Finance and Policy Committee Annual Report - 2025/26
Argyll and Bute Council · 18 August 2026
Back to Argyll and Bute HSCP Finance and Policy Committee — 18 August 2026 and its agenda
Text extracted from the council's PDF. Layout and reading order may differ from the original.
Page 1
1 Finance & Policy Committee Date of Meeting: 18 August 2026 Title of Report: Finance and Policy Committee Annual Report - 2025/26 Presented by: Chair, Finance and Policy Committee The Finance and Policy Committee is asked to: • Consider and approve the draft Committee Annual Report for 2025/26. • Request that the final report is placed on the agenda of the next meeting of the IJB, subject to any amendments. 1. EXECUTIVE SUMMARY 1.1 1.2 1.3 In line with the principles of good governance, an Annual Report is prepared by the Finance and Policy Committee for submission to the Integration Joint Board (IJB). The purpose is to provide the IJB with assurance that the Committee has evaluated its activity and performance. It also provides a further opportunity for the Committee to raise any matters of concern to the Board. This report is the Annual Report of the Finance and Policy Committee for Financial Year 2025/26. The Committee met on eight occasions, more than usual due to the requirement to implement a financial recovery plan and the challenge associated with the budget proposals for 2026/27. All minutes were submitted to the IJB and published within their papers. Scrutiny of financial performance was maintained throughout the year, and the Committee welcomed the improved financial position including the delivery of savings and implementation of the recovery plan. The Committee has considered the service impact of all of the decisions made and acknowledges that this has been a challenging time for Board Members, staff, and officers. Finance has remained a very high-grade strategic risk and is expected to continue to do so, for some time. The Committee has been supported by the Council’s Committee Services Team. This report provides a summary of the work of the Committee and an evaluation of its effectiveness. The Committee considers that its work has contributed to improved financial management and performance of the Health and Social Care Partnership (HSCP). The outlook remains extremely challenging particularly as the public reform agenda develops in the context of increasing service demands and constrained budgets and staffing. Emerging pressures such as the Service Level Agreement with NHS Greater Glasgow and Clyde (NHSGGC) present additional strategic risk to the HSCP and its services.
Page 2
2 1.4 The Committee believes that it has performed well in its oversight of Finance and is therefore able to provide assurance to the IJB that it has operated effectively. It has provided a clear leadership role in managing the financial challenged and has ensured that the approach to this has been evidence based, carefully considered, and consulted upon. It has also helped ensure an effective partnership approach was maintained throughout. 2. RECOMMENDATION 2.1 The Finance and Policy Committee is recommended to: • Consider and approve the draft Committee Annual Report for 2025/26. • Request that the final version of the annual report is placed on the agenda of the next meeting of the IJB, subject to any amendments. 3. DETAIL OF REPORT 3.1 3.2 3.2.1 This report provides an overview of the following aspects of the work of the Finance and Policy Committee: • Summary of the Committee Meetings • Committee Self Evaluation & Improvement • Committee Membership and Remit • Evaluation by the Chair Finance and Policy Committee Meetings This section provides a summary of the items of business considered at each meeting. Meetings were held electronically, and the Committee met eight times during 2025/26. The IJB is provided with the minutes of each meeting, as a matter of course. This provided Members with the opportunity to raise issues or question the Chair, in respect of the work of the Committee. Additional meetings were scheduled due to the need to approve the formal recovery plan and to ensure that the challenges and complexities associated with setting the budget for 2026/27 were carefully considered. Meeting 1: 29 May 2025 This additional meeting was established primarily to consider and endorse the recovery plan prior to approval by the IJB. • The Committee reviewed the proposed financial recovery plan in detail prior to IJB approval. This related to Social Work Services and was formally required in response to a significant overspend in 2024/25 and pressure on the current budgets. • Related to the financial challenge, the Committee considered the first formal report proposing the Threshold of Care policy change. The overall approach was endorsed, and it was noted that detailed IJB consideration and public consultation would be required. • The IJB Finance Bulletin published by Audit Scotland was considered and it was noted that this provided a bleak summary of the financial challenges facing the sector.
