Social Work / Social Care Financial Planning 2027/28
Argyll and Bute Council · 19 May 2026
Back to Argyll and Bute HSCP Finance and Policy Committee — 19 May 2026 and its agenda
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1 Finance & Policy Committee Date of Meeting: 19 May 2026 Title of Report: Social Work / Social Care Financial Planning 2027/28 Presented by: James Gow, Head of Finance The Finance & Policy Committee is asked to: • Note that the Council is commencing financial planning for 2027/28. • Note that the HSCP is engaged in this process and is forecasting a budget gap of circa £3.2m which will require to be addressed through the development of further savings plans and / or additional resourcing. • Note there is a high degree of uncertainty and risk regarding funding and costs for 2027/28. • Note the HSCP intends to report its full 3 year outlook to the next meeting. 1. EXECUTIVE SUMMARY 1.1 Argyll & Bute Council are currently in the process of developing budget plans for 2027/28 and beyond. This work is now considered as a continual rather than an annual process due to the scale of the projected budget gaps and perception of the future financial challenges. The HSCP position forms an important element of the overall Council budget. The purpose of this report is to provide members with the summary information provided to support the Council’s budget working group. It outlines the potential Social Work / Social Care budget gap for next year and provides an update regarding the savings programme for the current year. There is a high degree of uncertainty in respect of financial modelling at the time of writing. 1.2 The HSCP is working on its medium-term financial plans and will provide its full financial modelling to the next meeting of the Finance & Policy Committee. 2. Recommendations 2.1 The Finance & Policy Committee is recommended to: • Note that the Council is commencing financial planning for 2027/28. • Note that the HSCP is engaged in this process and is forecasting a budget gap of circa £3.2m which will require to be addressed through the development of further savings plans and / or additional resourcing. • Note there is a high degree of uncertainty and risk regarding funding and costs for 2027/28. • Note the HSCP intends to report its full 3 year outlook to the next meeting. 3. DETAIL OF REPORT 3.1 The budget for 2026/27 was approved by the IJB on 25th March 2026, this outlined a challenging savings programme and, along with other internal and Audit Scotland reports, indicated that the public funding outlook for future years is difficult also. It is therefore extremely important that the HSCP and IJB begin
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2 consideration of actions to balance the budget in 2027/28 as early as possible, and in partnership with NSH Highland and Argyll & Bute Council. This report provides members of the Finance & Policy Committee with information used to support the Council’s budget planning. It does not provide any information in respect of the NHS element of the HSCP budget. 3.2 HSCP Financial Planning 2027/28 – Social Work / Social Care Only The HSCP financial plan for 2026/27 requires £2.3m of savings to achieve financial balance. Delivery of the savings programme is an immediate priority. In respect of 2027/28, early modelling of Social Work / Social Care cost and demand pressures indicates an expected budget gap totalling £3.4m with the added pressure of £1m of the 2026/27 funding settlement from Argyll & Bute Council being non-recurring, if that funding is removed the 2027/28 budget gap is estimated at £4.4m. The table below summarises the mid-range financial modelling: £’000 Pay inflation and increments (3%) 1,545 Non-pay inflation 731 Older People Demand Growth – demographic change 465 Looked After Children demand growth 251 Contingency for unknown cost and demand pressures (additional inflation) 400 Total Cost and Demand Pressures 3,392 Removal of non-recurring funding 1,000 Total Budget Pressure for HSCP 4,392 The first priority is therefore to request that the non-recurring allocation is made on a recurring basis as it is clear that demand for social care services will continue to increase for many years to come. The Key assumptions built into the mid- range model are: • Real living wage increases will be fully funded by Government. • The 2026/27 savings programme is delivered in full. • Demand pressures don’t exceed the allowance made for them. • No new legislative / policy changes increase costs further without associated funding. Additionally, at the time of writing, there is significant concern and uncertainty regarding the war in the middle east. Forecasts suggest that inflation will increase again, initially relating to energy and vehicle fuels but then feeding into inflation more broadly. This could place substantial extra pressures on the budget including upward pressure on pay settlements. Economic recession is also being predicted, this could be of further detriment to an already challenging public funding outlook. Clearly this is not within local control but is a substantial strategic risk for 2026/27 and following years. Modelling will continue to be updated as the scale of the adverse implications become clearer. Management are considering the situation on a regular basis. There are some mitigations which offset the cost and demand pressures:
