Argyll and Bute HSCP Budget 2025/26
Argyll and Bute Council · 26 March 2025
Back to Argyll and Bute HSCP Integration Joint Board (IJB) — 26 March 2025 and its agenda
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1 Classification: OFFICIAL Integration Joint Board Date of Meeting: 26 March 2025 Title of Report: HSCP Budget 2025/26 Presented by: James Gow, Head of Finance The IJB is recommended to: • Note the budget gap before savings and use of non-recurring resources is £12.8m. • Approve the HSCP expenditure budget for 2025/26 totalling £398.1m incorporating a savings plan totalling £5.6m and allocation of £3m in non- recurring resourcing. • Note the HSCP continues to face severe financial challenge and further savings are required as part of a financial recovery plan. • Note the HSCP has not been able to identify 3% in NHS savings and therefore expects to be required to implement further savings or it will require additional resource from NHS Highland. The gap is £4.2m as an opening position. • Note the HSCP has worked with both partners throughout the development of the budget. • Request the management team urgently develop plans to move the HSCP into a more sustainable operating model. 1. EXECUTIVE SUMMARY 1.1 1.2 This report seeks approval for the HSCP operational budget for 2025/26. It has been considered and endorsed by the Finance & Policy Committee at its meeting on the 18th March 2025. The IJB is required to approve an expenditure budget prior to the commencement of the financial year which is in balance. This has not been possible in respect of the NHS element of the budget. The budget assumes that further savings can be identified and delivered in-year and / or additional resources will be made available as the year progresses. The report also highlights the scale of the 2026/27 challenge facing the IJB as non-recurring funding will be unavailable. More broadly, public finances remain under severe pressure and the Health and Social Care sector is not operating in a sustainable way. All IJBs are in a similar position and are having to identify ways of delivering services more efficiently. The savings proposals outlined in this report are not sufficient on their own to deliver 3% savings on NHS budgets and therefore the HSCP will be reliant upon additional savings being identified and upon NHS Highland for additional resourcing. This may present governance and reputational risk as brokerage will no longer be available from the Scottish Government although
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2 Classification: OFFICIAL there is not an expectation that all NHS Boards and IJBs will be able to operate within the resources allocated to them. 1.3 1.4 1.5 The budget gap, before the application of non-recurring funding and savings is £12.8m. The savings plan totals £5.6m and the use of non-recurring resourcing provides a further £3m. This leaves a budget gap of £4.2m within the NHS Budget. There are savings of £500k still to be identified assumed in the Council budget position. Actions to address this will be required throughout the year and the HSCP can expect further direction from partners as it presents a financial risk to them. Cost and demand pressures are significant and take account of Social Care demand and overspending. Further savings will impact on access, availability or quality of service provision. The HSCP has sought to develop proposals which minimise adverse impacts on the most vulnerable but it will have to find ways of operating more efficiently to ensure it is making best use of the considerable resources it does have available. IJBs are facing an extremely challenging environment with un-funded cost pressures and unfunded increases and demand. The National Insurance increase could add significantly to the budget gap outlined in this paper if it is not funded or absorbed by commissioned service providers. This could result in further closure of key services by 3rd and private sector providers. The IJB is required to set a budget which does not exceed the resources being made available to it by partners, this is within the terms of the integration scheme. NHS Highland are aware that the expenditure budget is in excess of the resources allocated by them at the start of the year. NHS Highland are also in a position whereby they also have a forecast deficit and an unidentified savings target, after assuming the HSCP will address its gap. 2. Recommendations • Note the budget gap before savings and use of non-recurring resources is £12.8m. • Approve the HSCP expenditure budget for 2025/26 totalling £398.1m incorporating a savings plan totalling £5.6m and allocation of £3m in non-recurring resourcing. • Note the HSCP continues to face severe financial challenge and further savings are required as part of a financial recovery plan. • Note the HSCP has not been able to identify 3% in NHS savings and therefore expects to be required to implement further savings or it will require additional resource from NHS Highland. The gap is £4.2m as an opening position. • Note the HSCP has worked with both partners throughout the development of the budget. • Request the management team urgently develop plans to move the HSCP into a more sustainable operating model. 3. DETAIL OF REPORT 3.1 Budget Context The HSCP is not operating on a sustainable basis, this situation is common with many IJBs reliant upon reserves (where available) to achieve financial
