Month 4 Financial Performance
North Ayrshire Council · 25 September 2025
Back to Integration Joint Board — 25 September 2025 and its agenda
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Integration Joint Board 25th September 2025 Subject: 2025-26 – Month 4 Financial Performance Purpose: To provide an overview of the IJB’s financial performance as at Month 4 (July). Recommendation: It is recommended that the IJB: (a) notes the overall integrated financial performance report for the financial year 2025-26 and the current overall projected year-end overspend of £5.259m reducing to £1.733m after planned recovery actions; (b) notes the progress with delivery of agreed savings; (c) approves the actions which are being taken to progress financial recovery and that an updated recovery plan will be presented to the next IJB; (d) note the projected overspend position of £0.134m for services managed under Lead Partnership arrangements by South Ayrshire HSCP and request that a financial recovery plan is proposed to bring the budget back online for 2025/26; (e) note that services managed in East Ayrshire under Lead Partnership arrangements are projected to overspend by £0.430m and that a financial recovery plan will be presented to the IJB on 29 October 2025 for formal approval; and (f) notes the remaining financial risks for 2025-26; Direction Required to Council, Health Board or Both Direction to: - 1. No Direction Required X 2. North Ayrshire Council 3. NHS Ayrshire & Arran 4. North Ayrshire Council and NHS Ayrshire & Arran Glossary of Terms NHS AA NHS Ayrshire and Arran HSCP Health and Social Care Partnership MH Mental Health MDT Child & Adolescent Mental Health Services BRAG Blue, Red, Amber, Green UNPACS UNPACS, (UNPlanned Activities) – Extra Contractual Referrals NRAC NHS Resource Allocation Committee PAC Performance and Audit Committee MHOF Mental Health Outcome Framework MDT Multi-Disciplinary Team
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1. EXECUTIVE SUMMARY 1.1 The report provides an overview of the financial position for the Partnership and outlines the projected year-end outturn position informed by the projected expenditure and income commitments; these have been prepared in conjunction with relevant budget holders and services. It should be noted that, although this report refers to the position at the end of July further work is undertaken following the month end to finalise projections, therefore the projected outturn position is as current and up to date as can practicably be reported. 1.2 The projected outturn is a year-end overspend of £5.259m (1.5%) reduced to £1.733m through already identified financial recovery actions. There is an increasing risk to achieving financial balance during 2025-26, the projected outturn position is summarised below with the residual risk following already identified financial improvement actions: TOTAL Health/ NHS AA Social Care/NAC Projected Overspend @ mth4 5.259 2.051 3.208 Financial Recovery Plan Projections (3.526) (1.275) (2.251) Residual Risk 1.733 0.776 0.957 The Integration Scheme describes the required approach where there is a projected overspend on the IJB integrated budget, which includes the requirement to agree a recovery plan to balance the overspending budget. Only if the recovery plan is unsuccessful will the Health Board and Council consider making available interim funds. The projection assumes all mitigations and controls established in 2024-25 continue throughout 2025-26 as it is recognised that the same uncertainty and risks remain into 2025-26 and there needs to be tight grip and control over expenditure overall. 1.3 From the core projections, overall, the main areas of pressure are: care at home, residential placements for children, physical disability care packages, supplementary staff in wards, staff costs in Montrose House and Unplanned Activities (UnPACs) within the lead partnership for mental health. 1.4 The projected IJB outturn position has been adjusted to reflect the impact of Lead Partnership services. The overspend in relation to North Lead Partnership services for Mental Health is not fully attributed to the North HSCP as a share has been allocated to East and South HSCPs, similarly the impact of the outturn on East and South led services has been shared with North, both on an NRAC basis in line with the agreed risk sharing mechanism. There is a requirement for the 3 IJBs to be aware of the position for Lead Partnership services and plans to deliver services from within allocated budget, on that basis further information will be brought forward with further detail on Lead Partnership services.
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1.5 Since the setting of the budget in March 2025 the 2025/26 financial position has been adversely impacted by the below factors out-with the control of the IJB. • National Care Home Contract (NCHC) – the recent increase to the NCHC rate to reflect the impact of the nursing pay award resulted in an additional unfunded cost of £0.175m. • NHS Board allocation for the Employers National Insurance increase confirmed at 60% of funding – full year impact £0.664m • The current allocation for the Agenda for Change costs in relation to the reduced working week are currently being queried with the NHS finance team to ensure we receive our ‘fair share’ of the funding. The current funding allocated is £0.659m, the cost of covering all reduced hours is £1.497m, currently calculating actual cover costs and will request NHS AA review funding allocation. This request will be informed by information collated from services on the actual impact and cost. • Pay settlements for both NHS and Local Government staff have been agreed for 2025/26. The NHS element has been funded, and the current assumption is that the shortfall between budget planning assumptions and actual settlements will be fully funded for Local Government staff. 2. CURRENT POSITION 2.1 The report includes an overview of the financial position including commitments against the available resource, explanations for the main budget variances and an update on progress in terms of savings delivery. 2.2 FINANCIAL PERFORMANCE – AT MONTH 4 At month 4 against the full-year budget of £341.975m there is a projected year-end overspend of £5.259m (1.5%). The Integration Scheme outlines that there is an expectation that the IJB takes account of the totality of resources available to balance the budget in year. Following this approach, an integrated view of the financial position should be taken, however it is useful to note that this overall position consists of a projected overspend of £3.208m in social care services and a projected overspend of £2.051m in health services. Appendix A provides the financial overview of the Partnership position. The sections that follow outline the significant variances in service expenditure compared to the approved budgets. The projections for some areas will be subject to fluctuations as they depend on recruitment plans for new funding and the capacity of providers to take on work. Appendix F provides information on the costs of bank and agency staff.