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3 Opening Budget Gap 4,392 Removal of mitigation funding for 3rd sector savings (180) Full Year Impact of Responder service fee increase (140) Potential for pension fund saving 17.5%-15% (TBC) (900) Net budget pressure / saving target / additional income 3,172 It is hoped there will be some additional funding to help offset the cost pressure associated with pay increases and/or the £1m of non-recurring funding. The HSCP is not able to allocate reserves at the present time as these currently fall well short of the reserves policy approved by the Finance & Policy Committee. The savings plan for 2026/27 focussed mainly upon reductions in: • Support for 3rd sector organisations • Services for Older Adults – Care @ Home and Contracts The priorities for 2027/28 are expected to be directed to other areas of budget as older adult and 3rd sector provided services (mainly to carers and older adults) have experienced detriment in the current savings plan. Future savings are expected to focus upon: • Children’s Social Work Services including expensive external placements (cost avoidance). • Services to support LD / PD / MH Clients. • Efficiency improvements across Care & Home and Care Homes which do not impact on service delivery capacity (eg staffing models, systems and accommodation). 3.3 Key Risks Financial modelling for 2027/28 is uncertain and there are many risks facing the development of the budget: • Impact of inflation increasing relating to middle east conflict – additional pay / non pay and contract costs. • Financial performance and delivery of savings in 2026/27. • Public Sector funding and policy environment post election and the impact of public sector reform. • The pension fund valuation as at 31 March 2026 may not enable a reduction in the employer rate, worsening the position further. • The NHS funding environment is a further risk as Boards continue to be financially unsustainable, this could result in further pressure to reduce services and costs. 3.4 Strategic Development Priorities The transformation and strategic development priorities are outlined in the new Joint Strategic Plan. The implementation of these remains a priority and in respect of Social Care include:
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4 • Digital and utilisation of AI. • Care Homes Strategic Review – Engagement to commence in summer 2026. • Care @ Home digitisation and service re-design. 3.3 2026/27 Savings – as at 30/4/26 The table below provides an early summary of progress regarding the 2026/27 savings plan: Service Savings £’000 Update Increase in fees and charges Inflation increases already approved by Council and considered at IJB in January 2026 180 Complete – no further action required. Budget monitoring will confirm achievement as year progresses Threshold of Care Full year impact of policy change and restrictions on commissioning. The value of this target has been reduced due to increased delayed discharges and unmet need. 500 Complete – no further action required. This saving should be achieved as long as care at home hours are managed at current levels. Budget monitoring will confirm progress as year progresses. Children and Families Social Work Posts – 2 FTE to be held. These posts are not being removed from staffing structures at present. Child protection risk identified – saving reduced and further work on risk assessment underway and subject to review. 113 Posts identified and held but not confirmed as a saving as posts not removed from the structure. Approach to this to be agreed. S Williams / A Tillery / J Gow / J Mc Dill to confirm approach. Adult Social Work – 2 FTE Posts. As above, these posts are not being removed from the structure but will be held vacant. Risks identified and mitigations being developed. 113 As above C Robertson / A Tillery / J Gow / J McDill to confirm. LD/PD/MH support posts – 1.5 FTE Posts vacant 90 Complete – posts removed from structure and saving achieved. Extra Care Services – Lorne Campbell Court Consultation on-going to deliver saving through implementation of new service model in Kintyre. 200 Engagement with key stakeholders is on-going, this includes staff side representatives. Firm dates for delivery of the saving is still to be confirmed. Additional ADP funding to support services Funding allocated to mitigate proposed saving – no service impact. 32 M Moir / A McGrory / A Tillery to organise transfer of resource to cover saving. NB – this will be a new cost pressure in 2027/28 unless the recurring cost is reduced or the funding is confirmed on a recurring basis. Contract Savings – for Approval Mobile Teams Contract Saving reduced to protect 24 Hour, 7-day Responder 450 Whole system funding has been agreed to cover the saving for the
