Infrastructure Update - July 2026
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.
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1 Finance & Policy Committee Date of Meeting: 18 August 2026 Title of Report: Infrastructure Update – July 2026 Presented by: James Gow, Head of Finance Malcolm McMillan, Senior Manager Strategic Estates Development & Sustainability The Finance & Policy Committee is asked to: • Note the contents of this report; • Note the progress since the increase of Infrastructure Risk to Very High on the HSCP Strategic Risk Register in June 2024; and • Note that actions are on-going to mitigate risk and make improvements where possible but considerable challenges remain. • Recommend that NHS Highland and Argyll & Bute Council ensure infrastructure risks are captured on their Strategic Risk Registers. 1. EXECUTIVE SUMMARY 1.1 The delivery of HSCP services is reliant on the physical building infrastructure from which it operates. The infrastructure is owned by both partners (NHS Highland and Argyll & Bute Council) who are also responsible for its maintenance. The purpose of this report is to: • Update the committee with progress on key projects since the last update in November 2025; and • Update the Committee on progress in managing infrastructure risk on the Strategic Risk Register classed as ‘Very High’. 1.2 Governance arrangements relating to infrastructure are complex, The Infrastructure Transformation Board was established in 2023 to strengthen HSCP governance arrangements, the board continues to meet quarterly to update and discuss priorities. However, capital spend is not delegated to the HSCP, separate and very different governance arrangements exist within the Council and NHS Highland. The HSCP is represented at the relevant groups within both partners and relationships remain positive. The overall position is that significant backlog maintenance requirements and equipment replacement needs have been identified and there is insufficient capital resource to address these (nationally and locally). The outcome of this is that the risk of failures and/or loss of capacity due to failure to meet regulatory standards is increasing.
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2 1.3 Delivery continues within a constrained capital environment, with investment focused primarily on statutory compliance, backlog maintenance and service resilience. Nationally, the Scottish Government’s Strategic Assessment approach requires NHS Boards to demonstrate long-term infrastructure alignment prior to project approval, reinforcing prioritisation and limiting progression of non- essential schemes. 1.4 Progress is evident in funded compliance projects, including fire safety works at Lorn & Islands Hospital and Islay Hospital. However, several projects - the Cowal Community Hospital redesign, Islay roof replacement, and care home infrastructure upgrades - remain at risk due to funding constraints, scope reductions or are still at an early-stage of development. The overall programme reflects a shift toward risk-based investment, with very little capacity for major transformation projects without additional capital support. 2. Recommendations 2.1 The Finance and Policy Committee are Recommended to: • Note the contents of this report; • Note the progress since the increase of Infrastructure Risk to Very High on the Strategic Risk Register in November 2024; and • Note that actions are on-going to mitigate risk and make improvements where possible but there remain considerable long-term challenges to risk reduction. • Recommend that NHS Highland and Argyll & Bute Council ensure infrastructure risks are captured on their Strategic Risk Registers. 3. DETAIL OF REPORT 3.1 This is an update on the paper presented to this committee in June 2024 that reported on the Audit & Risk committee decision to increase the risk of infrastructure failure putting the ability of the HSCP to meet its statutory and regulatory obligations at risk as well as its ability to deliver on its strategic objectives to Very High. Whilst this report indicates that good progress continues to be made in addressing some key risks and making improvements, the risk of infrastructure failure is reduced but not judged to have reduced significantly enough to warrant a downgrading of the risk at this time. This is partly because infrastructure is continuing to age and deteriorate even as the highest risk items are addressed. Additionally, regulatory bodies appear to be paying increased attention to the quality of infrastructure, particularly in recent inspections of the care home estate and fire service inspections of hospitals. In addition to the specific progress outlined in this report, it is worth highlighting that there is also important strategic development work underway. In addition to the development of the internal infrastructure board, there is also now a strategic Argyll & Bute place board focusing on development in Lochgilphead, Rothesay and Dunoon facilitated by Hub North. The Board meets regularly and includes key partners including the HSCP, Argyll and Bute Council and NHS Highland. It is hoped that this will help ensure that new investments will be progressed in a way which is aligned to the strategic direction of partners and will present new opportunities for innovation, partnership working and shared use of facilities. It may also present opportunities for new ways of working which could help support the development of the Single Authority Model Approach.