Page 3
3 3.2.2 3.2.3 3.2.4 • Finally, members welcomed the detailed stage 1 report on the strategic review of care homes and endorsed the progression of the project in partnership with the Council and Hub North. Meeting 2: 24 June 2025 • The Committee endorsed its’ annual report for 2024/25, highlighting the challenging nature of the year from a financial performance perspective with overspending reported. • The Committee reviewed the un-audited accounts for 2024/25 and considered the management accounts for that year. Concern was noted in respect of the significant overspending on social care services and agency staffing costs. • A progress report was also considered in relation to the Transformation Programme. It was noted that this was still in a transition phase; the Committee expressed its commitment to driving service transformation and re-design as a necessary response to the environmental context. Meeting 3: 16 September 2025 • The Month 4 Management Accounts and Financial Risks for the year were reviewed. A forecast overspend was reported totalling £1.5m (Social Work £0.7m, and NHS Services £0.8m). It was noted that the implementation of the recovery plan and the Threshold of Care policy change were critical to addressing this. • A report on the budget outlook and medium-term financial planning was noted. This report reiterated the severity of the financial challenge facing the HSCP, in the coming years. The scale of the 2026/27 budget gap was noted as being of particular concern, and management were requested to develop plans for urgently addressing the Social Work / Social Care element of the budget gap. • A revised Reserves Policy was approved in response to a recommendation from the Audit and Risk Committee. This maintained the aspirational general reserves target of 2% of annual spend whilst acknowledging that this was unlikely to be delivered in the current context. • A further report on the Threshold of Care policy was considered in detail by the Committee, who reluctantly agreed that this required to be progressed. • The meeting considered a further update in respect of the Transformation programme. Meeting 4: 27 October 2025 • The 6-month management accounts were considered, with a small improvement in the projected overspending of £1.3m across all services. Good progress with the current savings plan was appreciated and it was noted that recovery actions would continue to be implemented. • The first iteration of the Social Work / Social Care budget proposals was considered in detail. The challenging nature of the options and
Page 4
4 3.2.5 3.2.6 the process was discussed, at length. The requirement for public consultation, engagement with partners and the full IJB were highlighted as priorities. The reporting provided a timeline for the process, a series of savings options for consideration, and the medium-term outlook, to inform the discussion. • The Committee had requested an analysis of the budget to outline the split between budgets considered to be largely fixed or outwith the control of the HSCP and those that are discretionary in nature. Whilst highlighting that the split is not clear cut in all cases, the report suggested that around 12.5% of the Social Work budget was non- discretionary, with 50% of the Health budget considered as non- discretionary. It was appreciated that this analysis was useful in better understanding the link between managing spend, the provision of statutory services, and the requirement to provide access to NHS services. • The Committee considered a progress report on the Single Authority Model. The partnership approach to this, between the Council, NHS Highland, and the Scottish Government, was noted. Meeting 5: 18 November 2025 • The main purpose of the meeting was to again discuss the budget proposals in advance of consideration by the IJB, and commencement of public consultation. The challenging nature of this discussion and concerns about impacts were fully aired. • An updated financial risks report was provided along with a verbal update on the Month 7 management accounts; this indicated some improvement with the overspend reducing and some early signs the recovery actions were having a positive impact on financial performance. • The second stage of the care home strategic review was discussed. Again, the robust nature of the analysis was welcomed, and progression of the project was again endorsed. The importance of a robust public engagement process was highlighted. • The Committee welcomed an update report on infrastructure with the progression of several key projects including: - Key worker accommodation, in collaboration with the Council and Shelter. - Campbeltown Hospital radiography and fuel tank replacements. - Fire improvement and lab refurbishment in Lorne and Islands Hospital (LIH). - Refurbishment of Tigh a Rudha Care Home. The report reviewed the infrastructure risk rating (per the Strategic Risk Register), and it was agreed to maintain this at ‘very high’ due to the level of risk associated with the ageing infrastructure and lack of funds to address all backlog maintenance issues. It is noted that this is a national issue, with a shortage of capital resource.