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3 Classification: OFFICIAL 3.2 balance. In addition to the challenge for next year, the HSCP is overspending in the current year, an indicator of the on-going high levels of demand for care and dependency upon agency staffing to deliver it. Summary figures indicate that every IJB has a budget gap before savings, this totals £562m (on a £10bn budget) with the average gap just over 5%. The Argyll and Bute figure was slightly better than average. Most IJBs are therefore reducing services and increasing charging to try to manage the situation. The approach is local rather than national, contrary to the principles of whole system planning and those outlined in the National Care Service plans. The Scottish Budget has been approved by parliament. However, there is still material uncertainty regarding funding for the Employer National Insurance increase for commissioned service providers. The budget allocated some additional funding for the NHS and for Local Authorities. There is no new money for Social Care demand pressures and nothing for the NI increase for contractors. This approach fails to recognise increasing numbers of older adults requiring health and social care. Some of the key points are: • The Public Pay Policy is 9% over 3 years. • Argyll & Bute Council are providing funding for the NI increase relating to directly employed staff. No funding has been confirmed for commissioned service providers in the health and social care sector. NHS directly employed staff will be funded at 60% only creating a £1.5m cost pressure. • The minimum pay rate for health and social care is to increase from £12 to £12.60 per hour (5%) and funding is allocated to cover this. • There is a general 3% uplift for non-pay cost pressures within the NHS budget. • Health Boards in deficit are expected to work towards breaking even over a number of years and no brokerage is available from 2025/26. • NHS Boards are expected to set out how 3% savings can be made each year to move towards financial balance. • Funding for Agenda for Change uplifts and the reduced working week is expected to be made available to cover costs. There are no new medium term planning figures available, this report focusses on a single year budget for 2025/26. The HSCP, like many others, is not operating in a financially sustainable way. Action to improve efficiency and make better use of available resources is required urgently. Service Demand An increasing concern relates to demographic change. Health and social care spend correlates to population age, the number of older adults is increasing and projected to do so for many years. A second strategic challenge is the continuing inability to recruit permanent staff (HSCP and commissioned services), not unrelated to the demographic issue. Long term population modelling is complex and subject to variation with the actual future population. Analytical work is continuing to better understand this at a locality level and the implications for future service demand and models of care in our communities. The table below summarises population projections:
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4 Classification: OFFICIAL Age Group 2023 2028 2033 2038 2043 2048 65 to 74 12,779 13,565 14,469 13,773 11,382 10,028 75 to 84 8,332 9,098 9,222 9,833 10,444 9,855 85+ 2,814 3,089 3,711 3,899 4,024 4,323 We can expect demand to increase incrementally each year well into the 2040’s. The 75+ age group is expected to increase by 16% over the next 10 years (1.6% per year) with the 85+ group increasing by more. The Scottish Government are making no financial allowance for this. While funding models allocate resources to areas based on demographics, the total budget is not being uplifted. Recent funding uplifts do not take account of cost inflation fully, never-mind increasing service demand. This approach is likely to result in continuing annual overspending if budgets are not increased in proportion to a well understood pressure. Alternatively, budget setting will require a significant element of service reduction year on year. 3.3 Social Work / Social Care Budget – 2025/26 The funding allocations are now finalised and the Social Work Budget is summarised below. Argyll & Bute Council allocated a further £500k to the HSCP as part of its budget setting process which has enabled the HSCP to propose a balanced budget on the assumption that further savings are identified and implemented in-year. The Scottish