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3 3.1.1 NHS Highland Infrastructure Improvements NHS Highland capital investment has been focused on prioritised maintenance as advised in Directorate Letter (DL) 2024 02 and 2025 15. Health Boards have been instructed to create a prioritised maintenance only investment plan referred to as the Business Continuity Investment Plan (BCIP) for which some additional funding would be allocated only for board’s top risks. Health Boards are also instructed to allocate existing annual capital allowances (Formula Capital) should be focused to the priorities identified as well. It is worth noting that formula capital still falls considerably short of what is required on an annual basis for addressing backlog maintenance alone. The BCIP process produced a list of risk assessed capital investment priorities for Argyll & Bute NHS premises and was submitted to Scottish Government in November 2024. Following this submission additional capital funding was secured for Lorn & Islands and Islay Hospital fire improvement works and for scoping a solution to the fire improvement actions required for Cowal Community Hospital. Project progress is detailed later in the report but funding for a replacement fuel tank at Campbeltown Hospital was secured and a major point of failure risk has been removed from the risk register. In terms of strategic capital development, the Scottish Government have indicated to Boards that they can now progress work on a small number of new capital projects. NHS Highland is working with Hub North on identifying priorities and it is expected that this will include replacement of Argyll & Bute Facilities. It must be noted that this will take some time to progress with initial assessments due to be considered by Scottish Government in September 2026 with successful projects not expected to start development until 2031 at the earliest. 3.1.2 Argyll & Bute Council Capital Funding Capital budgets have been agreed to 2027/2028 and have been reduced from £428k in 24/25 to £382k per annum in 27/28 for the HSCP care homes, children’s homes, learning resource centres and offices. This reduction in capital significantly hampers the ability of the HSCP to operate safe, compliant and fit for purpose facilities. Argyll & Bute Council have increased the availability of preventative maintenance funding in recognition of the challenges that all its property users face within an ageing estate. This will help with tackling reactive and preventative maintenance issues that should ease some of the burden on the capital budget, but the backlog of capital improvements remains. Care Home Strategic Assessment work is expected to provide clarity on the future of care home provision in Argyll & Bute and will assist in the prioritisation of key capital works. The output of the Strategic Assessment provides further evidence on the disparity between budget allocation and budget required to maintain properties effectively. The HSCP is working closely with the Council on our priorities, once the strategic direction for each of the existing Care Home facility is agreed the HSCP would seek to take a property-by-property approach to the refurbishment of each asset that it intends to operate in the longer term (as it has done with Tigh a Rudha care home, Tiree), in preference to a piecemeal, reactive approach. There is a potential ask for a significant capital investment for our care home estate as outlined in the Strategic Assessment programme reports presented previously.
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4 3.1.3 Key Worker Housing Progress continues on key worker accommodation, supported by close working with Argyll & Bute Council’s Housing team. Housing remains a significant barrier to recruitment across HSCP services, and a temporary part-time Housing Improvement Officer has been appointed by the HSCP to strengthen operational support, improve procedures and help staff secure suitable accommodation. Rental charges for HSCP-owned properties are also being reviewed to support future maintenance costs. Four staff have now moved into key worker accommodation in Oban, with further moves planned. Joint working with the Council, housing associations and Shelter Scotland is delivering new or improved accommodation in Tiree, Coll, Islay and Oban, reducing costs and strengthening the recruitment offer for staff relocating to Argyll and Bute. Recent service pressures, including the liquidation of a Care at Home provider, have reinforced the importance of responsive housing arrangements, with registered social landlords providing valuable support to the HSCP. Strategic Housing Fund support has been secured to redevelop the former Bowmore dental surgery into a two-bedroom key worker property on Islay, expected to be available before the end of the financial year. 3.1.4 Carbon Reduction (Net Zero) The Scottish Government have indicated that funding for energy efficiency and adoption of renewable energy measures for NHS boards will be able to apply for in FY 26/27 and 27/28 with approximately £20M available across Scotland per year. NHS Highland will receive an estimated £625k per year to invest in sustainability projects. It is hoped that the HSCP, will be able to apply for funding over the course of the coming years to reduce its carbon footprint and running costs as well as deal with some