Page 5
5 3.2.7 3.2.8 3.3.9 Meeting 6: 20 January 2026 • The Month 8 Management Accounts showed further improvement in the forecast. However, concern was expressed that measures taken to reduce spend did appear to be having some impact on services. This report also provided an update on the national picture in respect of HSCP overspending. • A positive report on reduced locum and agency staffing spend within NHS services was welcomed, as this was contributing to the improving financial position. Medical staffing costs within LIH were considered to be the biggest challenge, at present. • The Committee considered a budget update report, and two reports on budget proposals were considered as confidential items due to their sensitive nature. These related to the Responder Service contract, and contracts with Third Sector partners. Meeting 7: 24 February 2026 • The Month 10 Management Accounts were welcomed as they indicated further improvement with spend projected close to budget and an indication that the recovery actions were likely to further improve the year-end position. Strong progress on the delivery of savings was also noted. • The Committee considered a concerning report outlining the potential implications of the re-basing process undertaken by NHSGGC in respect of the SLA. It was noted that costs were likely to be significantly increased and that the HSCP was engaged with NHS Highland, NHSGGC, and the Scottish Government on the implications. The Committee noted that this would take some time to resolve and would be highlighted as an escalating risk to the IJB. The activity analysis was welcomed but it was noted that more detailed work would be required to understand costs and activity. • A detailed report on Care at Home services and the implementation of the Threshold of Care policy change was provided. The Committee is committed to ensuring the impact of policy changes are reported on and assessed. The report noted that there had been adverse implications for delayed discharges and unmet need, as a consequence of managing the service within budget. Recruitment and continued reliance on agency staffing (lack of commissioned service provision in some areas) was highlighted, as a further challenge. Meeting 8: 17 March 2026 • The main purpose of the meeting was to review all of the final budget proposals and impact assessments prior to consideration of the budget by the IJB. This included a review of the early findings from the public engagement process. The Committee endorsed the reports and the approach taken; the HSCP had been able to amend its proposals, as additional funding was provided by Council and in response to the consultation feedback. The difficult nature of the budget setting had been acknowledged throughout the process. • The Committee welcomed a further improvement in the Management
Page 6
6 Accounts with NHS service forecasting a £1m underspend, as funding allocations and some national charges were confirmed. Social Work / Social Care budget performance was also improving. • A further update report on the Care Homes Strategic Development project was considered, noting that public consultation was due to commence in summer 2026. The report highlighted the complex nature of the governance arrangements with the Council responsible for capital funding and property. • An updated IJB Financial Bulletin, published by Audit Scotland was included on the agenda. This re-iterated the challenges IJBs across Scotland are facing. 3.3 Committee Self-Evaluation and Improvement 3.3.1 3.3.2 3.4 3.4.1 3.4.2 3.4.3 3.5 3.5.1 The Self-Evaluation Action Plan has been fully implemented. It is acknowledged that financial management is likely to be a high risk for the IJB, in the coming years, and that the measures required to manage the risk will be very challenging to implement. Board development sessions, public communications, and a carefully considered approach will be required to deliver the changes necessary. It will be important that the Board and Management Team continue to work collegiately on addressing the challenge in a considered way. The Committee will also hold its meetings in public from 2026/27 to further improve public accountability and openness. Committee Membership and Remit Membership comprises of six IJB Members plus one professional advisory. At the time of this report/currently, five places are filled with one Member vacancy, but throughout most of the year all Member places were filled. In addition, there are three required attendees – the Chief Officer, the Chief Finance Officer, and a Staffside representative. Other Officers attend, as required. Councillor Dougie McFadzean acted as Chair throughout the year. In February 2025, the remit was revised and deemed to be appropriate. The Committee has ensured that its work is consistent with its remit, and this enables the Committee to provide assurance to the IJB that it has fulfilled its role effectively throughout 2025/26. Evaluation by the Chair The Committee has met regularly, has operated effectively, and has contributed to ensuring that financial management, financial risk management, and oversight of the transformation and savings programme has continued. The Committee would like to acknowledge the work of Officers in continuing to provide detailed and clear reports, which have supported its work. 2025/26 was a particularly challenging year due to the scale of the budget challenge facing the IJB and the on-going high levels of demand for services.
