ITEM 10.1 Appendix 1 MTFP 2025-2028
North Lanarkshire Council · 19 March 2025
Back to Health and Social Care Integration Joint Board — 19 March 2025 and its agenda
Text extracted from the council's PDF. Layout and reading order may differ from the original.
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ITEM 10.1 Strategic Commissioning Plan FINANCIAL PLAN Engage with Partner Bodies Support Transformation Budget Setting & Monitoring 2025/26 to 2027/28 APPENDIX 1 Medium Term Financial Plan INCORPORATING THE LONG TERM FINANCIAL OUTLOOK
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1 | P a g e CONTENTS 1. INTRODUCTION 2 2. EXECUTIVE SUMMARY 2 3. PURPOSE 3 4. NATIONAL & LOCAL CONTEXT 4 5. FINANCIAL CONTEXT 6 6. FINANCIAL PLANNING ASSUMPTIONS 7 7. MEDIUM TERM FINANCIAL PLAN 2025/26 -2027/28 8 8. THE RESPONSE 10 9. LONG TERM FINANCIAL OUTLOOK 2025/26 – 2034/35 11 10. RESERVES STRATEGY 12 11. RISKS & UNCERTAINTIES 13 APPENDIX 1 – FINANCIAL PLANNING ASSUMPTIONS 14
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2 | P a g e 1. INTRODUCTION The North Lanarkshire Integra�on Joint Board (IJB) was established as a corporate body by Sco�sh Government and became opera�onal in June 2015 with integrated delivery of health and social care services commencing on 1 April 2016. It is a joint venture between NHS Lanarkshire (NHSL) and North Lanarkshire Council (NLC). The IJB has responsibility for the strategic planning and commissioning of a wide range of services within North Lanarkshire. The North Lanarkshire University Health and Social Care Partnership (the Partnership) is responsible for the opera�onal delivery of the IJB strategic direc�ons. This includes the services we are required to provide, the funding allocated and the monitoring of performance. The services include: • Accident and emergency services provided in a hospital • Inpa�ent services related to general, respiratory and rehabilita�on medicine • Pallia�ve care services • Community health services including Lanarkshire wide hosted services • Social care services. 2. EXECUTIVE SUMMARY The Medium Term Financial Plan (MTFP) 2025/26 – 2027/28 provides a medium term view of the challenges and opportuni�es facing the IJB and considers what the implica�ons of this are for the finances of the organisa�on. A robust MTFP will support the priori�es and ambi�ons as outlined in the Strategic Commissioning Plan whilst ensuring the organisa�on remains financially sustainable. The Partnership is opera�ng in an increasingly challenging environment with funding not keeping pace with increasing costs and demand, therefore the Long Term Financial Outlook (LTFO) 2025/26 – 2034/35 provides an es�mate of the longer term posi�on against this backdrop. In May 2023 the Sco�sh Government published an updated Medium Term Financial Strategy for the period 2023/24 to 2027/28, providing insight into future funding and spending priori�es at a na�onal level. The move to mul�-year setlements however remains an aspira�on which means the uncertainty which is currently impac�ng on strategic commissioning ac�vity across Partnership will con�nue. Both the MTFP and LTFO provide an overview of the financial planning assump�ons in rela�on to projected cost pressures arising from demographic growth, legisla�ve and policy developments, employee costs and infla�on alongside poten�al partner funding contribu�ons in future years. The MTFP es�mates a budget gap of £51.854m over the 3-year planning period 2025/26 to 2027/28, of which £14.729m relates to 2025/26. Therefore, to meet the requirement on the Partnership to set a balanced budget, a package of savings has been iden�fied to meet the 2025/26 gap. Any in year shor�alls will be met by reserves, as permited in the IJB Reserves Strategy. The LTFO iden�fies cost pressures in 2028/29 of £40.020m rising to £58.075m in 2034/35, however due to the uncertainty in funding beyond the 3 year medium term planning period no assump�ons have been made on the likely income receipts to meet these pressures. The long term financial constraints will require the Partnership and both partners to make difficult decisions in the years to come. Therefore, the whole system approach and working collabora�vely with carers, third par�es and independent providers is essen�al. An effec�ve communica�on strategy is also essen�al to ensure public confidence is maintained.