Government have made no new funding available for Social Care, however, Local Authorities were allocated additional resource and some of this has been passed on to the HSCP on a recurring basis, including £500k for service transformation. A fundamental risk, not resolved at time of writing, is the increase in employer National Insurance from 1 April 2025. The threshold change has a disproportionate adverse impact on the sector due to the number of part time employees. The HSCP estimate of the cost for Social Care is £1.3-1.4m with no funding confirmed as at 19th March. This is proportionate to the national estimate at £84m. Strong representations have been made directly to the Cabinet Secretary by the independent sector and IJBs. These highlighted risk of service closures in the context of an already extremely challenging and unsustainable service environment. A Scottish Government response is expected at the end of March. This is not included in the budget and savings outlined below: Social Work Budget 2025/26 £’000 £’000 Underlying budget deficit 1,300 Cost & Demand Pressures Pay Inflation – core staffing 1,143 Pay increments 203 Employer NI Increase – core staffing 864 Increase to base employee costs – regrading and transfers in 666 Anticipated inflation on contracts, supplies and services 649
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5 Classification: OFFICIAL Children & Families Cost pressures 200 Older Adult Residential – fund current level of overspend 1,200 Care @ Home – fund current level of overspend 800 Allowance for 1% demand growth Older Adults – Demographic Change 450 Real Living Wage and Free Personal care – all services 2,823 Cost & Demand Pressures 8,998 Additional Resourcing: Employers NI Funding (60% SG and 40% Council) 864 Contribution to 24/25 pay settlement (1%) 339 Contribution to 25/26 pay settlement (1%) 370 Additional Funding from A&B Council 500 Inflation on NHS Resource Transfer 433 Real Living Wage and Free Personal Care uplift – all services 2,781 Total Additional Resourcing (5,287) Budget gap before savings 2025/26 5,011 Proposed savings and non-recurring resourcing are: Quantified Service Savings £’000 Risk Review of Care @ Home Contract Operational 712 Low Avoided inflation on above Operational 30 Low Increase in fees and charges – inflation increase Increase in fees already approved 200 Low Increased Telecare Charges Increase in fees already approved 40 Low Saving on ‘Just Checking’ Operational – not in use at present 15 Low Flat Cash Settlements on some contracts Operational – negotiated with service providers 100 Medium Care Package Reviews LD/PD/MH EQIA 1 200 Medium/ high Care @ Home Efficiencies Operational – EQIA in respect of individual elements to be provided as required 250 Medium/ high Additional Savings to be identified and delivered TBC 500 high Savings 2,047 Allocation of non-recurring pension saving 2,500 Low Allocation of reserves 464 Medium Total Savings / Non Recurring Funds 5,011
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6 Classification: OFFICIAL 3.4 Additionally there is an NI cost pressure for contracted services £1.4m. If not resourced it is expected that there would be a sharing of the cost between service providers and the HSCP. Further savings would be required to compensate for any HSCP element. There is no contingency within the budget. The Council Budget earmarks £500k for transformational change and spend to save projects, this resource is held separately to this budget. Plans are to be developed and will be informed by the Transformation Board and the approach to the budget gap in 2026/27. Areas under consideration include: • Care @ Home Service – scheduling, digital & systems development and analysis of resourcing models and assessment processes. • Agency staffing and accommodation. • Care Homes Strategic Assessment. • High-cost care package reviews and direct payments. • Kintyre and Mid Argyll service sustainability. The use of £3m in non-recurring resourcing is not sustainable and must be addressed, this resource is not available from 1 April 2026. Social Work Budget £’000 £’000 Resourcing Base Budget Allocation Council* 77,204 Funds Flow from NHS 14,432 Additional Funding 5,287 Non-Recurring Resourcing 2,964 Total Resourcing 2025/26 99,887 Expenditure Base Expenditure Budget 92,936 Cost & Demand Pressures 8,998 Savings ( 2,047) Expenditure Budget 99,887 *Resourcing and expenditure budget reduced by £1,407 for transfer of hostels to education. NHS Budget 2025/26 The expectation from Scottish Government is that NHS Boards should improve their financial position (where in deficit) each year aiming to achieving balance in the medium term. Efficiency savings of 3% are to be delivered annually. The implication is that the HSCP savings target is £7.9m. Savings at this level would require an assumption (un-realistic) that this 3% could be applied to SLA costs (to contribute £2.6m to the target). This is important as SLA increases are a substantial element of the budget and cost pressure. The allocation of sustainability funding to the HSCP is based upon it being able to operate within budget if it could deliver 3% cost savings, this has not been possible. Current operating frameworks within the NHS are being maintained, these constrain change. Significant service change (required to deliver savings at this level) must comply with Planning with People guidance. Additionally, there are