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2.3 Health and Community Care Services Against the full-year budget of £98.615m there is a projected overspend of £4.330m (4.4%) which is an adverse movement of £0.206m and the main variances are: a) Care home placements – net projected overspend of £0.575m. This includes an overspend on placements of £1.275m which includes a provision for an average of 7 interim beds and reflects the recent increase to the NCHC to reflect the impact of the nursing pay award resulted in an additional unfunded cost of £0.175m. The adverse movement is mainly due to £0.508m of PD care home placements transferring to this budget which was approved as part of the recovery plan. The budgeted number of permanent placements was 765 and at month 4 there were 792 placements for older people and 14 PD placements resulting in a projected overspend of £1.275m. The plan to manage down the number of permanent placements to reach the target is challenging due to the need to respond to referrals from hospital and to continue to support those in critical and substantial need in the community. The overspend is partially offset by income recovered from charging orders which is projected to be £0.700m over recovered. This income is challenging to predict as it depends on the length of the legal process and time taken to sell the property that the charging order is registered to. b) Care at home is projected to be £1.672m overspent (£0.031m adverse). The position reflects the cost of meeting the significant demand and level of provision for care at home support. c) Physical Disability Services – projected overspend of £0.429m (£0.494m favourable) split as follows: £0.845m over in residential placements, £0.240m under in direct payments and £0.176m under in community care packages. The favourable movement is due to the transfer of £0.508m of PD cases to the older people care home placement budget. d) Integrated Island Services is projected to overspend by £0.311m (£0.045m adverse). The most significant variance is a projected overspend at Montrose House of £0.133m (£0.056m favourable) which relates to the net overspend on agency staff (i.e. net of underspend on employee costs) and overspends across property, continence and medical supplies, admin and transport. The Arran Patient Transfer contract is projected to overspend by £0.040m. e) Specialist Rehab wards – projected overspend of £0.190m (£0.024m favourable) (Redburn ward £0.234m overspend and Douglas Grant £0.044m underspend). The overspend is due to cover costs for vacancies as well as supplementary staffing for patients who require one to one support.
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f) Wards 1 and 2 – Projected overspend of £0.783m (£0.044m favourable). The overspend is due to increased use of supplementary staffing. All rehabilitation wards are operating at 100% occupancy supporting a high level of patient needs/complexity, which places pressure on staffing levels and the use of bank and agency staff to support additional patient observations. The senior manager has developed an action plan which will reduce this overspend and the reduction is reflected in the recovery plan. g) District Nursing – projected to overspend by £0.093m (£0.007m favourable) mainly due to an overspend on continence supplies. 2.4 Mental Health Services Against the full-year budget of £120.719m there is a projected overspend of £0.605m (0.5%) which is a favourable movement of £0.335m prior to the re-allocation of the Lead Partnership variance to East and South HSCP. The main variances are: • Learning Disabilities are projected to overspend by £0.620m (£1.044m adverse). It should be noted that most of the adverse movement is due to the all-age disability budgets being transferred from children’s services to Learning Disabilities and this resulted in an adverse movement of £1.094m. This £1.094m is across residential placements (£1.481m over), direct payments (£0.317m under) and community packages (£0.178m under). The main historic LD budget is projected to underspend by £0.385m across community care packages (£0.699m under), direct payments (£0.231m over) and residential placements (£0.034m over). This improvement from 2024-25 reflects the positive impact of assertive reviews of care packages and increased clawbacks from direct payments. • Community Mental Health services are projected to underspend by £0.154m (£0.059m favourable movement) across community care packages (£0.538m under), direct payments (£0.167m over), residential placements (£0.347m over) and Nethermains (£0.103m under). The main reason for underspend in community packages is the availability and capacity of adult community providers to deliver new packages of care. • There is a projected underspend of £0.353m in relation to the cost of Hospital Based Complex Continuing Care (HBCCC), this reflects the impact of change in provision for these services. There were plans to reinvest this in the service, but these plans are on hold as holding the funding was agreed as part of the recovery plan at month 3.
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• The Lead Partnership for Mental Health is projected to be £0.486m overspent (£1.321m favourable) and the main variances are as follows: • Adult Inpatients – projected overspend by £0.639m (£0.267m adverse) due to very high levels of continuous intervention which require additional supplementary staff and enhanced observations (1:1 and 2:1) and use of bank staff. There is an overspend of £0.288m at month 4 but this is partially offset by a recharge to another HSCP on a cost basis for an outwith authority placements which has incurred additional costs in relation to usage of supplementary staffing due to sustained enhanced observations. • The UNPACS (Unplanned Activities) budget – projected overspend of £1.353m (£0.016m favourable) based on current placements. UnPACS placements are for individuals with very specific needs that require a higher level of security and/or care from a staff group with a particular skill set/competence. There are no local NHS secure facilities for women, people with a learning disability or people with neurodevelopmental disorder. This can necessitate an UNPACs placement with a specialist provider which can be out-of-area. The nature of mental health UNPACs spend is that it is almost exclusively on medium- or long-term complex secure residential placements which are very expensive so a small change in placements can have a high budgetary impact. Due to the complexity and risk involved, transitions between units or levels of security can take many months. Applications to approve a placement are made to the Associate Medical Director for Mental Health who needs to be satisfied that the placement is appropriate and unavoidable prior to this being agreed. Part of the additional control measures agreed in month 3 was to expand the high- cost care package review group to include all UNPACS placement requests. • Learning Disability Services – projected to overspend by £0.056m (£0.045m favourable). This relates to the potential delays in achieving the saving from Trindlemoss moving from a nursing to social care model. The progress with this was impacted by the requirement to close Ward 7A in July 2025. It is assumed that Ward 7A budget will be online as the use of bank staff will reduce. • Elderly Inpatients – projected overspend of £0.133m (£0.131m favourable) due to the use of supplementary staffing. The elderly mental health wards continue to operate at full occupancy and at times with waiting lists, with several patients who are on enhanced observations and bank costs remain high.