Page 7
7 3.5.2 3.5.3 3.5.4 3.5.5 The work of the Finance and Policy Committee clearly evidences the IJB’s commitment to managing its finances in an open and transparent way. It has comprehensively fulfilled its remit in terms of oversight of finances, considered by the IJB to be a high-priority strategic risk. The Committee has provided appropriate challenge to Officers and has been able to take important decisions, when required. The Committee has played a leadership role in driving the budget process and the development of saving proposals for the 2026/27 budget. It has also been effective in enabling more detailed discussion of financial matters prior to formal consideration and approval by the full IJB. This work has enabled members to influence council budget setting which in turn has helped safeguard services. The Committee has focussed increasingly on ensuring that the HSCP is engaged with both partners in respect of its financial challenges. It has also taken a leadership role in the consideration of the actions that are likely to be required in the future, in response to the pressure of increased demand (demographic change), continued workforce shortages, increasing costs, and insufficient funding. The scale of the challenge facing the HSCP is significant and must be considered in the context of the national situation facing NHS Boards, Local Government, HSCPS, and commissioned service partners. Financial performance for the year ended 31 March 2026 was much improved in comparison with the prior year. The approach to robust oversight of the finances and working with Management to ensure that appropriate decisions were taken and implemented, with the support of the IJB, were critical in delivering change and financial improvement. The Threshold of Care policy change, the approval of the budget and oversight of the extensive public engagement process are clear examples of where this approach has worked. The committee has clearly had to manage many competing priorities and has had to take forward proposals that have adversely impacted upon service delivery, service users, and partners. It also acknowledges that there are opportunities for learning from the experiences of the 2025/26 year. I am pleased to commend the work of the Committee to the IJB and to provide assurance that, in my opinion, the Committee has operated effectively throughout the year and has discharged its responsibilities diligently. This opinion is formed on the basis of the totality of the evidence considered by the Committee throughout the year. The Committee has worked closely with Management to address the challenges in a proportionate, evidence- based and considered manner. I would also like to acknowledge the role Committee Members, Committee Services, and Officers of the HSCP, have played in facilitating the work of the Committee. The additional pressures and increased number of meetings have been necessary but have also placed an additional burden on Officers, Staff and Board Members. 4. RELEVANT DATA AND INDICATORS 4.1 Minutes of Finance & Policy Committee meetings, the accounts for 2025/26, and related papers.
Page 8
8 5. CONTRIBUTION TO STRATEGIC PRIORITIES 5.1 This document contributes to good governance of the IJB and provides assurance to the Board that the Finance and Policy Committee is operating effectively and in a manner that is consistent with its Terms of Reference. 6. GOVERNANCE IMPLICATIONS 6.1 Financial Impact – The Committee has considered multiple reports relating to financial performance and planning. It has also been kept informed of the national context. 6.2 Staff Governance – The Committee has considered staff governance issues, as part of its scrutiny of savings and transformation projects. 6.3 Clinical Governance – None. 7. 7.1 8. PROFESSIONAL ADVISORY Consideration should be given to this report. EQUALITY AND DIVERSITY IMPLICATIONS 8.1 9. 9.1 None directly from this report. GENERAL DATA PROTECTION PRINCIPLES COMPLIANCE None. 10. RISK ASSESSMENT 10.1 The Committee has reviewed financial risks in detail throughout the year. In terms of the wider strategic risk relating to financial sustainability, this remains a very high-grade risk due to the overall context with public funding, impact of inflation, workforce constraints, and increasing service demand. 11. PUBLIC AND USER INVOLVEMENT AND ENGAGEMENT 11.1 The Committee scrutinised the revised approach to budget consultation and considered the feedback form the public consultation. The budget process for the 2026/27 year was high profile, engaged with more people than any previous year and this resulted in demonstrable changes being made to the budget proposals as finally approved by the IJB. 12. CONCLUSIONS 12.1 12.2 The Finance and Policy Committee is asked to consider this report and request that it is placed on the next agenda of the IJB, following any amendments. This report concludes that the Finance and Policy Committee has performed its role effectively and diligently throughout 2025/26. It recognises that the year has been a particularly difficult one in respect of the development of
Page 9
9 the budget and financial recovery plan. However, financial performance has improved with increased scrutiny of the IJB finances. It is acknowledged that there are further challenges ahead and an uncertain future context as the public sector reform agenda progresses. However, these challenges are system-wide and the HSCP is navigating these in an appropriate way. Work on medium-term financial sustainability and continuing progress with strategic change projects will remain a priority for the Finance and Policy Committee, the Leadership Team, the IJB, and the stakeholders, in the coming months, and years. 13. DIRECTIONS Directions required to Council, NHS Board, or both. Directions to: tick No Directions required √ Argyll & Bute Council NHS Highland Health Board Argyll & Bute Council and NHS Highland Health Board 14. PREVIOUS REVIEW OF THE REPORT Meeting Title of report Date Output (if relevant) N/A REPORT AUTHOR AND CONTACT: Chair, Finance and Policy Committee