infrastructure liabilities. Additional government funding from third parties for a range of net zero projects is also available, but the lead applicants are required to be NHSH and Argyll & Bute Council. This financial year, funding has been secured from Scottish Government Sustainability Division by NHS Highland to complete a detailed decarbonisation plan for Raigmore and Lorn & Islands Hospital that will produce a route map to net zero for the sites. The scope of the project is being finalised (July 26) with completion of the report due March 2027. This will enable NHS Highland and the HSCP to understand the opportunities available that future sustainability capital funding can be applied for. Additional funding for LED lighting and lighting control measures has also been secured for this financial year. Work is on-going to de-carbonise the HSCP fleet and concurrently to provide a suitable charging infrastructure to support this. Funding was secured for the 25/26 financial year for the installation and upgrade of more chargers across Argyll & Bute NHS sites to provide greater resilience to EV fleet users. Additionally, a further 17 zero emission vehicles and 12 hybrid vehicles were procured replacing older petrol and diesel vehicles and reducing the average fleet emissions of the replaced vehicles from 101g/km to 62g/km. 3.1.5 Estates Rationalisation
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5 HSCP Estate rationalisation activity has been supported through Argyll and Bute Council's Our Modern Workspace (OMW) project since the project's inception in 2021. As part of OMW, Ellis Lodge, Dunoon, has been rationalised, with all staff relocating to the renovated Argyll House during 2025/26. This has affected HSCP social work staff across four departments. Work is ongoing to complete the rationalisation programme in Dunoon. In September 2024, the Board of NHS Highland confirmed that the former Argyll and Bute Hospital and associated land in Lochgilphead had been declared surplus to requirements and is being prepared for sale on the open market. However, some buildings remain operational, and alternative accommodation for these services would be required as part of any future sale. NHS Highland is also adopting a space utilisation policy that will provide clear guidance and governance on the efficient use of the NHS Highland estate. The HSCP is currently in discussions with NHS Highland regarding how this policy could be implemented across Argyll and Bute. 3.2 Current Projects The status of projects of strategic importance currently underway or planned are summarised below: Underway Details Governance Budget Lorn & Islands Hospital Fire Improvement Works Phase 1 &2 of 8 awaiting start date. NHSH Estates Capital team reporting quarterly to Infrastructure Board. £900K in 26/27 FY. Funded from SG Business Continuity Investment Fund. Islay Hospital Fire Improvement Works Underway. Awaiting phase 2 start date. NHSH Estates Capital team reporting quarterly to Infrastructure Board. £1,200K in 26/27 FY. Funded from SG Business Continuity Investment Fund. Cowal Community Hospital Fire Improvement Works Underway. Design works ongoing to establish a compliant layout for costing. SFRS notice requiring improvement to compartmentalisation and evacuation routes. Significant cost estimated to comply. Risk of enforcement action if no action taken. NHSH Estates Capital team reporting quarterly to Infrastructure Board. £250K secured this FY from Business Continuity Fund for design works. Birch Drive Islay (NHS owned) Project in progress. Once completed NHS A&B Estates team £220k. £145k contribution from
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6 HSCP will no longer require to lease as many third party properties on the island. reporting quarterly to HSCP Infrastructure Board. strategic housing fund. Remaining to be found from HSCP reserves. Struan Lodge Re- Wire Costs of full rewire not affordable. Measures to enable a 24-month stop gap measure accepted by ELT. Improvements to electrical protection, heating system and roof included in package of works. Fortnightly project board led by A&B Property Services, reporting quarterly to Infrastructure Board and Care Home and Housing Programme Board £291k from Argyll & Bute Council Capital allocation. Campbeltown Hospital Generator replacement and LV Panel upgrades. Upgrade of the Campbeltown hospital generator with the refurbished generator from LIH to a larger generator that can power they whole hospital is completed providing resilience to additional HSCP sites. NHS Estates team reporting quarterly to Infrastructure Board. £200k NHS Highland formula capital allocation 26/27 FY Cowal Hospital Lift Refurbishment Upgrade of both lifts in Cowal Community Hospital project underway. NHSH Estates Capital Team reporting quarterly to Infrastructure Board. £250k NHS Highland Capital formula allocation 26/27 FY. Thomson Court Temporary Generator connection point upgrades. Project to provide a generator hook up point to improve resilience for the care home during power outages. Fortnightly project board led by A&B Property Services, reporting quarterly to Infrastructure Transformation Board and Care Home and Housing Programme Board. £73K from A&BC Capital allocation. Ardfenaig Care Home Temporary Generator connection point Fortnightly project board led by A&B £31K from A&BC Capital allocation.