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7 Classification: OFFICIAL currently no mechanisms which enable a reduction in permanent staffing other than through natural turnover. The budget position for NHS services is provided below, the IJB is requested to approve the expenditure budget on the basis that there is a budget gap of £4.2m that requires to be resolved through additional savings or resourcing. NHS Highland are aware of this, however the expenditure budget outlined below is a realistic one and is required to fund the operation of current services. NHS Budget 2025/26 £’000 £’000 Opening Underlying Deficit 5,209 Unachieved Savings 1,127 Opening Underlying Deficit 6,336 Funding Uplift (3%) 7,709 Formula Funding (NRAC) improvement 3,659 Funding for AfC award – non pay elements 2,460 New Medicines Fund 4,766 National Insurance Funding 1,800 Sustainability Funding – recurring (NRAC Share of £70m) 1,335 Sustainability Funding – Non recurring share of £250m set to 3% saving (£2.1m below NRAC) 2,638 Total Additional Resourcing 24,367 Inflation & Cost Pressures Pay Inflation 3% 2,958 National Insurance Costs (inc SLAs) 3,000 SLA Inflation 4,073 Non-Pay elements Agenda for Change 2,460 Prescribing & Drugs Inflation 8% 2,352 New Medicines 4,766 LIH Medical Staffing 1,000 Out of Area & Complex Care Packages - MH 1,200 Resource Transfer Uplift 433 National Services Increased Top Slice 1,041 Regional Heart & Lung SLA uplift 500 2C GP Practices – additional costs 300 Glasgow - service increases 200 Labs re-modelling (revenue funded) 110 Fleet replacement and inflation 300 Inflation on PFI charges 134 Estates Inflation & Cost pressures 456 Depreciation & FRS16 100 Radiology Reporting Contract – increased volume 150 Renal Transport Contract 250 Child Health Screening 100 Total Cost Pressures 25,883 2025/26 Deficit / Budget Gap (3% saving target) 7,852 As there is non-recurring sustainability funding built into the table above, the recurring budget gap is potentially £10.5m, it may be the case that this funding becomes recurring as part of the budgeting process for 2026/27. The following
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8 Classification: OFFICIAL NHS savings proposals form part of the budget, governance is in place for monitoring these, however the identification of new savings will be an iterative process throughout the year and delivery of savings will require on-going support from NHSH: Risk Rating for Saving Saving Proposal £'000 £'000 £'000 Team Responsible Depreciation - end of life assets 70 Estates Energy price reduction & Estates Procurement 100 Estates Primary Care prescribing 250 Prescribing Performance Analyst 0.5wte Band 5 22 Planning Contract Cost Reduction - Addictions 21 Public Health Health intelligence support worker 0.5 wte – EQIA 2 20 Public Health Living Well Grants – EQIA 3 12 Public Health Living Well Network Funding – EQIA 4 25 Public Health Effective prevention outcomes framework 12 Public Health Drug purchasing efficiencies / cost reduction 400 Prescribing Dental Services budget adjustment 100 Dental Secondary Care Prescribing 100 Finance / SLAs Misc budget adjustments 76 Finance Establishment reviews 65 Adult Services Review of minor allocations budgets 45 Adult Services Telecom Lines 35 Planning Additional patient treatment income 30 Acute Minor changes to staff bandings 25 Adult Services Reserves review – removal of reserves no longer required 400 Finance In-year slippage on cost pressures (non recurring) 200 Finance Flow Navigation Centre 277 NHSH Supplementary Staffing Reduction 200 Adult Services Re-instate savings not delivered 561 526 40 Total 838 1,536 1,238 3,612 Summary of incremental changes to the NHS budget: £’000 £’000 Opening Underlying Deficit 6,336 Additional Resourcing (24,367) Cost Pressures 25,883 Gap Before Savings 7,852 Proposed Savings (3,612) Remaining Gap / Additional Funding Requirement (4,240) There are other opportunities to deliver cash releasing savings in 2025/26 still to be fully developed and agreed: • Time to Care Project (TBC)