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• Eating Disorders – projected to overspend by £0.127m (£0.002m favourable movement) due to the staffing level being higher than the funding allocation. This is being considered alongside the overall resource allocation. • Enhanced Mental Health Outcome Framework (EMHOF) – projected underspend of £0.624m. There was £0.624m of reserves held for EMHOF and the recovery plan approved the draw down of these reserves which is the reason for the favourable movement. • Psychiatry – is projected to overspend by £0.292m (£0.023m adverse) mainly due to junior doctor costs. A mitigation plan is being developed and the rota for junior doctors is being reviewed. • MH Pharmacy – is projected to overspend by £0.036m (£0.360m favourable), This favourable movement is mainly due to a prior year rebate. Prior to this rebate there was an overspend due to increased demand and cost of medicines, and particularly the cost of Buvidal. This position is after investing £0.510m on a Pan Ayrshire basis (£0.170m per HSCP). • Action 15 – is projected to underspend of £0.229m (£0.497m favourable). There was £0.487m of reserves held for Action 15 and the recovery plan approved the draw down of these reserves which is the reason for the favourable movement. The projected underspend is after considering the legacy costs from the 2024/25 review of funding. Innovation Fund – projected underspend of £0.025m (no movement) assuming that the posts to be redeployed as part of the EMHOF review are actioned. • The turnover target for vacancy savings for the Lead Partnership is held within the Lead Partnership as this is a Pan-Ayrshire target. There is a projected over recovery of the vacancy savings target of £0.701m (adverse movement of £0.173m) in 2025-26. Further information is included in the table below: Vacancy Savings Target (£1.160m) Projected to March 2026 £1.688m Over/(Under) Achievement £0.528m 2.5 Children and Justice Services Against the full-year budget of £41.619m there is a projected overspend of £1.606m (3.9%) which is a favourable movement of £0.924m and the main variances are:
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a) Care Experienced Children and Young People is projected to overspend by £1.915m (£0.942m favourable). This favourable movement is primarily due to the children with disabilities budget moving to Learning Disabilities. Some of these costs are offset by the contribution from the Home Office for Unaccompanied Asylum-Seeking Children which is detailed below. The main areas within this are noted below: • The children’s residential placements are projected to overspend by £2.691m (£0.037m favourable) based 34 placements in month 4. This demonstrates an increase of 5 places since the start of the financial year. There are several factors leading to this challenging position: o We have 32 places available in our internal children’s houses, due to demand these have been operating at 100% occupancy or over for some time, leading to increased use of external placements where residential care is required. o There remains an acute shortage of foster carers leading to residential care being necessary in emergency placement situations. o The requirement to support Unaccompanied Asylum-Seeking Children (UASC) under the National Transfer Scheme and to support trafficked young people who have been identified in North Ayrshire. o A number of young people in residential care have requested Continuing Care, whereby a young person can remain in their placement until age 21. o Where appropriate young people are placed to meet their educational needs, the cost of Residential School Placements in the most cases is shared 50/50 with Education services. o Contractual inflation has still to be agreed for most placements and it is likely that this will increase the projected costs of residential places which is outwith the control of the service. o Children’s Services are continuing to work with other services including Education and Housing to address the challenges through the work of the ‘Brighter Pathways’ Programme Board and associated workstreams. • Looked After and Accommodated Children (fostering, adoption, kinship etc) is projected to be £0.905m (£0.014m adverse) underspent. • Residential respite – placements are overspent by £0.073m (no movement). These short-term placements are used to prevent an admission to full time care or to avoid placement breakdown. • Employee costs – are projected to overspend by £0.071m (£0.079m favourable movement), largely due to staffing levels in the children’s houses and regrading of posts.
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• Care Leavers – projected underspend of £0.071m (no movement) in rent costs. • Section 29 Payments (Throughcare Team) are projected to overspend by £0.064m (no movement). b) Head of Service – is projected to underspend by £0.568m (£0.020m favourable). This consists of a projected overspend of £0.166m (£0.030m favourable) to the previous saving in relation to the staff reconfiguration in the children’s houses which was not achieved in 23-24 or 24-25 and this is offset by the grant funding in relation to Unaccompanied Asylum-Seeking Children (UASC), which is projected to amount to £0.764m (£0.028m adverse) and which contributes to costs incurred across a number of C&F service areas. c) C&F Health Team – is projected to overspend by £0.144m (£0.023m adverse) mainly in relation to the Band 6 to 7 regrade for Health Visitors and the progression of posts up the Band 7 scale. Part of this recurring cost was incorporated into budget pressures for 2025/26. 2.6 ALLIED HEALTH PROFESSIONALS (AHP) The non-employee costs element of the AHP services are projected to be on-line. All underspends in employee costs have contributed to payroll turnover. 2.7 CHIEF SOCIAL WORK OFFICER This is projected to underspend by £0.204m (£0.001m favourable). One contract has ceased at the end of June and there are savings against other areas. There is also an over-recovery of income in Learning and Development for social work student placements. 2.8 MANAGEMENT AND SUPPORT Management and Support Services are projected to underspend by £1.026m (£0.089m adverse) and the main areas of variance are: • There is projected slippage on the LD and MH transition funding of £0.263m (£0.017m favourable) due to delays in children transitioning into adult services. This involves complex planning by services with service users and families and can change over time based on assessed need when moving into adult services. • The 2024-25 budget included a budgeted deficit on the social care side of £0.437m which is offset by a budgeted surplus of £0.437m on the health side of the budget.
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• There is also a balance of overachieved savings of £0.061m (no movement) as a result of the 25/26 budget decision. • NHS shortfall in savings of £0.406m which is not coded to specific areas and held centrally until recurring savings can be identified. • An over-recovery of payroll turnover of £1.100m (£0.100m adverse) for social care services and an over-recovery of £0.302m (£0.101m adverse) for health services as outlined in the table below. The turnover targets and achievement for the financial year for Health and Social Care services outwith the Lead Partnership is noted below: Social Care Health Vacancy Savings Target (£3.400m) (£1.567m) Projected to be achieved by March 2026 £4.500m £1.869m Over/(Under) Achievement £1.100m £0.302m The areas contributing to the health and social care vacancy savings are spread across a wide range of services with vacancy savings being achieved in most areas. As part of the recovery plan, the vacancy scrutiny group has been enhanced with the Heads of Service and professional leads attending. Each post is scrutinised and filled only where deemed necessary with a recruitment freeze now implemented for all non-essential posts. For 2025/26 there will be a further recruitment delay with vacancy scrutiny approved vacancies being held for four weeks before they are advertised to create more payroll turnover. This will be for all vacancies except clinical or registered services vacancies or those which will incur cover costs. The turnover target for the North Lead Partnership for Mental Health services is detailed separately within the Lead Partnership information at section 2.4. 2.9 Savings Progress a) The approved 2025-26 budget included £4.019m of savings. BRAG Status Position at Budget Approval £m Position at Month 4 £m Red - 1.000 Amber 2.984 1.041 Green 1.035 0.686 Blue - 1.292 TOTAL 4.019 4.019
