Demographic and Population Change - Impact on Social Care
Perth and Kinross Council · 29 October 2025
Back to Perth and Kinross Council — 29 October 2025 and its agenda
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Our vision is a Perth and Kinross where everyone can live life well, free from poverty and inequality ___________________________________________________________________ Committee: Perth and Kinross Council Date of Meeting: 29 October 2025 Report Title: Demographic and Population Change: Impact on Social Care Report Number: 25/278 Report Authors: Jacquie Pepper, Director Integrated Health & Social Care/Chief Officer and Scott Walker, Chief Finance Officer Organisational Lead: Jacquie Pepper, Director Integrated Health & Social Care/Chief Officer ___________________________________________________________________ 1. Purpose 1.1 Significant demographic and population changes in Perth and Kinross are resulting in an associated increase in people with social care needs, particularly in relation to older people and people with a learning or physical disability. The increase in the level of complexity and demand for social care has been unprecedented within this financial year. There is now a gap between what is required to meet the needs of people eligible for social care and the budget available to deliver this. 1.2 This report provides the Council with a comprehensive overview of how increasing demand and complexity, driven by a growing and ageing population as well as rising numbers of people with complex needs, have resulted in budget insufficiency for the Perth and Kinross Integration Joint Board (IJB) within 2025/26. The report sets out the national context and key drivers for these unparalleled pressures, including early data on current and future demographic trends that will continue to impact demand for health and social care services. 1.3 The IJB has considered and agreed a financial recovery plan and work to scope out the impact of potential changes to delivery. This report seeks financial support in-year from the Council to address the gap between available funding and actual need. The Council, as a strategic partner in the Integration Scheme, has a legal duty to provide social care to eligible residents and must now consider how best to respond to these evolving challenges.
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2. Recommendations It is recommended that the Council: 2.1 Notes the projected financial gap for integrated health and social care services with, £4.430 million relating to social care provision; 2.2 Notes the IJB’s approved financial recovery plan Part A which is assessed as being deliverable by end March 2026; 2.3 Notes the IJB’s approval to scope out actions set out in Part B of the financial recovery plan which will require significant work to fully assess the impact should these actions be implemented, and the requirement for consultation; 2.4 Approves an additional allocation of up to £4.180 million from council’s Uncommitted General Fund Balance in 2025/26 to meet existing costs associated with high service demand and to complete the work outlined in Parts A and B of the Financial Recovery Plan; 2.5 Agrees to receive an update on progress at the meeting of Council proposed on 14 January 2026 which follows the next meeting of the IJB on 17 December 2025; and 2.6 Agrees to work collaboratively with the IJB, NHS Tayside and other strategic partners on the revised population projections, published by National Records of Scotland (NRS), and the implications for Perth & Kinross. 3. Structure of Report This report is structured as follows: • Background & Context • Current Financial Projections • Financial Recovery • Implications for Perth & Kinross Council • Conclusion • Impact & Value Assessment • Appendices 4. Background & Context Health and Social Care Integration in Scotland 4.1 Health and Social Care Integration in Scotland was established under the Public Bodies (Joint Working) (Scotland) Act 2014, which came into effect in 2016. The legislation requires local authorities and NHS Boards to work together to plan and deliver integrated health and social care services through a partnership arrangement known as an Integration Joint Board (IJB).
