ensures no Board is further than 0.6% from NRAC parity in 2026-27. A further £150 million of recurring funding has been included to support territorial boards’ continued implementation of the reforms committed to as part of the 2023-24 Agenda for Change (AfC) pay deal, including the additional one hour reduction from 1 April 2026. Together with the £150 million recurring funding issued in 2024-25, this increases total available recurring funding to £300 million for territorial boards. This funding covers all staff under AfC terms and conditions, including those staff working in functions delegated to IAs. For territorial boards this will be allocated on an NRAC basis and work will continue with national boards to understand the impact of the AfC reforms as in previous years. This level of funding should be assumed to continue in future years and will remain under review. 2026-27 Financial Support and Approach to Brokerage Continuing from 2025-26, brokerage will not be available to support overspends, and NHS Boards must work towards a break-even position which remains the statutory responsibility of the Accountable Officer. Historic brokerage remains repayable and has not been written off. Non-recurring sustainability funding of £150 million will be provided to territorial boards on an NRAC basis. This funding must be used in full to reduce pressures and the reported deficit. NHS Boards at stage two and above on 90
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2 the NHS Scotland Support and Intervention Framework for finance will receive additional support in 2026-27 to improve financial sustainability, including non-recurring deficit support funding as notified in early September 2025. Further assumptions on longer term sustainability funding and deficit support funding will be shared in due course. Discussion will be held with each Board to review their three-year financial plans and what support is required to improve their financial position. Overspends in excess of available funding will be reflected in annual accounts. Three-year Financial Planning A commission was issued on 12 December 2025 for three-year financial plans, and this budget announcement should be factored into those plans. To account for the later 2026-27 Scottish Budget date, an abridged plan is required on 2 February 2026 before final plans are submitted on 16 March 2026. Planning assumptions have already been shared with Directors of Finance, including the continued requirement to achieve 3% recurring savings against baseline budgets. NHS Boards should ensure they undertake appropriate impact assessments prior to implementing financial savings. In line with the sub-national planning guidance outlined in DL(2025)25, it is important for financial plans to align with sub-national structures. Further information is set out below. Financial Savings The 15 Box Grid (the Grid) sets out areas of focus for NHS Boards to support delivery of 3% recurring savings and improve the financial sustainability of NHS Scotland. It collates various national programmes of work, and has been effective through sharing best practice and benchmarking across the finance community and beyond. The Grid will be refreshed for 2026-27 with a renewed focus on tangible actions that underpin reform priorities set out in the Operational Improvement Plan, Service Renewal Framework and the Population Health Framework. Opportunities for efficiency improvements in relation to shifting the balance of care, value based health and care, and prevention will feature in 2026-27. The 15 Box Grid is effective due to continued collaboration across NHS Scotland, which is increasingly important as we implement sub-national structures. The Finance Delivery Unit will continue to support NHS Boards to implement savings and deliver the 3% recurring savings target. Sub-National Planning DL(2025)25 and the Ministerial Direction issued on 13 November 2025 outlined key requirements for NHS Scotland to improve outcomes and financial sustainability through two sub-national structures. East and West structures are responsible for designing their approach to delivering the requirements of the DL, including improving financial sustainability. Local NHS Board financial plans should be developed in tandem with sub-national work, particularly around delivering Part 2 objectives as set out within the Ministerial Direction. Each structure has discretion to include relevant information regarding the financial challenges arising from these plans and potential efficiencies that can be delivered over the course of the three year period. Accountable Officers for individual NHS Boards remain responsible and accountable for their financial position throughout sub-national planning. All Boards will be continually assessed against the NHS Scotland Support & Intervention Framework. Sub-national plans addressing the Part 2 objectives, as set out in the Co-operation and Planning Directions 2025, are to be submitted to the NHS Scotland Chief Operating Officer by 31 March 2026. These plans should be consistent with individual NHS Board financial plans submitted on 16 March 2026. The Scottish Government will continue to work with Boards and sub-national structures during the course of 2026-27 to understand progress with sub-national planning and its financial implications and efficiencies. This will extend to all objectives as set out in the DL. Operational Improvement Plan The Scottish Government’s Operational Improvement Plan (OIP) set out a focused programme of work to improve waiting times performance across the system in 2025-26. This focussed on reducing unscheduled care pressures, improving flow through hospitals, and tackling long waits in planned care. 91