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b) The main area to note is that the red savings have increased since month 3 as the saving in relation to the Brighter Pathways is not as certain. Appendix B provides an overview of those service changes which do have financial savings attached to them and the BRAG status around the deliverability of each saving. 2.10 Budget Changes The Integration Scheme states that “either party may increase it’s in year payment to the Integration Joint Board. Neither party may reduce the payment in-year to the Integration Joint Board nor Services managed on a Lead Partnership basis…. without the express consent of the Integration Joint Board.” Appendix C highlights the movement in the budget position following the initial approved budget. Reductions Requiring Approval: Ref Description Amount (£000) 1 Virement to Medical Directorate from Mental Health Admin (0.028) 2 Primary Care Prescribing Tariff Reduction (0.556) 2.11 Pan Ayrshire Lead Partnership services and Large Hospital Set Aside Lead Partnerships: - The IJB position is adjusted to reflect the impact of Lead Partnership services. The outturn for all Lead Partnership services is shared across the 3 Partnerships on an NRAC basis. The outturn in relation to North Lead Partnership services is not fully attributed to the North IJB as a share is allocated to East and South Partnerships; similarly, the impact of the outturn on East and South led services is shared with North. At Month 4 the MH lead partnership is projected to overspend by £0.485m (£0.159m NRAC share for East and £0.139m for South). South HSCP (month 3 info) – projected overspend of £0.134m of which £0.050m (no change) will be allocated to North. The variance is mainly due to an overspend of £0.080m in the community store. This includes the costs of replacing mattresses, repairs and maintenance contract and equipment costs. There is also a projected overspend of £0.058m in the Family Nurse Partnership as the SG funding was based on the mid-point of the salary scale and all post are now at the top point of the scale. This will be a pressure in 2026/27. East HSCP (month 4 info) - projected overspend of £0.430m (of which £0.159m will be allocated to North - £0.119m adverse movement). The main variances are:
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• The Primary Care and Out of Hours Services budget £134.522m budget is projected to overspend by £0.622m. There are projected additional costs within Primary Care Contracting and Support £0.493m, due to a number of variances, including new Office 365 licence costs, additional spend related to the GP’s Sub-Committee and staffing costs. Primary Medical Services are projected to overspend by £0.688m, due to additional staffing costs, including increased pension and sickness cover costs. These projected additional costs are being partially offset by a projected underspend £0.170m against Ayrshire Urgent Care Services based on Summer/Winter module. Funding has been allocated to fully offset Urgent Care Pathway costs £0.823m, as well as Covid-19 Therapeutics of £0.274m, with costs projected at £0.233m. There is a £0.304m underspend in Dental services that reflects that staffing numbers are running at less than establishment. • Prison and Police Healthcare (Lead Partnership) The £0.106m projected overspend at month 4 is largely due to increase prescribing costs and is partially offset by reduced staffing costs. Prison prescribing was highlighted as a budget pressure as part of the 2025/26 budget. Both East and South Ayrshire IJBs have approved additional funding to offset this pressure however North Ayrshire IJB did not provide for this in their approved budget. The additional funding has not been allocated against the prescribing budget at this stage, with further pan-Ayrshire discussions to be undertaken to determine how to account for this in the current financial year and going forward. It is anticipated that the Prison and Police Healthcare projected overspend highlighted in this report will reduce as a consequence of this work. • Allied Health Professions (Lead Partnership) There is a projected underspend of £0.445m on AHPs services hosted by East Ayrshire for the current year, which mainly relates to staffing savings. • Other Services (Lead Partnership) The £0.146m projected overspend is due to increased Area Wide Evening Services costs, mainly due to additional staffing costs including high use of bank staff, which will require to be addressed going forward. • An initial financial recovery plan for East Hosted Services will be developed and progressed and will be brought to the IJB on 29 October 2025 for formal approval. This financial recovery plan will also require to be approved by North and South Ayrshire IJBs. Set Aside: - Work has been undertaken with partnerships to progress and develop set aside arrangements to fully implement the legislative requirement. This includes
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arrangements in relation to the use of Directions, Joint Commissioning Plans and overall progression towards fair share allocations of resources. Further work has been undertaken through the Ayrshire Finance Leads group to establish baseline resources for each partnership and how these compare to the NRAC “fair share” of resources. Ayrshire Finance Leads have now agreed a baseline methodology for set aside budgets which involves using the four full years prior to the pandemic, 2016/17 – 2019/20 inclusive. The HSCPs require to agree their final share of the baseline with each other, however the aggregate will remain unchanged. The table below shows the cost of the historic baseline at 2024/25 prices. The 2025/26 actual usage information is not known until later in the year. IJB Baseline at 2024/25 prices (£) East 31.870 North 39.966 South 34.488 Total 106.324 The annual budget for Acute Services is £488.0million. The directorate is overspent by £10.5 million after 4 months including legacy CRES. This was caused by overspends on medical and nursing staff, together non pay overspends on equipment and supplies. These are required due to the level of operational pressure experienced. Unfunded beds contributed an overspend of £2.2m after 4 months. Within the overall £10.5m overspend Medicine are over by £4.5m, Emergency Care by £3.6m, Surgery by £1.0m, Labs and Diagnostics by £1.2m and Women and Children by £0.9m. Legacy CRES and underspends on other budgets make up the difference. There is a material underlying deficit caused by: • Length of Stay (LoS) and emergency admission rates in NHS Ayrshire and Arran acute hospitals are above the Scottish average. • High expenditure on medical and nursing agency staff, high rates of absence and vacancies causing service pressure. • Delayed transfers of care and high acuity of patients.
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The IJBs and the Health Board work closely in partnership to maintain service and improve performance. In respect of Lead Partnership Services, the 3 Chief Officers and CFOs have met to consider improvements in the reporting and visibility of financial and operational performance for those services which we lead or are led by another HSCP. Actions have been agreed to develop more regular shared information to be shared across all 3 IJBs with an intention to incorporate this further detail into future financial monitoring reports during 2025/26. 2.12 FINANCIAL RISKS There are a number of financial risk areas that impact or may impact on the financial position. • Current overspend areas, especially in low volume / high-cost services e.g. Children’s residential placements, UNPACs, and supplementary staffing across community, mental health and learning disability wards. • Growing demand for services. • Staff recruitment and retention challenges across a number of service areas. • The expectation that performance will continue to be maintained or improved despite the significant resource challenges. • Ongoing delivery costs of Scottish Government policy directives, particularly where these are not fully funded or inflation proofed. • Pay settlements for both NHS and Local Government staff have been agreed for 2025/26. The NHS element has been funded, and the current assumption is that the shortfall between budget planning assumptions and actual settlements will be fully funded for Local Government staff. • Unearmarked reserves are depleted, there is no scope to absorb in-year variances, with any overspends requiring additional funding from partners. • The ongoing review of the Integration Schemes, where there is a focus on financial arrangements and risk share. • The wider system financial challenges and impact across the whole system, for example the financial position of NHS AA and the decisions taken to reduce the Board’s deficit may have impacts on other parts of the health and care system. • Removal of brokerage for NHS Boards, NHS AA have been asked by Scottish Government to deliver further financial improvement beyond their Board approved financial plan. • The overall sustainability of commissioned care providers, with eNICs compounding historic challenges re financial sustainability, there is a heightened risk of provider failure leading to handing back of care and contracts. • The ongoing ability to source packages of care for service users. • Progress with the work to develop set aside arrangements and the risk sharing arrangements agreed as part of this.