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9 Classification: OFFICIAL • Distress Brief Intervention Contract (£150k) • Maternity Service Review (TBC) • Efficiency from SLA contracts (3% is £2.6m) • Rural General Hospital Review / LIH staffing model (£1m cost pressure) Savings relating to these will require to be approved after the year commences and will contribute to reducing the residual budget gap. An important risk is the new SLA model being developed by Greater Glasgow and Clyde Health Board. While we have no firm information on the impact, GG&C are looking to pass on cost increases to other Boards to the extent that they have not been funded. It is acknowledged that the model has not been updated to reflect activity patterns for some years and activity may not align with the contract value. The above indicates the HSCP does not expect to be able to fund its planned and committed expenditure within the resources being initially made available by NHS Highland as it has not been able to identify 3% savings. This position is common across the NHS. NHS Highland are aware that this is a risk to their financial position, also significantly in deficit, but they are assuming the IJB gap will be addressed. The IJB are requested to approve the expenditure budget on the basis that there is a budget gap of £4.2m. A savings target on the SLA and an NRAC share of the sustainability funding are options that could contribute to managing down the gap. The HSCP has a track record of operating relatively close to the formula funding allocated to it. Taking further action at this stage would disadvantage services within Argyll & Bute further. There is however a risk that the IJB position will be reported to Scottish Government as it may contribute to NHSH overspending. The Scottish Government have indicated that Brokerage is not going to be made available. The consequences may be that spend above funding will result in a reported overspend in accounts and the potential for External Auditors to make adverse Section 22 reports (per the Public Finance & Accountability (Scotland) Act). This risk applies to the IJB as well as NHS Highland. Further direction from NHS Highland on future steps to move towards a sustainable financial position can be expected. The IJB is asked to approve the NHS opening expenditure budget at £298.2m which is £4.2m greater than the opening funding offer. NHS Budget £’000 £’000 Resourcing Opening Offer 308,376 Resource Transfer to A&B Council (14,432) NHS Service Resourcing 293,944 Expenditure Opening Expenditure Budget 275,913 Cost & Demand Pressures 25,883 Savings ( 3,612) Expenditure Budget 298,184 Remaining Gap 4,240
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10 Classification: OFFICIAL 3.5 3.6 3.6.1 The structural gap for future years increases further as the budget relies upon non-recurring funds. The HSCP is required to continue efforts to narrow its budget gap for 2025/26 and intends to progress the projects summarised in the following sections. HSCP Summary Budget 2025/26 NHS £m Social Care £m IJB Total £m Opening Underlying Gap 6.3 1.3 7.6 Additional Resourcing (24.4) (5.3) (29.7) Pay, Cost & Demand Pressures 25.9 9.0 34.9 2025/26 Budget Gap 7.8 5.0 12.8 Mitigations Non-recurring Resources - (3.0) (3.0) Savings Plan (3.6) (2.0) (5.6) Remaining Gap / Additional Funding Requirement 4.2 - 4.2 Expenditure Budget 298.2 99.9 398.1 Urgent action is required to address the funding gap. There are unidentified savings included in the Social Work Budget to enable the HSCP to set a balanced budget and an additional gap in 2026/27 as non-recurring funding is not available. The expenditure budget for the NHS is £4.2m greater than resources available and action will be required to address this either through identification of additional savings or additional resourcing. Both partners are aware of the situation and dialogue is on-going to enable them to assess the risk associated with the HSCP financial position. • The NI issue for Health and Social Care providers is an additional risk for 2025/26. The HSCP has no identified resources to assist. • There is a remining budget gap for NHS services totalling £4.2m. • Reliance on non-recurring funding is a risk for 2026/27. Savings 2025/26 The IJB are asked to note the savings plan, the projects are listed above and total £5.6m. The delivery of the savings is a risk to the HSCP budget. The majority are operational in nature, the projects where EQIAs are required are highlighted in the tables and included as appendices. Further approvals (and EQIAs) will be sought as new proposals are progressed and detailed approaches to the unidentified savings target and budget gaps are developed. Summaries of key pieces of work underway are provided below: Care @ Home Contracts - £742k The saving outlined in the plan has been mutually agreed with the contractor. It was possible to achieve this level of saving through the