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3 | P a g e 3. PURPOSE The long-term vision for the Partnership was set out in the original Strategic Plan 2016- 2026 and con�nues as the over-arching vision of the Strategic Commissioning Plan 2023-26. This states that the people of North Lanarkshire will achieve their full poten�al through: In order to implement this vision, the Partnership has 6 key ambi�ons which were revised in 2023, following engagement with stakeholders, taking experience gained since 2016 and looking at the current and future challenges facing the Partnership. Longer term planning is integral to the Partnership’s Financial Strategy and strategic approach to budge�ng. Effec�ve decision making relies on robust financial planning and the MTFP and LTFO assist in ensuring resources are aligned to the key priori�es and ambi�ons highlighted above. With limited resources and increasing pressures on the Partnership’s services it is there is a need to adapt and change to be more efficient, responsive, and sustainable. A co-produc�ve approach therefore needs to be adopted that fully involves communi�es in decisions ensuring an approach that supports and empowers them when a different model of service delivery is proposed. It is therefore essen�al that service re-design and transforma�on is delivered in a planned and holis�c manner, rather than reac�ve cuts to services. The adop�on of a medium to long term approach for financial planning enables this approach. • Living safe, healthy and independent lives in their communi�es. • Receiving the informa�on, support and care they need, efficiently and effec�vely, at the right �me, in the right place and in the right way. • Ensuring North Lanarkshire is the best place in Scotland to grow up. KEY AMBITIONS Do the right thing first �me Increased focus on preven�on, early interven�on and tackling inequali�es by working with communi�es and people Develop and support a workforce for the future Improve mental health and wellbeing Support people through a whole family approach
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4 | P a g e 4. NATIONAL & LOCAL CONTEXT Health & Social Care Partnerships operate in a complex, challenging and changing environment where na�onal issues can have an impact on what and how services are delivered along with the financial resources they have available to meet this. The MTFP has considered a number of key issues, some of which are outwith the Partnership’ control, and those internal issues which the Partnership has the ability to influence. Both internal and external influences need to be considered with key variables modelled to guide the IJB decisions about the future. External Influences (outwith the Partnership’s control) • Increase in demand • Interest rate fluctua�ons • Level of funding from partners and Sco�sh Government • Na�onal pay agreements • Supply chain issues associated with the wider economy • Further financial and economic impacts and poten�al future pandemics • Na�onal Care Service. Internal Influences (within the Partnership’s control) • Community engagement, partnership working and co-produc�on of service delivery models • Working to clear priori�es as set out in the Strategic Commissioning Plan • Transforma�onal change programmes to improve outcomes • Effec�ve people planning and wellbeing • Use of robust performance data to drive improvement • Use of digital technologies to improve services and reduce cost • Effec�ve risk management to keep risk levels within tolerance • Effec�ve financial planning to ensure best value for the resources available There are mul�-faceted factors that impact on this budget and the demand for health and social care services across North Lanarkshire which include: • North Lanarkshire is the 4th largest area in Scotland. It is also the 5th most populated with a popula�on of 341,890. • Between 2011 and 2022, the 25 to 44 age group saw a percentage decrease (-7.3%), in contrast the 75 and over age group saw a percentage increase (+21%). • Although the popula�on is projected to decrease from 2028 to 2043 by 1.2% there is a forecast increase of 71.4% in the age group 75 years and over across the same �mescale. • 20% of North Lanarkshire’s data zones are within the 20% most deprived in Scotland. • The number of people income deprived in North Lanarkshire is 50,897, a reduc�on of 3% from SIMD 2016 data. • The unemployment rate is currently 3.3% which is the lowest in period between 2005 and 2024. However, the 2022 census reports that the amount of people who are long term sick or disabled has grown by 6%.