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• The recurring underlying levels of overspend which may impact on the Partnership’s ability to continue to sustain service levels in the future. • The use of supplementary staffing for enhanced observations across a number of service areas and the use of high-cost agency staff to support frontline service delivery in areas where there are recruitment challenges. • Agenda for Change Pay Reform programme – including Nursing Band 5-6 re- grade, protected learning time and reduction to the working week. • Scot Excel inflationary increases for children’s services have been significantly higher than assumed. • There is a risk in relation to recovering recharge income in relation to the LD Assessment and Treatment patients from outwith Ayrshire. These risks will continue to be monitored during 2025/26. 2.13 RESERVES The IJB opening reserves position, subject to completion of the 24/25 audit, is summarised in the table below. General Fund Reserve Earmarked Reserves Total Unearmarked External Funding HSCP £m £m £m £m Balance – 1 April 2025 - 2.381 0.780 3.161 Anticipated Drawdown - (2.381) (0.780) (3.161) Balance – 31 March 2026 - - - - The £0.780m HSCP earmarked reserve relates to the Service Redesign and Change Fund which is fully committed in 2025/26. Further detail on the reserves is given in Appendix D. 2.14 Financial Recovery Plan The IJB set a balanced budget for 2025/26 on 20th March 2025. This did not include any draw on reserves but did include the approval of £4.019m of savings to achieve financial balance. Services will continue to work towards implementing the recovery plan to deliver cost reduction targets while carefully managing the level of risk. This will include the preparation of equality impact assessments. The management actions and governance framework outlined below which were agreed in 2024/25 will continue throughout 2025/26: MANAGEMENT ACTIONS/CONTROLS AGREED IN 2024/25
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• Review of expenditure authorisation levels across the Partnership and escalation of specific decisions to senior officers. In particular, a new governance group has been introduced, involving the Director and Heads of Service, to oversee the agreement of higher value packages of care (above £40,000 per annum). • Staff communication in relation to discretionary/non-essential spend. • Review of temporary posts and robust vacancy management/approval. The vacancy scrutiny group now has representation from all of the Heads of Service and a recruitment freeze will be implemented for all but essential frontline posts. • Restrictions on all but essential overtime working. • Ongoing review of future year savings or transformation programmes to identify scope for acceleration. • Maximise opportunities from the recently reopened Independent Living Fund (ILF) Scotland. GOVERNANCE MEASURES AGREED IN 2024/25 • Establishment a ‘Finance Working Group’, chaired by the IJB Chair or Vice Chair. The Director and Heads of Service are members of the group. It meets monthly to facilitate increased oversight and scrutiny of the financial position and transformation programme as well as detailed budget planning for future financial years. • Strengthened support from Finance Team to front line services and increased engagement with Heads of Service and Senior Management Teams, including line by line reviews of all budget areas. MANAGEMENT ACTIONS/CONTROLS AGREED IN 2025/26 (AUGUST 2025) • Recruitment delay – there will be a recruitment drag with vacancy scrutiny approved vacancies being held for four weeks before they are advertised to create more payroll turnover. This will be for all vacancies except clinical or registered services vacancies or those which will incur cover costs. • High-cost care package group – the remit of this group will be expanded to include care packages for children with a disability and all UNPACs placement requests. • Oversight group for looked after and accommodated children in residential care – this group meets fortnightly to actively review all placements. NEW ACTIONS: • The senior managers for the main areas of overspend have been tasked with preparing an SBAR reports to be considered at the PSMT. This will cover current action being taken to reduce the overspend and future planned action. This will inform the update to the month 6 recovery plan. These actions will
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be tracked each reporting period and if progress is not being made an update will be made to the finance working group and IJB. • The Director and Chief Finance Officer have started a rolling programme of one-to-one meetings with individual budget holders across the HSCP to consider opportunities for cost reduction, service change and any spend to save propositions – to support the development of the 2026/27 budget but also to identify further cost reductions for the current financial year. RECOVERY ACTIONS – MONTH 4 UPDATE • The updated recovery action is outlined in Appendix E. This includes the proposals agreed at month 3 and updated progress at month 4 and any changes to target reductions. The actions are a mix of cost reduction targets across various services and a drawdown of reserves. At month 3 the position was: TOTAL Health/ NHS AA Social Care/NAC Projected Overspend @ mth3 5.187 2.271 2.916 Financial Recovery Plan Projections (4.012) (1.752) (2.260) Residual Risk 1.175 0.519 0.656 • At month 4 this has deteriorated to: TOTAL Health/ NHS AA Social Care/NAC Projected Overspend @ mth4 5.259 2.051 3.208 Financial Recovery Plan Projections (3.526) (1.275) (2.251) Residual Risk 1.733 0.776 0.957 • This plan will be reviewed each month and further recovery actions will be presented to the IJB for approval. PROPOSALS 3.1 Anticipated Outcomes Continuing to closely monitor the financial position will allow the IJB to take corrective action where required to deliver services in 2025-26 from within the available resource, thereby limiting the financial risk to the funding partners. The transformational change programme will have the greatest impact on the financial sustainability of the partnership, the IJB require to have a clear understanding of progress with the delivery of the transformation plan.