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In Perth and Kinross, this means the Council and NHS Tayside jointly agree the scope of an “Integration Scheme” each delegating the functions (as prescribed by the legislation) and associated budgets to the IJB. The IJB directs the design and delivery of integrated services through its strategic plan and allocates funding back to the partners, who are then responsible for the operational delivery of the services through the Health and Social Care Partnership (HSCP). The detailed arrangements for how this partnership operates, including governance, decision-making, and financial arrangements, are set out in legislation and statutory guidance and further defined in the Perth & Kinross Integration Scheme. Council Funding 4.2 The Council’s Revenue Budget for 2025/26 (Report 25/36 refers)approved a contribution to the IJB which included additional funding of £6.7 million to protect and support the delivery of social care services, based on mid-level demand assumptions. In setting the Revenue Budget however, there was an acknowledged risk that the higher-level assumptions could result in additional costs of £5 million over and above the assumed mid-range figure. That risk has now materialised. The IJB’s financial reserves are already depleted through efforts to manage and meet increasing complexity and demand across adult social care services mainly in the post-pandemic period. There is now a requirement for additional financial support from the Council to ensure the continued delivery of adult social work and social care services to match the needs of the population. National and Local Pressures 4.3 The primary challenge in social care funding in Perth & Kinross arises from increasing demand for services, both in terms of the number of people requiring care and support for daily living (reflecting our local demography) and the increasing complexity of need in terms of the care and support that individuals require for daily living. This includes personal care at home, complex care packages for people with learning disabilities and long-term mental health needs and residential care placements, all of which have exceeded budget assumptions. This is not solely due to overspending, but the scale of the demand that has been realised is in line with high-level assumptions previously identified. 4.4 Perth & Kinross is not alone in experiencing significant financial pressures in integrated health and social care. Reports from the Accounts Commission and Audit Scotland highlight that many areas across Scotland are facing increasingly challenging circumstances. Many IJBs have been relying on reserves in recent years to maintain essential services. As a result, a significant number of IJBs have now entirely depleted their general reserves. In April 2025, the Chair of Health & Social Care Scotland formally notified the Cabinet Secretary of an estimated national funding gap of £560 million and emphasised that, without additional funding, it would not be possible to sustain existing levels of care.
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The usual share of national allocations for health & social care in Perth & Kinross is around 3% and if the IJB was in line with the national position it could be facing a funding gap of approximately £15 million. However, due to the impact of local decision making, efficiency measures, and financial management, the current projection for 2025/26 is equivalent to 1% of the national shortfall. Demographic Trends and Demand 4.5 Demographic trends are resulting in an increasing scale and complexity of the needs of our older population and people with learning disability. These demand pressures show no sign of abating. The most recent population projections from the National Records of Scotland (NRS) published on 30 September 2025 and based on the 2022 census, indicate a sharp rise in the number of people aged 67–85 and 86+ in Perth and Kinross. The scale and complexity of need is already higher than previously anticipated and is expected to remain elevated through to 2045. Notably Perth and Kinross is experiencing a faster rate of growth in its older population compared to the Scottish average. The number of residents over age 75 has already increased by 10% over the past three years, rising to a 12% increase in 2026. 4.6 The revised population projections are a significant cause for concern not only for the Council but also its partners, as older people typically require greater healthcare attention and long-term social care that becomes more intensive as a person ages. In addition, the number of people with a learning disability requiring complex and costly packages of care and support throughout their adult life is rising. There is also an imperative to secure the return of people who have experienced long term hospital stays to the community in line with the Coming Home ambitions. 4.7 Early analysis of the updated population data over the next 20 years is shown in Tables 1 and 2 below. Perth & Kinross is the only local authority area in Tayside in which the population is growing at such a fast rate and at a rate higher than Scotland as a whole. This will be an important factor for local strategic and community planning and for partners and services that operate across Tayside.
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Table 1. Population projections for Perth & Kinross, Tayside Local Authorities and Scotland 2022-2045 Source: National Records of Scotland (Sept 2025) Table 2. Percentage population growth projection for Perth & Kinross by age group 2022-2045. Changes in projections from 2018 to 2022. Source: National Records of Scotland (Sept 2025) 5. Current Financial Position 5.1 The recurring budget for Perth and Kinross IJB is £277.5 million, with £175.0 million allocated for health and £102.5 million for adult social work and social care. The £5.558 million projected gap equals 2% of the total delegated budget. For social care, a projected gap of £4.430 million represents 4.3% of its £102.5 million budget.
