Revenue Budget 2026-27
North Ayrshire Council · 13 March 2026
Back to Integration Joint Board — 13 March 2026 and its agenda
Text extracted from the council's PDF. Layout and reading order may differ from the original.
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Integration Joint Board 13th March 2026 Subject: Revenue Budget 2026-27 Purpose: To update the IJB on the financial position for the Partnership for 2026-27, including the proposed delegated funding, service budget pressures, plans developed to set a budget and the associated risks. Recommendation: That the Board: (a) approves the budget for 2026-27 for the Partnership inclusive of all pressures, savings and reserves, noting that the funding position is subject to confirmation of the NHS Ayrshire and Arran budget (b) approves the new hourly rates for commissioned providers and Personal Assistants; and (c) notes the risks associated with this budget. Direction Required to Council, Health Board or Both Direction to:- 1. No Direction Required 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 IJB Integration Joint Board NAHSCP North Ayrshire Health and Social Care Partnership NAC North Ayrshire Council CAMHS Child and Adolescent Mental Health Services FPC Free Personal Care PCIF Primary Care Improvement Fund ADP Alcohol and Drugs Partnership UnPACs UNPACS, (UNPlanned Activities) – Extra Contractual Referrals SLA Service Level Agreement AfC Agenda for Change 1. EXECUTIVE SUMMARY 1.1 The report outlines the funding allocations from North Ayrshire Council and NHS Ayrshire and Arran, the service pressures, resulting budget gap and the savings plan for 2026-27. The Council budget was set on 25th February and NHS AA will set their budget on 7th April 2026; if the funding assumption from NHS AA changes from the planning assumption set out, the plans for the IJB will require to be re-visited. 1.2 The Scottish Government finance settlement set out a number of conditions and requirements for Health Boards and Councils in relation to funding delegated to
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Integration Authorities. The delegated funding outlined in the report (indicative for NHS AA) meets those Scottish Government requirements. 1.3 The financial context for this budget is exceptionally challenging. Cost and demand pressures across both health and social care continue to grow at a pace that significantly exceeds available funding, and this is compounded by a recurring underlying deficit carried forward from 2025–26. Against that backdrop, the primary focus of this report is to ensure that the IJB is able to set a legally compliant, in-year balanced budget, while being transparent about the scale of risk, the level of reliance on savings and policy decisions, and the implications for future financial sustainability. 1.4 The table below summarises the overall financial position for 2026-27: Social Care (NAC) £m Health (NHS AA) £m Total £m Funding Increase 11.147 4.714 15.861 Service Pressures – Appendix B (17.152) (4.855) (22.007) Budget Gap (6.005) (0.141) (6.146) Funded by: - Savings – Appendix C 1.577 1.239 2.816 2026/27 Budget Position (4.428) 1.098 (3.330) Estimated Opening Gap from 2025-26 (1.400) (1.592) (2.992) 2026/27 Opening Budget Gap Position (5.828) (0.494) (6.322) Note that green highlighted line represents the new in-year budget gap for 2026-27 and the legal requirement to set an in-year balanced budget and in the case of the Health/NHS budget this is a surplus. Further savings are required in recognition that there will be an overspend from 2025- 26 carried into 2026-27 relating to a number of pressures areas regularly reported to the IJB. Approving additional savings at this stage is prudent and necessary to ensure early action is taken to minimise any overspend in 2026-27. 1.5 The Partnership has undertaken extensive community engagement which commenced early December 2025 on the challenges of delivering social care services within budget. There is a separate paper on the IJB agenda for consideration, it is recommended that the remainder of the Social Care/Council gap is met through the review of eligibility criteria for access to funded adult social work and social care services. The remaining budget gap for Health/NHS services is smaller in value and primarily reflects current year pressures recurring to an extent next financial year, rather than a significant pressure on core funding, therefore it is recommended that the remaining health services gap is monitored closely in-year during 2026-27 with further recovery actions identified as required. 1.6 A number of financial risk areas are highlighted in the report and the IJB are asked to note these at this stage; the IJB may be asked during 2026-27 to approve any appropriate action to mitigate or manage these areas.