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3.3 Measuring Impact Ongoing updates to the financial position will be reported to the IJB throughout 2025- 26. 4. IMPLICATIONS 4.1 Financial The outturn is an overall year-end overspend of £5.259m (1.5%) prior to recovery action. The report outlines the main variances for individual services. The IJB unearmarked reserve balance is zero. This current position poses a financial risk to North Ayrshire Council and NHS Ayrshire and Arran. 4.2 Human Resources The report highlights vacancy or turnover savings achieved during the year. Services will review any staffing establishment plans and recruitment in line with normal practice when implementing service change and reviews as per agreement with the IJB. Tight vacancy scrutiny management arrangements are in place for the HSCP. 4.3 Legal None. 4.4 Equality/Socio-Economic None. 4.5 Risk Para 2.12 highlights the financial risks. The report falls in line with the agreed risk appetite statement which is a low-risk appetite in respect to adherence to standing financial instructions, financial controls and financial statutory duties and a high-risk appetite in relation to finance and value for money. The ‘financial viability of the HSCP’ risk on our strategic risk register. 4.6 Community Wealth Building None. 4.7 Key Priorities The ability to deliver on our strategic priorities may be compromised due to the greater financial risk faced in 2025-26 and the increased focus required on financial rather than service improvement. This will be kept under close scrutiny throughout 2025-26. If we are unable to successfully develop a financial recovery plan to achieve financial balance, consideration may be given to revising the strategic commissioning plan. 5. CONSULTATION 5.1 This report has been produced in consultation with relevant budget holders and the Partnership Senior Management Team.
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5.2 The IJB financial monitoring report is shared with the NHS Ayrshire and Arran Director of Finance and North Ayrshire Council’s Head of Finance after the report has been finalised for the IJB. Caroline Cameron, Director Author – Eleanor Currie, Chief Finance Officer [eleanorcurrie@north-ayrshire.gov.uk]
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PUBLIC INFORMATION 2025-26 Budget Monitoring Report–Objective Summary as at 31st July 2025 Appendix A Budget Outturn Projected Over/ (Under) Spend Variance Budget Outturn Projected Over/ (Under) Spend Variance Budget Outturn Projected Over/ (Under) Spend Variance £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 COMMUNITY CARE AND HEALTH 77,507 80,514 3,007 21,108 22,431 1,323 98,615 102,945 4,330 4,124 206 : Locality Services 32,828 33,942 1,114 5,914 6,006 92 38,742 39,948 1,206 1,137 69 : Community Care Service Delivery 40,500 42,245 1,745 0 40,500 42,245 1,745 1,624 121 : Rehabilitation and Reablement 2,108 2,118 10 0 2,108 2,118 10 (21) 31 : Long Term Conditions 868 915 47 10,661 11,677 1,016 11,529 12,592 1,063 1,123 (60) : Community Link Workers 384 379 (5) 0 0 0 384 379 (5) (5) 0 : Integrated Island Services 819 915 96 4,533 4,748 215 5,352 5,663 311 266 45 MENTAL HEALTH SERVICES 40,722 41,195 473 79,392 79,524 132 120,114 120,719 605 940 (335) : Learning Disabilities 31,712 32,332 620 747 747 0 32,459 33,079 620 (424) 1,044 : Community Mental Health 7,015 6,861 (154) 1,831 1,831 0 8,846 8,692 (154) (95) (59) : Addictions 1,995 2,002 7 1,899 1,899 0 3,894 3,901 7 6 1 : HBCCC 0 0 0 353 0 (353) 353 0 (353) (353) 0 : Lead Partnership Mental Health NHS Area Wide 0 0 0 74,562 75,047 485 74,562 75,047 485 1,806 (1,321) CHILDREN & JUSTICE SERVICES 35,862 37,307 1,445 5,757 5,918 161 41,619 43,225 1,606 2,530 (924) : Irvine, Kilwinning and Three Towns 3,122 3,184 62 0 0 0 3,122 3,184 62 50 12 : Garnock Valley, North Coast and Arran 3,538 3,595 57 0 0 0 3,538 3,595 57 54 3 :Intervention Services 1,788 1,793 5 0 0 0 1,788 1,793 5 9 (4) : Care Experienced Children & Young people 22,550 24,465 1,915 0 0 0 22,550 24,465 1,915 2,857 (942) : Head of Service - Children & Families 1,336 769 (567) 0 0 0 1,336 769 (567) (548) (19) : Justice Services 3,099 3,099 0 0 0 0 3,099 3,099 0 0 0 : C&F Health Team 429 402 (27) 4,995 5,140 145 5,424 5,542 118 95 23 : Lead Partnership NHS Children's Services 0 0 0 762 778 16 762 778 16 13 3 CHIEF SOCIAL WORK OFFICER 1,954 1,750 (204) 0 0 0 1,954 1,750 (204) (205) 1 PRIMARY CARE 0 0 0 54,591 54,627 36 54,591 54,627 36 (69) 105 ALLIED HEALTH PROFESSIONALS 0 11,349 11,350 1 11,349 11,350 1 0 1 MANAGEMENT AND SUPPORT COSTS 10,510 8,997 (1,513) 3,223 3,710 487 13,733 12,707 (1,026) (1,115) 89 OUTTURN ON A MANAGED BASIS 166,555 169,763 3,208 175,420 177,560 2,140 341,975 347,323 5,348 6,205 (857) Return Hosted Over/Underspends to East 0 0 0 0 (159) (159) 0 (159) (159) (591) 432 Return Hosted Over/Underspends to South 0 0 0 0 (139) (139) 0 (139) (139) (517) 378 Receive Hosted Over/Underspends South 0 0 0 0 50 50 0 50 50 50 0 Receive Hosted Over/Underspends East 0 0 0 0 159 159 0 159 159 40 119 OUTTURN ON AN IJB BASIS 166,555 169,763 3,208 175,420 177,471 2,051 341,975 347,234 5,259 5,187 72 Over/ (Under) Spend Variance at Period 3 Movement in variance from Period 3 TOTAL Partnership Budget - Objective Summary Council Health 2025/26 Budget
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2025-26 Savings Tracker Appendix B Social Care: Ref Description Deliverability Status at budget setting Deliverability Month 4 2025/26 Saving Previously Agreed Savings (Full year impact) 1 Review of Day Care provision Green Blue 0.100 2 Service redesign (CAAST Team and Corporate Parenting team) Green Blue 0.034 Adjustments 3 Payroll Turnover Green Blue 0.099 Mental Health 4 LD Responder Service Amber Amber 0.150 Children, Families & Criminal Justice 5 Brighter Pathways Amber Red 1.000 Community Care & Health 6 Review of Day Care provision Amber Blue 0.107 7 Care at Home Amber Green 0.500 Cross Service 8 Care Package Review (all services) Amber Amber 0.200 9 Deletion of vacant posts Green Blue 0.056 10 Increase to charging Green Green 0.186 11 Admin Post Savings Green Blue 0.114 12 Financial Inclusion Green Blue 0.357 TOTAL SOCIAL CARE SAVINGS 2.903