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3 In 2026-27, the OIP will continue as a core framework for delivery, with renewed focus on reforming the services to work towards prevention and delivering improved access to treatment through digital innovation. Non-recurring funding of £100 million will be provided for the OIP in 2026-27, and further information on this will be provided in due course. This replaces the value in 2025-26 rather than being additional. Policy Funding In addition to the baseline uplift, funding aligned to policy commitments will be allocated to Boards in 2026- 27. Scottish Government remain committed to continuing to rationalise the in-year allocation process by reducing the number of in-year allocations and issuing as early as possible within the financial year. Health and Social Care Integration The Health and Social Care Portfolio will transfer additional funding of £167 million to Local Government to support social care and integration for 2026-27, this includes funding towards the uplift for pay for adult social care workers to the Real Living Wage of £13.45 per hour (£160 million) and inflationary uplift on Free Personal Nursing Care rates (£7 million). There is also additional investment to support improvements to wider terms and conditions for Adult Social Care workers and support for advocacy within social care, as well as investment to support a digital telecare pilot as part of commitment to remove non-residential charges. Further information around these will be provided in due course. The funding allocated to IAs should be additional and not substitutional to 2025-26 budgets for services which are delegated. Therefore, Local Authority social care budgets for allocation to IAs must be at least £167 million greater than 2025-26 recurring budgets. While funding for reform and improvement measures will be routed through NHS Boards, elements will support activity in the community and delivered via IAs. Part of this package will be used to directly support our shared ambition to alleviate pressure across the health and social care system. Capital The Budget will provide capital investment for the Portfolio’s priority projects of the University Hospital Monklands, Princess Alexandra Eye Pavilion, the Belford Hospital, the Barra and Vatersay Community Campus, as well as contractual commitments relating to our construction programme. Out with these priorities, the capital programme will continue under the Whole System Infrastructure Planning (WSIP) process as outlined per DL (2025) 15 with all Boards required to submit strategic assessments in 2026-27, although any decision on which priority projects can be supported within the Portfolio’s capital funding envelope will not take place before 31 March 2027. Approved projects from the Business Continuity Plans (BCP) will continue to be supported alongside funding made available for BCP Equipment and Sustainability programmes. NHS Boards’ formula capital will remain in line with 2025-26 levels. Alongside capital spending plans, as set out in DL (2025) 15 and aligned to the Service Renewal Framework, a revenue funded primary and community care infrastructure investment programme is being developed. Work is underway to explore use of modern Public Private Partnership structures to support delivery and it is our expectation that, through a Mutual Investment Model, a significant programme of community health and wellbeing centres can be delivered over the coming decade, with initial construction anticipated from 2029-30 following establishment of the revenue funding model. Considering suitability for revenue funding, along with community need, demand pressures and estate issues, twelve areas (Annex B) have been identified for pilot and first phase projects and meetings will be arranged with those local Health Boards to discuss this further. Following successful completion of the initial phase, it is intended that there will be further tranches, including smaller projects that are not suitable candidates for revenue funding, subject to funding availability and aligned to the overarching WSIP work. Summary It remains our collective duty and responsibility to ensure the funding allocated is used effectively to deliver the best possible care for the population of Scotland. This requires us to work collectively across organisations, using the new sub-national planning arrangements to make the best possible use of our resources. 92
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4 I am grateful for your support to date and your continued engagement moving into the next financial year. Yours sincerely, Fiona Bennett Interim Chief Finance Officer Health and Social Care 93