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5.2 The Health and Social Care Partnership delivered £12 million in savings between 2022 and 2025 and is projected to achieve an additional £2.5 million by the end of March 2026. This has been achieved through a financial strategy focusing on efficiency and redesign, including £1.1 million savings since 2023/24 within central support and management functions. These savings were achieved during a period of population growth and increasing need and Audit Scotland noted in September 2025 that the IJB has made significant progress towards recurring savings targets. 5.3 Significant savings and efficiencies have already been delivered within social care to meet additional population growth and increased demand and the remaining options to further reduce expenditure are limited and extremely challenging. Based on the most recent verified Local Financial Return (LFR) for 2023/24, for the level of adult social care expenditure per 1,000 population, Perth & Kinross ranks as the 29th lowest of the 32 local authorities in Scotland. Further demonstrating that, to date, the social care budget has been managed efficiently and effectively; leaving the scope for achieving further material savings without impacting on service delivery or worsening outcomes for people who use services, very restricted. 6. 2025/26 Financial Projections 6.1 The IJB is currently forecasting a net gap of £5.558 million, with £4.430 million of this attributed to social care pressures. This financial position reflects a combination of demand pressures and underlying structural budget challenges. 6.2 The most significant element of the financial pressure is the Care at Home service, which accounts for £2.5 million of the projected gap. Current levels of demand and assessed need has outpaced the assumptions used to set the 2025/26 budget, which were based on a mid-range scenario. The volume of care hours commissioned has exceeded expectations, driven by: • Service demand has exceeded demographic projections which were based on 2018 national data. • An unanticipated surge in high levels of complex needs being assessed to support older adults with complex needs. • Increased acuity and frailty among service users, requiring more intensive support. 6.3 The factors underlying this are multifaceted, with primary drivers including a growing and aging population. People are living longer, and this is accompanied by more complex needs, as well as a significant surge in pandemic-related demand (see Appendix 1: Chart 3 page 4). These trends, combined with the impact of interruptions in addressing care requirements during periods of elevated unmet need, contribute to the current challenges.
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6.4 The HSCP restructured in 2024 with the aim of enhancing and building further on integrated working, localities and a whole-system focus. The HSCP has also driven forward service redesign and transformation to deliver the IJB’s Strategic Plan 2024-2027. Transformation is focused on shifting the balance of care towards prevention; addressing needs arising from demographic change namely the ageing population and prevalence of dementia; increasing equality of access and addressing unmet need in the community. The most recent performance report (Appendix 1) shows how all of this is leading to improved outcomes over time. Demand for health and social care services is high and performance in delivering against that demand is good with people spending less time in hospital and access to services is quicker from the point of assessed need. Areas for improvement are informing the programme of service development and transformation. 6.5 Following recovery from the Covid19 Pandemic in 2022/23, strategic planning by the IJB has delivered positive and improving health and wellbeing outcomes for the population of Perth & Kinross (see Appendix 1). External auditors concluded in September 2025 that the IJB continues to perform well against its performance comparators and the Scottish average. This performance directly supports the Council’s vision, corporate priorities and is contributing positively to prevention, early intervention and stemming failure demand across multiple points in the health and social care system. Appendix 1 is the most recent IJB performance report and shows very positive trends over time that without support could be interrupted or reversed causing cumulative impact and significantly higher levels of need, crisis care and cost. 6.6 The HSCP has managed higher levels of demand through a 3-year workforce plan which seeks to deploy expertise in key service areas. This is supporting positive recruitment and retention resulting in a low vacancy rate in social care. The health and social care workforce is to be commended for their central role in addressing higher levels of need and demand and in achieving the current levels of performance through service redesign and without significant increases in staffing. Research shows that high demand in health and social care creates a significant negative impact on staffing, leading to increased vacancies, staff burnout, and decreased quality of care. Looking after the health and social care workforce in the current climate is a key priority as quality health and care delivery are directly linked to appropriate staffing levels and a workforce whose wellbeing is actively promoted. The health and social care workforce remain vulnerable to the negative impacts, and this will need to be a significant factor in the scoping and assessment for any changes in the way in which services are delivered and configured. 6.7 Other areas contributing to the financial challenge include: • Learning Disabilities and Mental Health Placements: Costs have risen by £1.0 million due to higher placement needs and increased demand.