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Health: Ref Description Deliverability Status at budget setting Deliverability Month 4 2025/26 Saving Adjustments 13 Increase recharge to East Ayrshire for beds at Woodland View Green Blue 0.010 14 Payroll Turnover Green Blue 0.079 Other Savings 15 Admin Savings Amber Blue 0.186 16 Trindlemoss House - move to social care model Amber Amber 0.250 17 EICT/Rehab Amber Blue 0.150 18 Community MH/Wellbeing Review Amber Amber 0.100 19 Ward 7A - Woodland View Amber Amber 0.341 TOTAL HEALTH SAVINGS 1.116 TOTAL NORTH HSCP SAVINGS 4.019
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2025-26 Budget Reconciliation Appendix C COUNCIL Period Permanent or Temporary £'m Initial Approved Budget 137.739 Adjustments to baseline 0.014 Revised Budget 137.753 Resource Transfer 25/26 1-3 25.447 Additional Funding - 24/25 Adult Social Care RLW 1-3 P 0.073 Additional Funding RLW 1-3 P 0.126 Additional Funding - Money Smart 1-3 P 0.094 ICT Transfers 1-3 P (0.005) Additional Funding - Whole Family Wellbeing Funds 1-3 T 0.179 CJSW - S27 1-3 P 3.280 Development of People working in Childrens SW 1-3 P (0.390) Roundings 3 (0.002) Social Care Budget Reported at Month 4 166.555 HEALTH Period Permanent or Temporary £'m Initial Budget exc set aside 161.934 Month 10-12 Adjustments and adjusting for the full year impact of part years amounts and temporary funding. 8.532 Revised Budget 170.466 Resource Transfer 24/25 24.640 Resource Transfer 25/26 (25.447) NORTH NATIONAL INS 25-26 AMBUS 1 0.997 PRESCRIBING 25-26 AMBUSH 1 2.754 PRESCRIBING CRES 25-26 AMBUSH 1 (0.715) Training Grade Adj - April 1 (0.058) Training Grade Rates Adj - April 1 0.030 MH: Anticipate PDS Dementia (North) 25/26 1 0.094 MH: Anticipate Delivery of Veteran Specific 25/26 1 0.105 Anticipated RWW from SG 1 0.659 Anticipate 20% Tranche 2 ADP 1 0.174
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HEALTH Period Permanent or Temporary £'m Training Grade Adj - May 2 (0.013) Bwp 25-26 East Chest Heart Stroke 2 0.001 Bwp 25-26 East Nest Expansion 2 0.023 Bwp 25-26 East - Sds Advice Service 2 0.013 Bwp 25-26 East Sub Prescribing 2 0.170 25-26 South Budget Paper - North Substitute Prescribing 2 0.170 25-26 South Budget Paper - Pan Ayrshire Chest Heart And Stroke 2 0.001 25-26 North Budget Paper - Pan Ayrshire (vision Support Service 2 (0.005) 25-26 North Budget Paper - Pan Ayrshire (community store) 2 (0.155) HD52: EARLY INTERVENTION PSYCHOSIS 3 0.100 25-26 Pay Award Increase North 3 1.179 Training Grade Adjustment (Dean Funding) 4 0.011 Medical Pay Award - Senior Medical - Additional 1% 4 0.086 Medical Pay Award - Specialty Doctors - Additional 1% 4 0.006 Virement to Medical Directorate from Mental Health Admin 4 (0.028) Transfer MAT Standards Psychiatrist 0.2 WTE 4 0.029 Primary Care Prescribing Tariff Reduction 4 (0.556) BBV transfer from Public Health 4 0.269 ANTICIPATED BUDGETS INCL HERE (NOT IN LEDGER) 4 0.419 Roundings 0.001 Health Budget Reported at Month 4 175.420 TOTAL COMBINED BUDGET 341.975
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25-26 IJB Reserves Position Appendix D Area of Reserves Balance at 31 March 2025 Earmarked Funds £ : Alcohol & Drug Partnership 353 : Mental Health Action 15 135 : Primary Care Improvement Fund 46 : Service Redesign / Challenge Fund 780 : Family Wellbeing Fund 934 : Breastfeeding Network 36 : MH Recovery and Renewal /Enhanced MH Outcome Framework 365 : Early Intervention in Psychosis 92 : LD funding 82 : Donation (Police Scotland) 1 : Primary Care Improvement Fund IP 303 : GP Premises Improvements - tranches 1 and 2 3 : Dental Practice Improvement 29 : Appropriate Adult 2 Total Earmarked 3,161
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Financial Recovery Action Plan Appendix E FINANCIAL RECOVERY PLAN £m £m Projected Overspend at Month 4 5,259 5,259 SERVICE AREA Orginal Cost reduction target Revised Target at Month 4 Achieved at Month 4 Still to be achieved Target set (IJB Date) Comment a) Care home placements (60) (568) 0 (568) August 2025 - month 3 report This will bring the overall budget for placements and charging order income online. b) Physical Disability Services (res, community and DPs) (575) 0 0 0 August 2025 - month 3 report Some PD residential packages £508K (prev £575K) have moved to the older people Care Home placements budget. The older people placements will need to manage this transfer within the existing budget. c) Specialist Rehab wards (75) (75) (24) (51) August 2025 - month 3 report Based on planned action developed by the senior manager. d) Wards 1 and 2 (275) (275) (44) (231) August 2025 - month 3 report Based on planned action developed by the senior manager. e) Care at Home (300) (300) 0 (300) August 2025 - month 3 report Reflects the potential reduction to costs as an impact of the SG investment in unscheduled care TOTAL (1,285) (1,218) (68) (1,150) a) Learning Disabilities 0 0 0 0 August 2025 - month 3 report b) Community Mental Health services 0 0 0 0 August 2025 - month 3 report c) Lead Partnership for Mental Health : - Adult Inpatients (150) (150) 0 (150) August 2025 - month 3 report Inpatient Review being undertaken - Elderly Inpatients (50) (150) (50) (100) August 2025 - month 3 report Inpatient Review being undertaken - Psychiatry (150) (150) (150) August 2025 - month 3 report Junior doctor rota still to be revised. - Action 15 Reserves (486) (486) (486) 0 August 2025 - month 3 report Draw down of the full pan Ayrshire reserve - agreed with the CFOs at East and South - Enhanced MH Outcome Framework Reserves (624) (624) (624) 0 August 2025 - month 3 report Draw down of the full pan Ayrshire reserve - agreed with the CFOs at East and South NORTH AYRSHIRE ELEMENT 38.65% (564) (603) (448) (155) August 2025 - month 3 report TOTAL (564) (603) (448) (155) Health and Community Care Services Mental Health Services No cost reduction proposed but the service need to maintain the current position. All new placements need to be offset by discharges or reductions from care package reviews.