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St Andrew’s House, Regent Road, Edinburgh EH1 3DG www.gov.scot Annex A – Board Funding Uplifts 2025-26 Allocation (£m) Recurring Allocations* (£m) Updated Allocation (£m) Uplift** (£m) Transfer to NHS Delivery*** (£m) 2026-27 Total Allocation (£m) NRAC Funding (£m) Distance from NRAC Parity (%) Ayrshire and Arran 1,006.6 45.5 1,052.1 42.7 N/A 1,094.8 0.0 -0.3% Borders 303.7 16.2 319.9 13.0 N/A 332.9 0.0 -0.4% Dumfries and Galloway 425.4 19.4 444.8 18.0 N/A 462.8 0.2 -0.6% Fife 937.9 40.8 978.8 54.1 N/A 1,032.8 13.7 -0.6% Forth Valley 751.7 34.9 786.6 32.1 N/A 818.7 0.0 -0.5% Grampian 1,346.8 61.8 1,408.7 68.8 N/A 1,477.5 11.4 -0.6% Greater Glasgow and Clyde 3,123.5 141.1 3,264.5 100.2 N/A 3,364.7 0.0 1.4% Highland 940.2 40.3 980.5 39.6 N/A 1,020.0 0.0 -0.6% Lanarkshire 1,713.0 72.9 1,785.9 72.9 N/A 1,858.8 0.0 -0.4% Lothian 2,113.0 96.6 2,209.5 91.0 N/A 2,300.5 1.7 -0.6% Orkney 74.9 5.0 79.8 5.1 N/A 84.9 1.9 -0.6% Shetland 74.8 4.8 79.6 7.0 N/A 86.6 3.8 -0.6% Tayside 1,094.3 48.4 1,142.7 45.9 N/A 1,188.5 0.0 0.1% Western Isles 106.8 6.1 112.9 4.3 N/A 117.2 0.0 6.2% Territorials Total 14,012.6 633.6 14,646.2 594.5 N/A 15,240.7 32.8 National Waiting Times Centre 98.0 9.8 107.8 3.1 N/A 110.9 Scottish Ambulance Service 437.2 18.7 455.9 15.7 N/A 471.5 The State Hospital 49.0 1.6 50.6 1.7 N/A 52.4 NHS 24 118.3 5.6 124.0 4.3 N/A 128.3 NHS Education for Scotland 648.9 135.1 784.0 24.8 (808.7) 0.0 NHS National Services Scotland 428.5 25.3 453.8 12.6 (466.4) 0.0 Healthcare Improvement Scotland 37.6 3.3 40.9 1.4 N/A 42.3 Public Health Scotland 67.8 8.7 76.5 2.5 N/A 78.9 NHS Delivery 0.0 0.0 0.0 0.0 1,275.1 1,275.1 Nationals Total 1,885.3 208.1 2,093.4 66.1 0.0 2,159.5 Total NHS Boards 15,897.9 841.7 16,739.6 660.6 0.0 17,400.2 * Includes recurring allocations from 24-25 ** Includes NRAC parity adjustments. *** NHS Delivery to be formed via merger of NES & NSS. 94
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St Andrew’s House, Regent Road, Edinburgh EH1 3DG www.gov.scot Annex B – Revenue funded primary and community care infrastructure investment programme The three pilot projects, selected for their health, population demographic and estate needs, will be in the following areas: 1. Port Glasgow 2. East Calder and East Livingston 3. Cowdenbeath and Lochgelly Other projects identified for the first tranche of this primary and community care investment programme include: • West Edinburgh • Edinburgh City • Cumbernauld area of Lanarkshire • Hamilton area of Lanarkshire • South Glasgow, Langside • East Dunbartonshire • West area of Ayr • Inverness and Nairn • Dunfermline and Kincardine (including intervening areas) 95
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Cabinet Secretary for Finance and Local Government Shona Robison MSP F/T: 0300 244 4000 E: scottish.ministers@gov.scot Councillor Morrison COSLA President Verity House 19 Haymarket Yards Edinburgh EH12 5BH Copy to: Councillor Heddle Scottish Local Authority Leaders Scottish Local Authority Chief Executives ___ 13 January 2026 LOCAL GOVERNMENT SETTLEMENT 2026-27 Earlier today I formally set out the Scottish Government’s proposed Budget for 2026- 27 to the Scottish Parliament. Next year’s budget is accompanied by the results of the Scottish Spending Review, providing a forward planning horizon of three years for resource and four for capital. Focusing on four priorities set out in the Programme for Government, the Budget invests in the wellbeing of our society and seeks to ease the pressure on families and family budgets by continuing and expanding the best cost-of-living support package available anywhere in the UK. At the very heart of that is a commitment to more effective and more efficient policy delivery. It will mean a smaller, more modern public sector, with smarter use of technology, including digital delivery, making it easier for citizens to access the services they need. Our ambition is clear – a Scotland where public services work seamlessly for people, modern in their design and delivery, accessible where and when they are needed, flexible in how they respond, and consistently focused on the best outcome. In short, 96
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public services that are centred on the needs of the person, not the needs of the system. Local Government are central to that ambition. As I outlined to COSLA political group leaders last week, in some areas my statement set out a direction of travel and funding allocation on key themes – such as child poverty - and Local Government will remain key partners in how those propositions are further developed and ultimately delivered, alongside our valued third sector and communities themselves. Examples include our proposals around expanding Breakfast Club provision; enhancing wrap-around childcare; and sporting opportunities for young people, capitalising on Scotland’s summer of sport. Over recent months, the First Minister and I, as well as my officials, have engaged extensively with Local Government and I am proud that we were able to work with you to agree and put into practice the first Fiscal Framework between Scottish Government and Local Government. The Budget today reflects the evidence gathered throughout that engagement and, further to my budget statement, here are the details of the Local