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5 | P a g e • The 2022 census also provides the following comparisons to the 2011 census: o Individuals who reported themselves as “not in good health” has grown by 24.6% (+6039) o Individuals who reported themselves as ‘in fairly good health’ as opposed to ‘good health’ has grown by 15% (+7036) o Individuals who reported themselves as having ‘long term health condi�ons’ has grown by 30.6% (+43,943) o Individuals self-repor�ng mental health issues has grown by 158.6% (+24,903) o Individuals self-repor�ng as providing informal / unpaid care has grown by 31.6% (+10,877) • There remains significant ongoing pressure in all health and social care systems across Scotland. High demand and pa�ent acuity, coupled with increased flu numbers in recent months has placed even greater demand on the system. In Lanarkshire, there is a genuine whole-system focus to the resilience response and there has been a tremendous effort across the whole system, including third and independent sectors, communi�es, carers, and public partners in the con�nued response to increased pressures and demand. • Whilst many older people are expected to enjoy beter health than their predecessors did at an equivalent age, they will s�ll have significant health needs, living with poten�ally mul�ple and complex condi�ons. The impact of this will be a steadily increasing demand on health and social care services, including care at home, care homes, increases in demand for community-based healthcare, equipment and adapta�ons and an increased demand for GP services and medica�on.
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6 | P a g e 5. FINANCIAL CONTEXT The Partnership delivers and commissions a range of health and social care services to the local popula�on. This is funded through budgets delegated from both NHSL and NLC. The baseline for the MTFP and LTFO is the 2024/25 budgets; the total resources available during this year has been £810m. This includes funding from NHSL of £483.74m and £209.52m from NLC. Also included is a ‘Large Hospital Service’ (No�onal Set Aside) budget totalling £74.54m. This budget is in respect of those func�ons delegated by the Health Board which are carried out in a hospital within the Health Board area. The Set Aside resource for delegated services provided in acute hospitals is determined by appor�oning the hospital expenditure to individual pa�ent episodes, separa�ng out episodes for services delegated to the IJB from those that are not, and assigning these to the relevant IJB based on postcode. The IJB is responsible for the strategic planning of these services but not their opera�onal delivery. Finally, £42.05m represents a number of delegated services where South Lanarkshire IJB acts as the lead host on behalf of North Lanarkshire Partnership. The value consumed by North Lanarkshire equates to 52% of South Lanarkshire IJB hosted budget. North Lanarkshire IJB 2024/25 Resources NHSL NLC Set Aside South Hosed
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7 | P a g e 6. FINANCIAL PLANNING ASSUMPTIONS Financial planning requires assump�ons to be made about future demand and cost pressures which could be faced by the Partnership and our partners. This MTFP focuses on the likely cost pressures that the Partnership can reasonably expect over the next three years which has then been extended to look at the following seven years for the LTFO up to 2034/35. These assump�ons have been informed by the local and na�onal context within which the Partnership operates. It is widely expected that the public sector in Scotland will con�nue to face a very challenging financial outlook for the foreseeable future. The cabinet Secretary for Finance and Local Government announced the Sco�sh Government’s budget for 2025-26 in Parliament on 4th December 2024. The Director of Health & Social Finance said this budget provides: “a platform for the health and social care system to focus on reform and innovation. We must work as a whole system and across organisational boundaries to improve outcomes and deliver the best possible care within our available resources” The Dra� Local Government Financial Setlement confirmed the posi�on at individual Council level, for North Lanarkshire this presented a more favourable posi�on than previously assumed in their MTFP in June 2024. However, the Accounts Commission, in its Local Government in Scotland Financial Bulle�n 2023/24 published in January 2025, highlighted that ‘despite the Scottish Government’s budget proposals in December 2024 indicating a further real terms uplift in funding for 2025/26 the financial outlook for Scotland’s councils remains challenging’. The same can be said for NHSL, the headline increase to baseline funding is 3% however there remains significant pressures across the system which require to be addressed. Therefore, whilst the provision of recurring investment and non-recurring reserves will help, there remains significant uncertainty over increasing cost pressures and what the scale of the likely reduc�on in available funding will be over the term of this plan. It therefore remains important that the Partnership ensures sufficient flexibility to manage, in a sustainable manner, the posi�on which emerges over the coming years, with the likely scenario that a significant level of further recurring savings will be required. Consequently, the Partnership’s financial planning arrangements remains subject to ac�ve review using a scenario-based approach in recogni�on of the significant uncertainty over rising costs and the scale of variability in the poten�al funding available to the Partnership in future years. The key variables which have been considered in preparing the MTFP & LTFO are detailed in Appendix 1. This is not an exhaus�ve list of variables, however, the assump�ons iden�fied are considered to be the core issues which require to be included in this plan. Adjus�ng for these key variables will give the Partnership a robust approach to ensuring the board remains financially and opera�onally sustainable, and in doing so ensures that it meets its statutory obliga�ons, its policy aspira�ons, and the needs of local communi�es.