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11 Classification: OFFICIAL 3.7 elimination of duplication of service and therefore it is not expected that there will be significant adverse impacts. However, it is possible that, at certain times, there will be some reduction in the level of service available. Extensive partnership working has taken place with the contractor to deliver a mutually agreeable outcome that has the minimum possible impact on service and risk. There will continue to be a 24 hour response available during 2025/26 in the mainland area and Bute. Transformation and Service Reviews The Transformation Programme is in place, available resource is being allocated to priorities which will address the financial and staff resource challenge. Investment in change is challenging as resources that could have been invested are now being used to fund revenue cost pressures. However, the Council have required that £500k is set aside for future investment in transformation. There is also a shortage of capital resource. The Transformation Board and a series of other short life working groups are responsible for governance oversight. 3.7.1 3.7.2 Children’s & Families – Maternity Services Review The review of maternity services has been delayed but is nearing completion. The process is piloting a model for reviewing all services within Children, Families and Justice. It includes staff engagement from the outset and will take into account: • Configuration of services within Argyll & Bute. • Demographics, birth rates and complexity of need; and • Best practice and national service developments. The service budget under review is £2.7m with a further £3m included within the SLA with Greater Glasgow and Clyde for births which take place within their maternity units. The outcome will be reported through existing governance structures and a saving added to the plan if appropriate. Adult Services – Care @ Home Efficiencies The care at home service is a priority for transformation as it is not operating on a sustainable basis. There are a variety of models operating in local areas. Some are largely or wholly covered by the new contract while in others the service is delivered by HSCP employed staff and / or agency staff. Challenges include: • High demand and unmet need. • Increasing cost of agency staff. • Lack of housing options for workers (Islands & Oban). • Pressure to minimise hospital delays. The service impacts on a wide range of other services including those offered by community nurses, AHP teams and demand for residential care. The total budget sits at £20m. Specific consideration is being given to:
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12 Classification: OFFICIAL 3.7.3 3.7.4 3.7.5 • Linkages between telecare, mobile teams and responder contracts. • How to achieve a reduction in the use of agency staff and operate with sustainable staffing models. • Access and equity for Self-Directed Support payments. • Reviewing of assessment processes and governance of care packages. • A requirement for improved scheduling and digital systems. • A value for money review of the different models currently operating and re-consideration of the best strategic approach. Any specific policy changes to assessment methods or working practices will be supported by appropriate EQIAs. Longer-term planning for the financial and staffing implications of the increasing number of older adults is not adequately resolved. In order to reduce cost, it will be necessary to improve efficiency and ensure that resources are spent in the best way possible. A principled and values-based approach is being taken which will seek to deliver on the priorities (outlined in the strategic plan) in a fair, safe and equitable way. There is a short term opportunity to derive savings from reductions in agency staff costs through changes to accommodation provision and recruitment. Strategic development process is underway in respect of care homes, this piece of work is complex and will take further time to complete, it is not expected that financial savings will be derived from this budget in 2025/26 other than through inflation increases on charges. Adult Services – Time to Care The Time to Care project is nearing completion, it is externally facilitated by Meridian and funded by NHS Highland. It is intended to model how staff time is used within community teams with the objective of increasing the time staff have available to spend with patients and clients. It is intended that the project will report in April in a way that will enable some savings to be attributed to it. These are not likely to be immediate cash releasing savings and will not align with the initial savings plan for the project, it may help identify opportunities to reduce supplementary staffing in some teams. Acute & Complex Care – Rural General Hospital A review of the services offered within LIH is in its early stages. The HSCP will work with NHS Highland to look for opportunities to better co-ordinate activity in Oban and Fort William. There may be some options to reduce duplication across the sites and create more joined up and sustainable staffing structures. An approach to making better use of theatre capacity will feature with potential for income generation or reduction in SLA activity. Mid Argyll & Kintyre Service Model This project is intended to review all services delivered across the area to: • Address persistent staffing shortages.