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FINANCIAL RECOVERY PLAN SERVICE AREA Orginal Cost reduction target Revised Target at Month 4 Achieved at Month 4 Still to be achieved Target set (IJB Date) Comment Children and Justice Services a) Residential Placements (1,000) (1,000) 0 (1,000) August 2025 - month 3 report Based on some placements moving to tenancies and other placements moving from external to in-house provision. TOTAL (1,000) (1,000) 0 (1,000) ALLIED HEALTH PROFESSIONALS 0 0 0 0 August 2025 - month 3 report No cost reduction proposed but the service need to maintain the current position. CHIEF SOCIAL WORK OFFICER 0 0 0 0 August 2025 - month 3 report No cost reduction proposed but the service need to maintain the current position. MANAGEMENT AND SUPPORT a) Payroll turnover (200) (200) 0 (200) August 2025 - month 3 report Increase to the current projection based on dragging vacancies for 4 weeks after vacancy scrutiny approval. b) Transition slippage (100) (100) (17) (83) August 2025 - month 3 report Based on historic slippage. c) Contractual inflation (25) (100) 0 (100) August 2025 - month 3 report TOTAL (325) (400) (17) (383) OTHER AREAS b) Agenda for Change - assume fully funded (838) (838) 0 (838) August 2025 - month 3 report Based on 100% cost of the half hour reduction in working week being funded. (838) (838) 0 (838) TOTAL RECOVERY ACTION (4,012) (4,059) (533) (3,526) Remaining projected overspend 1,733
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Bank and Agency Costs to Month 4 Appendix F Bank and Agency Costs M1-4 2025-26 1) NHS 4863 (Registered) 4864 (Unregistered) 4853 (Registered) 4854 (Unregistered) TOTAL Average per month NORTH CORE SLT ADULT 2,243 2,243 561 WARD 1 WOODLANDS VIEW 13,014 105,966 118,980 29,745 WARD 2 WOODLANDS VIEW 10,433 163,458 173,891 43,473 ACH REDBURN REHAB WARD NRS 13,388 67,121 80,509 20,127 ACH DOUGLAS GRANT REHAB WD NRS 10,033 15,926 25,959 6,490 WARD 3 WOODLANDS VIEW NURSING 4,009 163,350 167,359 41,840 WARD 4 WOODLANDS VIEW NURSING 682 14,566 15,248 3,812 NEW CLONBEITH NURSING(JURA) 42,815 35,539 78,354 19,589 WVIEW THE GLEN ECT 1,854 1,095 2,949 737 WVIEW WARD 10 ACUTE MH NRS 1,342 65,584 66,926 16,732 WVIEW WARD 8 ACUTE MH NRS 7,224 348,128 355,352 88,838 WARD 5 WOODLANDS VIEW 358 7,738 8,096 2,024 WVIEW WARD 7B REHAB MH NRS 2,302 2,302 576 NEW DUNURE NURSING(CLONBEITH) 15,397 57,881 73,278 18,320 MH BED MANAGEMENT 5,180 5,180 1,295 TRINDLEMOSS 25,494 80,544 106,038 26,510 ARRAN HOSPITAL NURSING 24,985 16,973 41,958 10,490 CAMHS UNSCHEDULED CARE 589 589 147 EARLY YRS-C/F TEAM 1 599 599 150 PACKAGE OF CARE (P) - AMG 47,860 47,860 11,965 PACKAGE OF CARE (P) - LMO 312 312 78 ARRAN DN 12,413 12,413 3,103 NC POC TEAM 2 990 990 248 NC POC TEAM 3 2,701 2,701 675 THREE TOWNS DN 101- 101- 25- IRVINE DN 11,776 11,776 2,944 NORTH WEST COAST DN 15,024 15,024 3,756 GARNOCK VALLEY DN 30,150 30,150 7,538 NORTH AHP MANAGEMENT TEAM 3,515 3,515 879 LADY MARGARET NURSING 5,274 2,873 8,147 2,037 PREVENTION + SERVICES SPT TEAM 2,397 2,397 599 LD HEALTH CHECKS 12,238 12,238 3,060 NORTH CLDT 5,777 164 5,941 1,485 LDS MANAGEMENT 2,286 2,286 572 MHANPS MH UNSCHEDULED CARE 1,720 1,720 430 MHS INPATIENT MGT 15,722 210 15,932 3,983 CMHT NURSING-NORTH AYRSHIRE 1,697 1,697 424 WVIEW WARD 7C FORENSIC REHAB N 2,207 39,395 41,602 10,401 INTENSIVE COMMUNITY NURSING TEAM 13,430 335 13,765 3,441 ADULT MENTAL HEALTH LIASION TEAM 13,881 13,881 3,470 PCMHT NORTH 1,798 1,798 450 WVIEW WARD 6 LOW SECURE NRS 14,683 54,904 69,587 17,397 WARRIX AVE 30,178 29,983 60,161 15,040 ICFN - COMMUNITY PHLEBOTOMY 4,709 4,709 1,177 WVIEW WARD 7A LD A+T NRS 25,422 25,422 6,356 WVIEW WARD 9 ACUTE MH NRS 11,528 11,528 2,882 WVIEW WARD 11 ACUTE MH NRS 11,631 11,631 2,908 WVIEW WARD 7A LD A+T NRS 402,876 1,804 14,532 419,212 104,803 WVIEW WARD 9 ACUTE MH NRS 107,700 107,700 26,925 WVIEW WARD 11 ACUTE MH NRS 48,625 48,625 12,156 419,132 1,894,961 1,804 14,532 2,330,429 2) SOCIAL CARE Month 4 Agency Cost Montrose House 128,839 Mh Acm 13,606 Ld Acm 13,864 TOTAL 156,309 Bank Agency