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8 | P a g e 7. MEDIUM TERM FINANCIAL PLAN 2025/26 -2027/28 As outlined in sec�on 5, the 2024/25 budget is the baseline for the MTFP updated with the financial planning assump�ons outlined in Appendix 1. A range of risk-based scenarios have been considered, resul�ng in envisaged, pessimis�c and op�mis�c posi�ons with regards to total pressures as shown in Table 1. Table 1: Es�mated Cost Pressures Financial Year Total Pressures Envisaged (£000) Total Pressures Pessimistic (£000) Total Pressures Optimistic (£000) 2025/26 60.803 65.712 57.219 2026/27 36.905 44.096 33.016 2027/28 37.737 46.607 33.063 Total 135.445 156.415 123.297 Based on these projec�ons the Chief Financial Officer (CFO) recommends that the Partnership progress with a financial planning strategy based on the envisaged scenario, this is shown in Table 2 with the es�mated funding envelope available for 2025/26 to 2027/25 and results in a budget gap of £14.729m for the forthcoming financial year. Table 2: Es�mated Cost Pressures and Funding (Envisaged Scenario) 2025/26 (£000) 2026/27 (£000) 2027/28 (£000) Pressures: Contractual Pressures 10.922 11.328 12.081 Demand Pressures 11.922 7.182 7.434 Pay Pressures 14.611 8.577 8.834 Local Cost Pressures 10.998 1.283 0.000 Prescribing 12.350 8.535 9.388 Total Pressures 60.803 36.905 37.737 Recurring Funding: Social Care Spend Reductions 4.804 0.000 0.000 NLC & NHSL Contributions 20.375 18.583 18.933 Non Recurring Funding Reduction in Employers Superannuation 6.961 0.000 0.000 Budget Management - Pays & Non Pays 4.982 0.000 0.000 Prescribing Reserve 4.361 0.000 0.000 Additional sustainability funding 4.591 0.000 0.000 Total Funding 46.074 18.583 18.933 FUNDING GAP 14.729 18.322 18.804
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9 | P a g e Opportuni�es to redesign services, remove duplica�on and achieve efficiency savings have been implemented over the last number of years and in order to achieve a balanced budget and meet the budget gap in 2025/26 this service transforma�on will need to con�nue over the coming 12 months. There is no doubt it is becoming increasingly challenging to deliver further savings on a recurring basis however, the focus should be on the budget available to the Partnership of over £800m and how services can best be delivered and priori�es achieved within that financial envelope rather than focussing on the savings that have to be implemented. Table 3 highlights the financial Strategy for 2025/26. Table 3: 2025/26 Financial Strategy North Lanarkshire IJB Financial Plan 2025/26 £000 Total Pressures - Envisaged Outlook 60.803 Financial Strategy to address Funding Pressures: £000 Social Care Budget Management -4.804 NLC & NHSL Funding Contributions -20.375 Reduction in Employers Superannuation Contribution -6.961 Budget Management - Pays & Non Pays -4.982 Prescribing Reserve -4.361 Additional sustainability funding -4.591 Service Redesign and Transformation -14.729 Total Financial Strategy -60.803 More detail is provided on the proposed service transforma�on and redesign opportuni�es in sec�on 8 ‘The Response’.