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7 upgrades. Project to provide a generator hook up point to improve resilience for the care home during power outages. Property Services, reporting quarterly to Infrastructure Transformation Board and Care Home and Housing Programme Board. Eadar Glinn Care Home Temporary Generator connection point upgrades. Project to provide a generator hook up point to improve resilience for the care home during power outages. Fortnightly project board led by A&B Property Services, reporting quarterly to Infrastructure Transformation Board and Care Home and Housing Programme Board. £33K from A&BC Capital allocation. Eadar Glinn Care Home Shower and Window replacements. Following Care Inspectorate comments new shower rooms and windows are being installed in the care home. Fortnightly project board led by A&B Property Services, reporting quarterly to Infrastructure Transformation Board and Care Home and Housing Programme Board. £198K from A&BC Capital allocation. Kintyre Care Centre Various Electrical Services Upgrades. Decorations and Toilet refurbishment Window Replacement Programme. Fortnightly project board led by A&B Property Services, reporting quarterly to Infrastructure Transformation Board and Care Home and Housing Programme Board. £803k from Argyll & Bute Council Capital allocation. In development
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8 Net Zero Project LED Lighting improvements Part of a funding package for nearly £1M awarded to NHS Highland. Improvements are pan A&B NHS properties. NHS A&B Estates Team reporting quarterly to Infrastructure board. £259K from SG Sustainability Directorate. Net Zero Decarbonisation Plan Part of a funding package for nearly £1M awarded to NHS Highland. This plan will provide a detailed decarbonisation plan for LIH. Thomson Gray. £250K from SG Sustainability Directorate. Islay Hospital flat roof repair/ replacement Design in development 26/27. Flat roof on Islay Hospital is beyond end of life and regularly leaks or requires repairs due to wind damage. NHS Estates Capital team reporting quarterly to infrastructure board. NHS Highland formula capital funded. Former Argyll & Bute Hospital disposal. Initial Phase completed. Further phases require additional capital funding which has been applied for. Former Hospital site falling into significant disrepair, New Mid Argyll Hospital utilises some of the original water infrastructure that is beyond end of life. Risk of failure and possible service disruption. Also, a revenue burden for security of site. NHS Estates Capital team reporting quarterly to infrastructure board. £402k in 25/26 FY from S.Gov ADEL fund to enable asbestos removal and design works for adoption of the water supply by Scottish Water. Mid Argyll Community Hospital X-Ray equipment replacement. The MAH X ray equipment was brought across from the old hospital and is now obsolete. NHS H Equipment Purchase Advisory Group (EPAG) £407K in 26/27 Financial Year from equipm budget ent formula capital. Completed Campbeltown Hospital Fuel Tank Replacement Completed. Original oil tank showing signs of failure and on risk register. Led by NHS A&B Estates Team with progress reports to Funded from 24/25 NHS Highland Capital Allocation.
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9 Good progress has been made in taking forward a number of projects designed to reduce risk, improve facilities and help address key worker accommodation concerns. The HSCP has been able to joint fund some of this work from its reserves. These are now depleted and the HSCP is no longer in a position to facilitate the development of further substantial projects in this way. Going forward the HSCP plans to seek project funding from partners and other alternative sources. 3.3 Risk The Strategic Risk Register considers infrastructure risk as ‘Very High’ putting the ability of the HSCP to meet its statutory and regulatory obligations at risk as well as its ability to deliver on its strategic objectives. In tackling this risk, progress has been made across multiple fronts improving the situation for the HSCP. This can be attributed to more staff and financial resources being provided towards HSCP priority issues but also more effective working relationships with our partner organisations. Evidence of progress is listed below: • Removal of high-risk high impact infrastructure failures such as Campbeltown Hospital oil tank. • Refurbishment of Tigh-A-Rudha Care Home to modern standards removing the risk of regulatory enforcement and improving resilience of service • Securing of additional capital funding to address Scottish Fire & Rescue Service improvement notices at Islay and Lorn & Island Hospital. Replacement now in situ. Infrastructure Board Campbeltown X- Ray replacement and re-modelling Completed. HSCP funded re-modelling. Equipment funded by NHS Highland. NHS Estates team reporting quarterly to Infrastructure Board. £528k, project delivered on time and budget. Tigh