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1.7 The IJB Finance Working Group (FWG) has supported the development of the proposals presented and the financial position and options have been discussed in more detail in that forum; this has supported the opportunity to bring forward some proposals earlier for approval such as the 2026-27 Charges for Services. The FWG will play a critical role as we move into next financial year to provide additional oversight, scrutiny, challenge and support to further monitor the position and develop the budget further. 1.8 The proposed integrated budget for the IJB is £343.390m (inclusive of the estimated Set Aside budget of £42.670m). A summary of the 2026-27 budget and net budget increase is detailed within Appendix A. 2. BACKGROUND 2.1 Key Budget Principles A number of key guiding principles were set out for the approach to developing the IJB budget for 2025-26. We have been guided by these principals in setting the budget for 2025-26, in managing in-year pressures and in developing the budget for 2026-27 and are able to provide examples of how these principals have been taken forward in practice – including the recent budget consultation, review of charging policy, our transformation plans, the roll out of digital solutions, our communications approach and escalations to parent bodies and Scottish Government of our funding challenges. It is recommended that these key principles remain in place, these are set out below: • Maximise income from charging for services to protect the delivery of frontline services, ensuring that only individuals who have the means should pay more for the services they receive directly. • Manage within available budget limits – including re-design to deliver service within available resource. • Maximise efficiencies in the way services are delivered through a structured service review process. • Maximise opportunities for shared service and lead partnership delivery across the Ayrshires. • Values-based health and care– eradicating effort that provides no benefit for the person and a focus on self-management and prevention. • Tighten the eligibility criteria for targeted services to prioritise delivery of services to those with the highest levels of need and risk. • Improve services through digital innovation and maximise the use of digitally enabled care technology, where appropriate • Be transparent and open in our challenges, having honest conversations with our staff and communities. • Advocate for a better funding deal for North Ayrshire for community-based health and care services & actively pursue opportunities for additional funding.
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2.2 The Integration Scheme outlines a process of planning for budgets in future years where the Chief Officer and the Chief Finance Officer develop the funding requirements for the Integrated Budget based on the Strategic Plan and present it to the Parties for consideration as part of the annual budget setting process. This includes consideration of pay awards, contractual uplifts, prescribing, resource transfer and ring-fenced funds. The Integration Scheme approved by Scottish Ministers states that following determination of the Council and NHS payments to the IJB, the IJB will refine its Strategic Plan to take account of the totality of resources available and there is an implicit requirement to set a balanced budget prior to the new financial year. In December 2025 the IJB approved a refreshed Strategic Plan to 2030 which updates the HSCPs priorities for delivery and long-term planning. The new vision in the plan is “To empower people in North Ayrshire to live safe, healthy and active lives with fair and equal access to sustainable health and care services”. The new plan will be in place for the new reporting period beginning on the 1st of April 2026. In recent years, the budget process has moved away from that outlined in the Integration Scheme, with Scottish Government directives and expectations in relation to funding levels to be passed on to IJBs. Whilst the IJB are required to engage with the partner bodies in relation to budget pressures and savings, the overall funding allocation reflects an element of ring fencing and settlement conditions in relation to funding for IJBs. This has to some extent in previous years driven or led the approach to local decision making for resource allocation for IJBs across Scotland with the Scottish Government minimum prescribed level of funding being the default. 2.3 The benefits of a delegated funding approach from both partners are: • The IJB can manage the budget process in terms of developing pressures and savings (including providing for those pressures not planned to be funded by partners), providing greater transparency and governance re decision making. • Allows resource to be allocated by the IJB in line with the priorities in the Strategic Plan. • Allows the SG directive to be followed, not only in terms of application of the uplift but also in terms of policy areas to be prioritised (e.g. Mental Health and Drug and Alcohol services). • Facilitates the ongoing in-year management of the IJB financial position in relation to the funding and budget being managed on an integrated way to deliver financial balance. • Supports future years planning and the development of a Medium-Term Financial Outlook, supporting an earlier approach to financial planning and an integrated approach to distribution of resource. • Aligns with the proposals in the review of integration for budget planning and resource delegation for IJBs. 2.4 Scottish Government Budget 2026/27 – Settlement for IJBs For 2026/27 the Health and Social Care Budget and directives to Councils and Health Boards included the following. Local Government: For 2026-27 there was no directive in the North Ayrshire funding settlement letter and instead it referred to:
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• Having listened carefully to the arguments set out in ‘Strong Councils, Strong Communities’, I have sought to balance the desire to ringfence additional funding towards social care with the Verity House Agreement commitment to maximise fully flexible funding. In conclusion, I have allocated as much as possible of the additional revenue funding as General Revenue Grant for Councils to allocate as they see fit. I do, however, recognise the importance of sustainable adult social care services and as I set out in my statement, the government is committed to working together with local authorities on the delivery and improvement of social care. • Following our engagement work over the autumn, I am confident that Local Government will pass more in total to IJBs than is provided as an in-year transfer by Scottish Government. However, I do acknowledge that partnership working will be even more critical this year to ensure that the technical changes applied to the Adult Social Care GAEs are appropriately reflected locally. Health Boards: For 2026-27 there was no directive in the NHS Ayrshire and Arran funding settlement letter: • NHS Boards will receive a 2% uplift on baseline funding in 2026-27. This will provide funding towards the costs of the 2026-27 pay deals and provides a 2% uplift for non-pay costs to support inflationary pressures. Additional funding will be provided to meet the costs of the 2026-27 pay deals where uplifts exceed 3% in line with public sector pay policy, and full funding has been included for the agreed Agenda for Change pay settlement. Pay funding should cover all staff including those delegated to Integration Authorities (IAs). • A further £150 million of recurring funding has been included to support territorial boards’ continued implementation of the reforms committed to as part of the 2023-24 Agenda for Change (AfC) pay deal, including the additional one- hour reduction from 1 April 2026. Together with the £150 million recurring funding issued in 2024-25, this increases total available recurring funding to £300 million for territorial boards. This funding covers all staff under AfC terms and conditions, including those staff working in functions delegated to IAs. • While funding for reform and improvement measures will be routed through NHS Boards, elements will support activity in the community and delivered via IAs. Part of this package will be used to directly support our shared ambition to alleviate pressure across the health and social care system. • There is a specific reference in the NHS Board funding letter to - The funding allocated to IAs should be additional and not substitutional to 2025-26 budgets for services which are delegated. Therefore, Local Authority social care budgets for allocation to IAs must be at least £167 million greater than 2025- 26 recurring budgets. However, this is not reflected in the Local Government settlement and contractility to the position communicated to Local Government directly. Full detail is included in the settlement letters in Appendix D. To ensure some stability in funding for future years, when there is no direction included in the funding circular, then the funding consideration by both partners should be aligned to the Integration Scheme. This includes consideration of pay awards, contractual uplifts, prescribing, resource transfer and ring-fenced funds. This will be considered for budget planning in 2027-28.