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10 | P a g e 8. THE RESPONSE The Partnership is opera�ng in an increasingly challenging environment with funding not keeping pace with increasing costs and demand for services. This is reflected in the MTFP which has iden�fied a £51.854m funding gap over the next 3 years. In order to remain sustainable in future years, the Partnership will need to make significant changes to its opera�ng model, by con�nuing to explore new ways to deliver services that beter meet the needs of the people in the community. The focus of a whole system approach is to reduce inequali�es, build community capacity and resilience and thereby decrease demand for services in other parts of the system. The response to this challenge is to propose service review and redesign which will result in efficiencies that meet the £14.729m funding gap in 2025/26. SERVICE REDESIGN & TRANSFORMATION £14.729m Health £4.343m Budget Management Non-Pays £0.247m A review of budget lines including (but not limited to) travel, training and printing costs. Prescribing £4.096m A review of prescribing will be undertaken with a 5% savings target being applied. Social Care £10.386m Home Support £2.838m Home Support re-design which will include the introduction of the dynamic scheduling tool to support the process of streamlining shift patterns alongside service provision. The re-design will further develop the enabling approach as the operating model. Independent Care Homes £4.710m Focus the strategic direction to reduce both the length of stay in care homes and the number of people being placed. Care at Home £2.838m A review of the guided self-assessment process to align with a more strategic assessment and planning practice.
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11 | P a g e 9. LONG TERM FINANCIAL OUTLOOK 2025/26 – 2034/35 The table below gives an es�mated impact of cost and demand pressures arising from employee costs, infla�onary cost pressures, demographic growth and demand, local cost pressures and legisla�ve and policy developments for the next ten years. Unlike the MTFP, it does not include a financial strategy to address these cost and demand pressures or any mi�ga�on to reduce the gross cost through budget upli�s; recurring savings plans or funding from other sources. Table 4 details the es�mated long term pressures. Table 4: Es�mated Long Term Cost Pressures As previously stated, due to the con�nuing changing financial environment the Partnership is facing, the reliance which can be placed on the financial es�mates decreases the further into the future the projec�ons relate to. The CFO will con�nue to update and refresh the assump�ons as new financial informa�on, including future funding and savings plans becomes available. Pressure on Base Budget (Envisaged Outlook) 2025/26 (£000) 2026/27 (£000) 2027/28 (£000) 2028/29 (£000) 2029/30 (£000) 2030/31 (£000) 2031/32 (£000) 2032/33 (£000) 2033/34 (£000) 2034/35 (£000) Contractual Pressures 10.922 11.328 12.081 12.900 13.786 14.746 15.785 16.911 18.133 19.458 Demand Pressures 11.922 7.182 7.434 7.694 7.963 8.242 8.530 8.829 9.138 9.458 Pay Pressures 14.611 8.577 8.834 9.099 9.372 9.654 9.943 10.242 10.549 10.865 Local Cost Pressures 10.998 1.283 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Prescribing 12.350 8.535 9.388 10.327 11.360 12.495 13.745 15.120 16.631 18.295 Total Pressures 60.803 36.905 37.737 40.020 42.481 45.137 48.004 51.101 54.451 58.075 Pressures:
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12 | P a g e 10. RESERVES STRATEGY The Partnership has the same legal status as a local authority and is therefore able to hold reserves under sec�on 106 of the Local Government (Scotland) Act 1973. A reserves strategy was developed to provide security against unexpected cost pressures and to aid financial stability. The use of reserves must be prudent and controlled and are generally held for the following purposes: • To create a working balance to help cushion the impact of uneven income flows • To create a con�ngency to cushion the impact of unexpected events or emergencies • To create a means of building up funds, to meet known or predicted liabili�es • To fund non-recurring costs and to help with payment profiles straddling more than one year • To enable the implementa�on of longer-term savings proposals. The reserves strategy for 2025/26 is being presented to the IJB in March 2025 and summarises the reserves posi�on as at 31 January 2025 as detailed in Table 5. Table 5: Reserves as at 31 January 2025 SUMMARY Balance at 31 January 2025 £m Ring-Fenced Reserves 24.529 Earmarked Reserves 19.006 Risk-Based Reserves 17.045 Con�ngency Reserves 13.140 TOTAL 73.720 It is recognised that service redesign and savings plans take �me to implement therefore, to mi�gate this risk to the Partnership, con�ngency reserves may be needed to fund the gap un�l the full savings can be realised. Updates, tracking savings achieved against target, will be presented to the board throughout the year as iden�fied savings op�ons are implemented.