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5 Service. The Mobile Teams in Kintyre and Cowal will be managed out over 3 months and replaced by mainstream care provision. first 3 months. Anticipated that saving will be achieved by May June. Plan in place – J Dreghorn, S Torrie, N Gillespie, J Gow to confirm when new contract / saving is fully agreed with Carr Gomm. Assumption of flat cash on all contracts – inflation removed Contracts that are not being reduced will be held at flat cash. 41 Complete – saving removed from budget no further action required. Helensburgh Community Transport – funding reduced Provides for some mitigation as options to develop a sustainable model are progressed. 51 In place – some assurance still required from Interloch re impact and future of service. No further action to achieve saving at the moment. Scottish Care – funding withdrawn Mitigation required in respect of engagement with independent sector. 44 Complete – meeting being arranged to address relationship with independent sector to put in place new communication channels. S Devaney to progress. Carers Centres – 6 Contracts / Providers with proposed maximum 15% saving Impact assessments provided, some resourcing is being held centrally to develop an area wide digital platform to modernise the service in partnership with the carer’s centres. The funding for mitigation will help manage the transition. 165 On-going but no immediate action required and low risk Carers centres aware and now in the process of considering access to flexibility fund. Agreed to continue at current rate for first quarter and reduction thereafter. Funded from £180k below. Care & Repair Negotiations underway to deliver modification to service 25 Complete Alzheimer’s Scotland – Outreach service Negotiations underway to deliver reduction to service. The main post diagnostic support contract with Alzheimer’s Scotland which provides an area wide service is being protected from savings. 118 Complete – agreed and Alzheimer’s Scotland will access the transition funding and are looking to part fund some service in Helensburgh funded from elsewhere. Mitigation / Flexibility – total saving to be achieved in a full year on contracts is £470k Funding for mitigation / transition. This funding will enable the HSCP to support transitional costs. (180) £45k allocated to date. Low risk and will continue to be managed by S Torrie / J Gow / HoS Full year saving for 2027/28 is £180k Saving requiring further Approval / governance New charges for Responder Service Requires A&B Council to approve implementation of £5 per week. Assume implemented from 1 July. Preference to protect the service even if charging is required to do so. 160 Report to Council and IJB in May. If approved this can be delivered. Full Year Additional Saving for 2027/28 is £140k Day Services Engagement on-going, Option appraisal to be presented in May 2026. 150 High risk at present – approach to delivery of this saving is to be confirmed.
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6 Use of General Reserve 67 This is being used to fund Interloch mitigation for 26/27 only Savings & Reserves 2,319 Considered Complete as at 17/4/2027 1,039 45% The impact of the savings programme is being monitored and will be reported to the IJB and its Clinical Governance Committee as evidence is gathered. A priority for the HSCP is to increase care at home capacity as there are demonstrable impacts and care bottlenecks being caused by the reduction in hours within care at home services. 3rd sector partners who are experiencing a reduction in funding are accessing the transitional resource set aside and, so far, the changes appear to be being managed and mitigated as well as can be expected. 3.5 Governance The HSCP will continue to be considered as one of the Council’s financial risks going forward and therefore it is expected that financial planning and the development of further savings plans will continue throughout the current year. Decisions already taken and the learning from the consultation process undertaken in December to March will assist the process, however identifying more savings will likely be increasingly difficult and impactful. 4. RELEVANT DATA AND INDICATORS 4.1 The data provided in this report is largely drawn from the social work finance and management systems operated by the HSCP / Argyll & Bute Council. 5 CONTRIBUTION TO STRATEGIC PRIORITIES 5.1 Financial planning is a key element of ensuring that the HSCP remains sustainable and can deliver on the Joint Strategic Plan. 6. GOVERNANCE IMPLICATIONS 6.1 Financial Impact – the outlook for the Social Work / Social Care budget in 2027/28 is challenging. It is positive that work on this is progressing early. 6.2 Staff Governance – none directly. 6.3 Clinical Governance – non directly. 7. Professional Advisory 7.1 Professional input has been provided throughout the development of the budget and the IIAs. 8. EQUALITY & DIVERSITY IMPLICATIONS 8.1 Integrated Impact Assessments will be required for all savings proposals required to balance the budget in 2027/28. 9. GENERAL DATA PROTECTION PRINCIPLES COMPLIANCE 9.1 None.
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7 10. RISK ASSESSMENT 10.1 Specific risks relating to financial planning for 2027/28 are outlined in this report. Financial Sustainability remains a very high grade strategic risk. Any requirement to progress with substantial new savings schemes will increase existing risks and / or create new ones. 11. PUBLIC & USER INVOLVEMENT & ENGAGEMENT 11.1 Public engagement on the budget has been extensive. The HSCP is transparent in respect of its finances and normally makes its financial reports publicly available. 12. CONCLUSIONS 12.1 This report seeks to provide an early overview of the budget outlook for social work and social care services for 2027/28. Whilst there is a high degree of uncertainty the development of a balanced budget is likely to be very challenging again. The Council are beginning work on this early, the HSCP is in the process of modelling the totality of its budget and will report full three year outlook figures to the next meeting of the Finance & Policy Committee. 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 AUTHOR NAME: James Gow, Head of Finance EMAIL: james.gow@argyll-bute.gov.uk