a Rudha refurbishment and remodel – Island Programme / HSCP and Council funded Completed. A&B Property Services, reporting quarterly to Infrastructure Transformation Board. £2.4M from A&B Capital, Strategic Housing Fund and HSCP reserves. Coll Houses – NHS owned with contribution from Strategic Housing Fund Completed Nurses House Completed. GP House anticipated completion date of 17th November 2025. Managed by NHS A&B Estates team reporting quarterly to Infrastructure Board. £465k. £365k of HSCP reserves, £100k of strategic housing fund. LIH Hospital Generator replacement. Larger generator and LV panel modifications enable hospital to be fully powered in outage situations. NHS Estates Capital Team / A&B Estates. £250k NHS Highland formula capital allocation
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10 • Refurbishment of housing on Coll to enable quality accommodation for key workers. • Relocation and replacement of X-ray department in Campbeltown Hospital avoiding the risk of equipment becoming obsolete while improving staff and patient experience. • Replacement of out of contract fleet vehicles ensuring continuity of community services. • Upgrade of the LV plant infrastructure at Lorn & Islands Hospital replacing obsolete and unreliable equipment to enable the Electric Vehicle charger rollout as well as improve resilience at our only Rural General Hospital. While this progress is satisfying there remains considerable complex risks from infrastructure to HSCP operations; • Scale of backlog maintenance is such that a building failure which could result in a temporary or medium-term closure is still increasing. • Cowal Community Hospital refurbishment remains in development, and funding has not yet been identified to deliver the changes required to meet the Scottish Fire & Rescue Service improvement notice and service needs. • There is insufficient funding identified to arrest the deterioration of existing infrastructure and address essential requirements; • There is a lack of a clear long-term strategy from partners and the government for dealing with infrastructure backlog; • Statutory enforcement agency warning notices and threat of enforcement are still being received with preventable infrastructure related problems cited as reasons for the issuing of notices; • Some properties continue to be unsuitable for services and NHS strategic development work has yet to resume; • Legacy infrastructure issues remain a significant problem. • Some properties are not fully compliant with current standards; • Costs of capital works have increased substantially which reduces the impact planned spend will have; and • ICT infrastructure and equipment replacement investment are also well in excess of available resources. At this point it is not possible to recommend a change to the risk status. 4. RELEVANT DATA AND INDICATORS 4.1 This report relies on various condition survey reports and in some cases high level estimates of costs. 5 CONTRIBUTION TO STRATEGIC PRIORITIES 5.1 The availability of suitable infrastructure (buildings, ICT and equipment) is essential for the delivery and safety of service delivery and provision of appropriate working and living environments. 6. GOVERNANCE IMPLICATIONS 6.1 Financial Impact – There is insufficient funding at present to address backlog maintenance requirements. Spend of reserves on projects reduces capacity to manage service spend pressures.
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11 6.2 Staff Governance – None 6.3 Clinical Governance – risks highlighted in this report have implications. 7. PROFESSIONAL ADVISORY 7.1 Professional leads are represented on the Infrastructure Board and have the opportunity to contribute to the prioritisation of projects. 8. EQUALITY & DIVERSITY IMPLICATIONS 8.1 None 9. GENERAL DATA PROTECTION PRINCIPLES COMPLIANCE 9.1 Cyber security risks are linked to investment in infrastructure but are considered through the Digital Health and Care Programme Board and are the responsibility of both partners. 10. RISK ASSESSMENT 10.1 No change to the risk register is recommended at this time. infrastructure risk should remain a Very High strategic risk. 11. PUBLIC & USER INVOLVEMENT & ENGAGEMENT 11.1 Engagement has taken place in respect of new projects, the community and partners on Tiree and Coll have been effectively consulted with during their respective projects. 12. CONCLUSIONS 12.1 This report summarises the current priorities for infrastructure projects and provides an overview of the current context, risk and condition of the facilities the HSCP is utilising. 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
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12 This report draws heavily on a number of documents considered by the Infrastructure Transformation Board. REPORT AUTHOR AND CONTACT James Gow, Head of Finance james.gow@argyll-bute.gov.uk Malcolm McMillan, Senior Manager Strategic Estates Development & Sustainability. Malcolm.mcmillan2@nhs.scot