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13 | P a g e 11. RISKS & UNCERTAINTIES Given the current poli�cal climate and the associated economic uncertainty, it is important to note that projec�ons made within this MTFP and LTFO may poten�ally be subject to significant varia�on. The assump�ons applied to income and expenditure models are based on the best informa�on available at the �me of wri�ng. There are also a number of risks inherent in this MTFP which will require to be monitored over the coming months. Financial Risks & Uncertain�es • Future funding levels from partner organisa�ons and Sco�sh Government. • Con�nued increasing costs and raising infla�on including future pay awards. • Increasing costs of equipment and adapta�ons • The outcome of the nego�a�ons for the na�onal care home rate • The impact of the increase to na�onal insurance contribu�ons for both direct staff and commissioned services and the poten�al lack of addi�onal funding to support these • Impact of rising costs of commissioned services with providers outwith the na�onal frameworks asking for significantly above infla�on increases. • The level of non-recurring solu�ons included to meet the 2025/26 cost pressures. Opera�onal Risks & Uncertain�es • Impact of proposed savings op�ons which could include an increase to delayed discharge figures and bed delays. • The ability to recruit and retain quality staff to con�nue to deliver services and manage increasing demand. • Unexpected shortage of supplies and materials. • Increasing level of complex care packages materialising that are currently unknown. • Vola�lity of the external care market and the support required in order to provide stability. • Increased numbers of providers seeking to set up separate companies and exit the Na�onal Care Home Contract which would lead to individual placement and price nego�a�ons. • Opera�onal impact of the increased contract prices from providers leading to issues with placement of clients. • Changing poli�cal factors which influence the UK and Sco�sh Government priori�es and policy ini�a�ves. The Partnership maintains a strategic risk register and both partners maintain opera�onal risk registers. Strategic and opera�onal risks are regularly monitored and updated by the board and senior management to mi�gate against key risks and uncertain�es.