Government Finance Settlement for 2026-27. The Budget delivers record funding of almost £15.7 billion through the Local Government Settlement. That represents a £650 million uplift since the last Budget publication. As you are aware, additional funding was made available to support the costs of the UK Government’s changes to employer National Insurance Contributions through the budget process last year and I have baselined this funding as part of that figure. Even adjusting for the eNICs funding, the Local Government Settlement overall has increased by £506.9 million – a 3.3% cash increase or a 1.0% increase in real terms. The revenue settlement budget to budget increases by £746 million, including the eNICs funding. Whilst the capital settlement falls by £95.7 million, this is wholly explained by the expiration of time-limited funding and agreed profiling of flood prevention funding to better align with councils’ spending requirements. 97
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The settlement includes: • an additional £253 million of General Revenue Grant to provide a meaningful contribution to the second year of the local government pay deals and to support other local priorities, including Adult Social Care; • baselines £79.7 million and £30 million that was previously provided in-year from non-recurring sources to support the pay deals; • allocates a further £17 million to reflect the legacy costs of the first year of the SNCT pay deal; • baselines a further £773.8 million of funding previously provided as in-year transfers, taking the total funding baselined since the Verity House Agreement was signed to almost £2.3 billion; • an additional £160 million and £22 million to fund the Real Living Wage uplift for commissioned services across adult social care and early learning and childcare respectively; • £7 million to support an inflationary uplift in free personal nursing care; • £0.7 million increase to the School Clothing Grant; • £3 million to support expansion of Free School Meals; • enhanced revenue and capital support for inter-island connectivity; • extended support for the Climate Emergency with a further £20 million of one- off capital funding; and • Local Authorities will retain all the funding paid to local authorities by PackUK under the Extended Producer Responsibility scheme with no adjustment to the Settlement. The Settlement also provides councils with full discretion over decisions on council tax, with no freeze and no cap. The Scottish Budget prioritises cost of living measures and, with over a quarter of a billion of additional General Revenue Grant in the Settlement, it should also enable councils to protect family budgets by minimising any proposed increases in council tax. Having listened carefully to the arguments set out in ‘Strong Councils, Strong Communities’, I have sought to balance the desire to ringfence additional funding towards social care with the Verity House Agreement commitment to maximise fully 98
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flexible funding. In conclusion, I have allocated as much as possible of the additional revenue funding as General Revenue Grant for Councils to allocate as they see fit. I do, however, recognise the importance of sustainable adult social care services and as I set out in my statement, the government is committed to working together with local authorities on the delivery and improvement of social care. The Cabinet Secretary for Health and Social Care will be engaging with local government and health and social care partners over the coming weeks on proposals to strengthen our response to complex care and delayed discharge. While there is not a specific allocation within the settlement for this work at this time, we want to develop proposals together to deliver new approaches which could improve our collective endeavour to support people with complex needs who require specialist support and services. If proposals can be collectively developed at pace, I will consider with the Cabinet Secretary for Health and Social Care how these may be supported. In providing £160 million for the Real Living Wage in Adult Social Care and £22 million for children services, I am acknowledging that employers, including Local Authorities where appropriate, are subject to statutory duties to meet increases in the National Living Wage. I have therefore fully funded the difference between the National Living Wage and the Real Living Wage in those services in recognition of our shared commitment to paying valued care workers at least the Real Living Wage. Following our engagement work over the autumn, I am confident that Local Government will pass more in total to IJBs than is provided as an in-year transfer by Scottish Government. However, I do acknowledge that partnership working will be even more critical this year to ensure that the technical changes applied to the Adult Social Care GAEs are appropriately reflected locally. Recognising the impact of this exceptional change in distribution and to balance the needs of councils who stand to receive more funding through this change with those seeking to ensure sustainable delivery locally, I have taken the decision to increase the funding floor in 2026-27 to 0.5% below the average change. This is up from the current level of 0.75%. In addition to the Real Living Wage funding, the budget honours the historic commitments to support local government pay deals. However, in light of the 99