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• Community Packages of Care: An additional £0.6 million is required to address the growing complexity of care packages for people whose needs cannot be met easily within the current range of services, further highlighting the shortfall between available funding and the cost of meeting population needs. Health System Pressures 6.8 While the majority of the financial challenge is in social care, health-related pressures have also emerged which reflect wider system challenges. These include: • Staffing costs linked to recruitment challenges and resilience in the workforce. • Bed capacity constraints and the requirement to carry unfunded inpatient beds into 2025/26. 7. Financial Recovery 7.1 To address the in-year financial pressures, the Chief Officer and the Chief Finance Officer of the Integration Joint Board presented a Financial Recovery Plan to the Board on 8 October 2025 comprising immediate in-year actions to reduce costs and a range of medium to longer term measures to be scoped out. 7.2 The financial recovery plan needs to strike a balance of reducing spend without compromising the legal requirement to deliver safe and effective care and support for vulnerable adults. It is for this reason that the recovery plan is in two parts: • Part A is focused on areas where the Health and Social Care Partnership, with professional advice, considers it can further reduce spending. This includes measures to further strengthen existing vacancy management, repurposing earmarked funds, reducing supplementary staffing costs, and introducing elevated levels of scrutiny and approval for all spending. • Part B sets out more strategic options which include reviewing commissioning models and eligibility criteria. Most of these long-term measures will require comprehensive impact assessments, and the completion of the necessary consultations required to deliver major service change. 7.3 It is important to be clear that the only remaining way to further materially reduce expenditure this year is through the actions set out in Part B of the Financial Recovery Plan. All other efficiency measures and service improvements of any material financial value have either already been delivered, identified, or are in the process of being implemented.
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7.4 The actions in Part B are not being proposed by choice but by necessity, as there are no alternative options capable of closing the current financial gap. If the position was to be considered on financial grounds alone, expenditure could be reduced rapidly and significantly. However, doing so without fully understanding the impact on service users, carers, staff, the social care market and providers; third sector, and wider system performance would carry substantial risk. For these reasons, in-year funding support is being sought to allow the required impact assessments and engagement work to be completed before any such measures are implemented. Without extra funding, the IJB must revise its strategic plan which will inevitably lead to service reductions which will have a negative impact on the experiences and outcomes for vulnerable people and on whole system performance. 7.5 The Scottish Government’s Operational Improvement Plan has provided £6.143 million to NHS Tayside of which £1.543 million is targeted at services provided by the HSCP and benefitting the population of Perth & Kinross. This funding is aimed at reducing immediate pressures across the NHS, shifting the balance of care from acute to the community and using digital and technological innovation to improve access to care. This investment was intended to be recurring, but this is conditional on improving and maintaining whole-system performance including the current levels of flow through hospital into the community (Appendix 1: Charts 6-13 on pages 6-9). 7.6 The IJB’s request for additional in-year funding from the Council will provide sufficient time to fully assess the potential impact across the whole-system of health and care and to enable careful implementation of complex decisions and financial recovery measures set out in Part B (see sections 7.10 and 7.11). If approved, this will give officers time to comprehensively assess the impact of these actions. Recovery Plan Measures 7.7 The IJB considered a Financial Recovery Plan aimed at addressing the financial challenges of both current and future financial years. Specifically, a two-part financial recovery plan has been developed. Part A – Immediate In-Year Actions 7.8 These measures are designed to deliver £950,000 savings within the current financial year, of which £250,000 are expected to deliver in social care. Month 5 Projected Position Health £m Social Care £m Total £m Projected 2025/26 Gap after Reserves 1.128 4.430 5.558 Financial Recovery Part A (0.700) (0.250) (0.950) Updated Projected 2025/26 Gap 0.428 4.180 4.608
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7.9 Part A actions are largely non-recurring and will not address structural budget gaps and are already in progress or ready for implementation: • Vacancy Management o Non-frontline vacancies are being held or delayed. o Workforce planning is being reviewed to align staffing levels with service demand and budget constraints. • Repurposing Earmarked Funds o Uncommitted reserves and earmarked funds redirected to reduce the financial gap. o This action is subject to approval from the Scottish Government and is likely to require formal notification and consent. • Increased Scrutiny of Complex Care Requests o New authorisation process for high-cost care packages. o Multi-disciplinary panel review to ensure necessity, value for money, and alignment with eligibility criteria. Part B – Strategic Options for Medium-Term Sustainability 7.10 Part B proposals are more complex and require further development, consultation, and comprehensive equalities and system impact assessment. They aim to reshape service delivery and reduce recurring costs. Whilst decisions pertaining to care must be made based on need rather than cost this may involve tightening criteria for access to certain services, introducing decision-making and authorisation levels and maximum funding thresholds in certain areas. Local Authorities in Scotland are responsible for eligibility criteria to determine whether an individual will be able to access social care. This must be compatible with the National Eligibility Framework and any changes to the current criteria will require Council approval prior to implementation. 7.11 Proposed actions include: • Review of Commissioning Models for Care at Home • Exploring alternative models of service delivery • Reviewing the provision of social care services in-year alongside a comprehensive review of eligibility criteria. This will include a prioritisation framework to manage demand and limiting services to those with the greatest need. • Accelerate recommissioning of Service Level Agreements and contracts alongside a review of the IJB’s Strategic Plan. • Vacancy management to be further strengthened to include a freeze on non-frontline posts. 7.12 The IJB will receive comprehensive impact assessments on all the above actions on 17 December 2025. This information will be shared with elected members at the Council meeting on 14 January 2026 and will be available for consideration as part of the 2026/27 Budget setting process.