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13 Classification: OFFICIAL 3.7.6 3.8 • Review demographic data and care needs. • Review the impact of recent investment in Kintyre (purchase of KCC and transition to an internal care at home service). • Identify unnecessary duplication. It is expected this work will identify savings, some of these could be available during 2025/26 but most are likely to relate to longer-term change to sustain services. No specific changes are incorporated in the savings plan. Care Package Reviews A decision has been made to invest in the review of care packages. The programme is being scoped and will include: • Care @ Home packages • LD/PD and Mental Health packages • Direct payments (Self Directed Support) The process will improve governance over care package decision making and the process will set targets for the number of packages to be reviewed starting with the most expensive ones. Care packages at present have a total cost of around £33m with 55 packages costing over £100k or £8.5m. These in total commit one third of the Social Care budget for the lifetime of clients, if spend is to be brought back into line with available resources, action on existing packages is important. Next Steps Following approval of the budget, directions will be issued to both partners. It is anticipated the HSCP will be asked to develop further saving and financial recovery plans urgently to reduce financial risk to both partners. Expenditure control processes will remain in place: • Chief Officer approval of all locum and agency contracts and extensions. • Moratorium on new social care agency contracts. • Continued scrutiny of vacant posts. • Changes to PECOS approval processes. • Implement Care at Home efficiency plan. The situation will remain challenging. It is likely that the HSCP will be required to continue to take short term decisions based on its financial position. On- going communication and consultation are critical as is engagement with partners. Professional support with the HR aspects of change is a gap within the management structure and a risk. Some mechanisms that organisations normally apply to reducing costs are not available as a result of policy commitments and approaches to HR management. Engagement with staff, the IJB and Finance and Policy Committee will continue. The financial challenge is now considered as a continual one rather than an annual process with the Finance & Policy Committee leading governance oversight.
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14 Classification: OFFICIAL 4 4.1 5 5.1 6 6.1 6.2 6.3 RELEVANT DATA AND INDICATORS Information is derived from publicly available public planning documents, professional networks and financial systems of both partners. CONTRIBUTION TO STRATEGIC PRIORITIES The Integration Joint Board has a responsibility to balance its budget and ensure spend and investment is aligned to the Strategic Priorities. GOVERNANCE IMPLICATIONS Financial Impact – the budget gap is significant and the HSCP expects to be reliant on additional funding from NHS Highland and potentially Argyll & Bute Council if it cannot identify and deliver sufficient budget savings during the year. The HSCP will continue to work with both partners on its savings proposals. There is a risk that this could result in adverse audit reports and reputational damage. Staff Governance – None directly from this report but there is a strong link between HR management and delivering a balanced financial position. Staff have been asked for ideas to contribute to savings and these have been reported to the IJB previously. Clinical Governance – There are clinical governance implications associated with the reductions in service required to reduce spend, these will be risk assessed and mitigated as far as possible. 7. 7.1 8. PROFESSIONAL ADVISORY The budget planning process for 2025/26 ensures that Professional Leads continue to be fully engaged. EQUALITY AND DIVERSITY IMPLICATIONS 8.1 Service changes will require impact assessments to be completed, the reductions in service being planned at present will have impacts on service users, these are typically individuals and groups that are covered by equality legislation. 9. 9.1 10. GENERAL DATA PROTECTION PRINCIPLES COMPLIANCE None. RISK ASSESSMENT 10.1 Financial sustainability is a Very High risk on the strategic risk register. Specific risks relating to this report include: • The HSCP is not able to identify savings opportunities to a great enough extent to enable it to operate within a very challenging budget. This could result in interventions from partners.