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decision by the Cabinet Secretary for Education & Skills, Jenny Gilruth MSP, to extend the Scottish Attainment Challenge Programme, including Pupil Equity Funding, at current levels into 2026-27, I would offer assurance in line with the original agreement that the £30 million previously re-deployed to support the 2023- 24 pay deal will now be refunded in full following the revised timeline for expiration of the scheme, rather than in 2026-27 as originally envisaged. Similarly, the £79 million of capital funding for flood prevention has been reprofiled in full over the course of the Spending Review to align more accurately with the evidence on spending requirements provided through the Joint Scottish Government and COSLA Flood Risk Management Funding working group rather than in a single year. Having fulfilled our commitments on local government pay deals, the Budget I have set out today is designed to build on the increase in teacher numbers and the improved pupil teacher ratio in 2025, which were the result of most councils making positive choices to invest the additional funding I announced in last year’s budget. This uplifted the ring-fenced funding for teacher numbers and provided our councils with extra funding specifically to support additional support needs. I am pleased to maintain that investment this year, allowing councils to maintain and build on those additional teachers in 2026/2027. The Education and Skills Portfolio budget also includes an additional £1m to support pilot approaches to implement a reduction in class contact time, as a catalyst for deeper professional engagement, improved workload, and better outcomes for every learner. It is the intention of this government that this will lead to wider agreement, including on the use of the 90 minutes, through the SNCT. The Fiscal Framework between Scottish Government and Local Government agreed in the autumn, is not only the first such arrangement since devolution but it is unique across the UK. As previously communicated to Directors of Finance, it remains our aspiration to issue council by council allocations today (13 January 2026). My officials have provided officers with a full reconciliation of the funding announcements set out in 100
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the Budget today and briefing sessions are planned for Chief Executives and Directors of Finance over the course of tomorrow. The £281.4 million of new General Revenue Grant in the settlement compares favourably with the £307 million of resources consequentials accruing from the UK Budget in November and is materially more than the £5.7 million of consequentials accruing from increased expenditure on Local Government in England. Successive budgets since the Verity House Agreement was signed have baselined almost £2.3 billion into the core local government budget. We have delivered powers for a Visitor Levy, made council tax more progressive (focusing to date on second and empty homes), and have now funded for the preliminary work necessary to progress two new high value council tax bands from 01 April 2028 in order to increase local revenues. As the design and legislation for those new bands progresses, this government will continue to work in partnership with COSLA and local authorities on the detail, including design considerations which may arise from the results of the live consultation on council tax reform. The Spending Review sets out multi-year planning assumptions for local authorities with provisional resource allocations up to 2028-29 and provisional capital allocations available to 2029-30. I fully anticipate that trajectory will change going forward as was the case with the 2022 Spending Review – the original 2026-27 core revenue allocation of £10,716 million is now £13,917 million – and further discussion with local government in future years will inform that. Alongside the Scottish Budget, I have also published a number of other supporting documents including Portfolio Efficiency and Reform Plans and an integrated pay and workforce policy statement. Whilst these documents have been developed and published by Scottish Government, it is clear that the policy intent set out in each will only be achievable for the public sector as a whole if local government and the Scottish Government work in partnership with one another. I would therefore intend to prioritise these matters through my engagement, and to support the prioritisation of discussion of these matters through engagement with all relevant Cabinet Secretaries and Ministers. 101
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The Budget invests in the wellbeing of our society and following significant joint investment in the engagement process throughout the financial year, the Local Government Settlement now delivers a strong outcome for Councils. I hope this is recognised locally and I look forward to further engagement with COSLA for the remainder of this Parliamentary session. Yours sincerely, SHONA ROBISON 102