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14 | P a g e APPENDIX 1 – Financial Planning Assump�ons An�cipated Sco�sh Government Funding Levels The Sco�sh Government finance setlement for both partners will significantly influence the funding contribu�on each partner can make to the IJB. The Sco�sh Government has historically provided one year funding setlements which has impacted on the ability to plan over the longer term with certainty. Single year setlements have required assump�ons in the MTFP & LTFO from year 2 to 10. For financial year 2025/26 another one-year setlement was provided in December 2024, however there is s�ll a commitment from Sco�sh Government to move to mul�-year setlements in the future. Assump�ons on Infla�on Consumer price index (CPI) and retail price index (RPI) infla�onary increases are assumed for a range of contractual commitments and purchasing of supplies and materials. The Office for Budget Responsibility (OBR) published its latest Economic and Fiscal Outlook alongside the UK Government’s budget, which indicated that CPI/ RPI infla�on is an�cipated to remain higher for longer than previously expected. The OBR published figures have been used throughout the plan. Na�onal Care Home Contract A significant cost pressure relates to the Na�onal Care Home Rate Contract (NCHR) which is nego�ated annually. The level for this year is currently unknown, work remains ongoing within the sector to agree this rate. The primary factor influencing this has been the decision in October of the Chancellor to change the Employers Na�onal Insurance Contribu�on (eNICs) which will have an impact on the agreed NCHR. It is prudent to assume, based on past year trends and the on-going cost of living crisis that this is likely to increase significantly over the life of this plan therefore a 10% increase has been included. Pay Increases Employee costs represent a large por�on of IJB net budgets with any increase in pay awards impac�ng directly on current and future cost pressures. The Sco�sh Government has set the Public Sector Pay Policy (PSPP) at a maximum of 9% over the next 3 years therefore an es�mated 3% has been assumed for staff employed in NLC in both the MTFP and LTFO. This increase has also been assumed for NHSL staff over the life�me of the plan, in line with previous years, full funding is expected for pay upli�s to NHSL staff. In the event of an upli� greater than that es�mate and no addi�onal government support, the forecasted gap could poten�ally change materially. Considera�on is also given to the challenges of recrui�ng and whether pay setlements are keeping pace with industry standards. As future pay agreements are confirmed, these assump�ons will be updated in the model.
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15 | P a g e Increase to Na�onal Insurance Contribu�ons As part of the UK Government’s Budget on 30 October 2024 it was announced that there would be changes to employer Na�onal Insurance Contribu�ons (eNICs). The increase to the pay bill is es�mated at 2.2% for direct staff and early indica�ons on the increases likely to be seen on commissioned services could range from 2.2-2.5%. While it is understood that Public Bodies will receive funding to support this addi�onal cost pressure, such funding will be insufficient to meet the overall cost. For Social Care Services it is currently es�mated that funding to Local Authori�es will be c.60% for direct staff therefore the unfunded element of 40% is included in the 2025/26 plan. However, uncertainty over funding for commissioned services means that this cost has not been included and will be funded from reserves un�l more is known. NHSL have been advised by Sco�sh Government that funding may be available to them therefore the assump�on in the plan is that this will be fully funded. The full recurring impact will be included in future MTFP updates. Assump�ons on Increased Demand for Services Including Prescribing Health and social care services are experiencing increasing demand due to demographic growth, an ageing popula�on, complexity of care needs, depriva�on, and health issues. This increase has been factored into the financial plan over the full 10 year period to ensure that costs are adjusted in line with forecast demand, however, close monitoring is required to ensure that demographic growth is in line with assump�ons made. If investment in this area is insufficient over a number of years, this could destabilise services whilst an over-provision of growth would mean the resources available would not be effec�vely allocated in line with need and priority. The amount and cost of drugs prescribed usually increases year on year. The price of drugs is set na�onally and influenced by factors such as supply and demand, currency movements and patents. Prescribing ac�vity is a clinical decision made by a qualified health professional. At the �me of wri�ng, the current prescribing budget is projected to overspend by year end 2024/25. Based on this trend, a volume and price upli� has been included in future projec�ons to mi�gate against deteriora�ng health within the popula�on and the con�nuing uncertain�es experienced in supply and demand due to fluctua�ng market condi�ons. Investment in Local Priori�es Including IT Improves and Upgrades A range of local priori�es are included in the LTFO including digital and IT technology improvements, inves�ng in home support and tests of change pilots. Depending on when the cost commitment is expected to be incurred and expected dura�on, the cost pressures will be recognised in the year it is forecast to materialise. Legisla�ve and Na�onal Policy Decisions There are a range of legisla�ve and policy developments which have and are con�nuing to be implemented across the partnership. To date, addi�onal funding has been made available by the Sco�sh Government to take these policies forward and it is assumed that the expenditure will be contained within the funding available. Recognising this, no varia�on in the cost projec�on is therefore considered, however, if future funding from Sco�sh Government is withheld or withdrawn, the financial forecast could change.