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7.13 In addition, the HSCP is reprofiling its Transformation Programmes. Existing transformation initiatives are being reviewed to accelerate delivery and maximise savings. This includes digital enablement, workforce redesign, and integrated locality planning along with a requirement to align with the Scottish Government’s Service Renewal Framework for Health & Social Care published in June 2025. 8. Implications for Perth and Kinross Council 8.1 According to the Integration Scheme, if a recovery plan fails, IJB reserves are used first. The IJB has exhausted all remaining general reserves. Therefore, after Part A recovery actions, the remaining forecast gap based on expenditure to month 5, is £4.180m. Should the Council approve the additional payment up to £4.180m in year, and costs rise further, the IJB must take further action to contain this. Should these efforts fail, any excess over £4.180m in social care would have to be funded by the Council as part of the annual accounts, in line with the Integration Scheme. 8.2 It is proposed that the Council supports an allocation of up to £4.180m and this will be met from Council general reserves. 8.3 Should the IJB revise its Strategic Plan and agree to take forward any of the proposals in Part B, the Council will be required to support and approve strategic changes, such as raising eligibility criteria for social care and managing waiting lists for new care packages. 9. Conclusion 9.1 The Perth and Kinross Integration Joint Board (IJB) faces a significant financial challenge for 2025/26, with a projected net gap of £5.558 million, largely driven by increased demand and complexity in social care services. 9.2 Despite substantial savings achieved in recent years, the scale of current pressures means that further reductions will be extremely difficult without impacting service delivery. This reflects the national situation where IJBs are experiencing depleted reserves, significant financial pressures, increasing demand, and complexity of need. 9.3 The IJB’s financial recovery plan outlines immediate actions and longer-term strategic options, but without additional funding, service reductions such as raised eligibility criteria and longer waits to receive a social care service will be unavoidable. The Council’s support and close collaboration will be essential to manage these pressures, assess the impact of recovery measures, and ensure the continued provision of safe and effective care for vulnerable residents. Additional funding in-year to meet the funding gap for social care services is requested to enable the HSCP to continue providing social care to eligible people and allow the IJB time to scope out Part B of the Financial Recovery plan and longer-term options for addressing the levels of rising demand.
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10. Impact and Value Assessment 10.1 A comprehensive Equalities & Fairness Impact Assessment will be required by the IJB for its meeting on 17 December 2025 and ahead of any decisions. The impact assessments will need to identify the potential impact on outcomes across all equally protected groups. In addition, the assessment will be informed by legal and professional advice and identify the impact on unpaid carers, workforce, as well as other parts of the health and social care system including acute hospital services, and other Council services. Crucially, these must also evaluate the impact on the social care market which comprises commissioned providers in third and independent sectors. 10.2 The impact assessment should thoroughly review how proposed actions may affect the strong performance and improved outcomes achieved in the last 4-5 years, especially since Covid. 11. Appendices Appendix 1 – IJB Key Strategic Performance Report – Quarter 1 2025/26 (27 October 2025)