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15 Classification: OFFICIAL • There are additional cost pressures in year with pay increases and the SLA with Glasgow being specific risks. • Social Care funding for the Employer NI increase is not forthcoming putting the sector at risk or further inflating HSCP cost pressures. • The IJB may not support the proposals that are still to be developed to deliver the required savings. • Adverse impact upon workforce and lack of HR support to effect change. • The HSCP is not able to deliver the approved savings and operate on a financially sustainable basis in 2025/26 and beyond. This could have significance consequences for the IJB including potential adverse audit reports to the Scottish Parliament. The HSCP is not in a sustainable financial position as spend and service demand exceed resourcing, this is included in the Strategic Risk Register. Reliance upon non-recurring resourcing means that the challenge for 2026/27 and beyond is significant in addition to any further cost pressures that arise during 2025/26. There is no extant spending review covering 2026/27. 11. PUBLIC AND USER INVOLVEMENT AND ENGAGEMENT 11.1 None directly from this report, engagement on activities relating to savings and transformation forms part of the project plans where appropriate. The HSCP is transparent in respect of its finances and generally makes all reports publicly available. A public consultation on the budget was conducted in February 2024 using an interactive tool. The outcome was reported to the IJB. Whilst there were some specific issues raised, the overall tone of the responses indicated disappointment at the need to make reductions. To the extent that savings are necessary, the consensus indicated they should be evenly spread across services. A desire for management costs to be reduced was communicated by the public. The HSCP has not re-run the exercise due to the opportunity cost and real cost of extending the license for the software (£4k). It will however continue to communicate and engage with all partners in respect of the financial challenge it faces. 12. CONCLUSIONS 12.1 12.2 This report seeks approval from the IJB for an expenditure budget which is reliant upon the identification and delivery of additional savings and may also require additional financial support from NHS Highland. This situation has arisen as the HSCP has been allocated funding which assumed a 3% or £7.9m saving. Savings of this magnitude have not been identified. As a consequence, the financial sustainability of the HSCP must be considered to be a short term high grade risk. On-going work is required and is expected to improve the position and contribute towards savings targets and an improved financial situation. The gross budget gap before savings is £12.8m. The IJB is requested to approve: • the expenditure budget totalling £398.1m • the savings plan totalling £5.6m
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16 Classification: OFFICIAL 12.3 12.4 The HSCP is in an extremely challenging financial situation in 2025/26 as it still must identify and deliver further savings as well as address its structural budget shortfall in 2026/27. It expects demand for service will also continue to increase and inflationary pressure will likewise continue. The SLA with Greater Glasgow and Clyde and the resolution of the National Insurance increase for commissioned service providers are key risks to the financial plan. Dialogue with both partners in respect of the situation is continuing and the sector is seeking to ensure government are aware of the scale of the challenge. The constraints on the pace of service change and capacity to deliver it are further challenges. 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) SLT Budget Update 18/09/24 Amendments made IJB Budget Update 25/9/24 Noted Finance & Policy Committee Budget Update 28/9/24 As above SLT Budget Update 20/11/24 Noted Finance & Policy Committee Budget Update 22/11/24 Noted Finance & Policy Committee Budget Update 21/1/25 Noted SLT Budget Update 22/1/25 Noted IJB Budget Update 29/1/25 Noted Finance & Policy Budget Update 25/2/25 Noted Finance & Policy Draft Budget 2025/26 18/3/25 Draft proposals endorsed subject to final allocations AUTHOR NAME: James Gow, Head of Finance EMAIL: james.gow@argyll-bute.gov.uk Appendix 1 – Directions (2) Appendix 2 – EQIAs (4)