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2.3 PARTNER FUNDING 2.3.1 North Ayrshire Council North Ayrshire Council met on 25th February to set their budget for the coming year including the contribution to the IJB. There is no direct general investment in the Scottish Government budget for social care and no national directive about the level of resource for Councils to pass on and this will be locally determined. As noted, the settlement letter references “I am confident that Local Government will pass more in total to IJBs than is provided as an in-year transfer by Scottish Government. However, I do acknowledge that partnership working will be even more critical this year to ensure that the technical changes applied to the Adult Social Care GAEs are appropriately reflected locally.” The draft Scottish Government Budget included the transfer additional funding of £167million to Local Government to support social care and integration for 2026-27. This relates specifically funding for the following areas: • Real Living Wage for Adult Social Care • Free Personal and Nursing Care The allocation for the Real Living Wage was reviewed at the draft budget stage with Scottish Government allocating an additional £20m in total to make up the shortfall. This takes the national funding to: • £174.7m for adult social care workers in commissioned services. • An additional £13.4m to improve pay for early learning and childcare workers in commissioned services. • £13.9m to support development of people working in children’s social work. • £7m to support provision of Free Personal and Nursing care. The North Ayrshire share of the additional £20m has still to be confirmed but is included at an estimated £0.500m for the budget estimates. Additionally, in line with the agreed approach North Ayrshire Council have passed through all other funding or adjustments to Social Care allocations in the budget settlement, including: • Adjustments to allocations for Children’s Services, Disability Assistance administration and Justice Social Work • Funding received for the 2026-27 pay settlement difference between 3% and 3.5% - note the core pay settlement of 3% is not directly funded. • Additional funding approved at the Council budget setting meeting on 25th February which reflected North Ayrshire Council’s General Grant uplift and a Council Tax increase of 7% - £4.961m This has resulted in a net increased contribution to the Partnership of £13.759m through the NAC budget setting process. Some elements of this relate to previous years and were already assumed in the Partnership base budget and this is shown in the table below. Category £m Funding to meet new expenditure requirements: Childrens Services Additional Funding 0.651 Scottish Disability Assistance – reduction in grant (0.094) Health & Social Care Uplift – Real Living Wage 4.688 HSCP share of SG Funding to meet pay awards:
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SG Funding for 26-27 Pay Award 0.441 Baseline additional Uncommitted Funding to HSCP 4.961 Share of the additional £20m funding (estimate) 0.500 Per the HSCP budget plans 11.147 Reconciling Items to the Council Budget Paper Amounts already included in HSCP base budget: - SG Funding for 25-26 Pay Award 0.777 - Criminal Justice Social Work 2.335 Share of the additional £20m funding (estimate) still to be distributed (0.500) Per Council Budget paper 13.759 2.3.2 Adult Social Care GAE – Budget Context The Scottish Government’s Local Government Finance Settlement for 2026-27 includes technical changes to the Adult Social Care Grant Aided Expenditure (GAE) methodology, which underpins the distribution of core local government funding for adult social care across councils. The updating of Population Census variables has resulted in the revision of 3 indicators - Personal & Nursing Care of Older People, Residential Care for the Elderly and Services for Home-based Elderly. Together the indicators distributed about £2.33 billion in 2025-26. Much of the underlying data has not been updated since 2011 or 2001, and the current formulae, which have not been updated since 1997 or 2002, have been found to be either incorrect, or not using needs-based indicator methodology, and so not reflecting the expected numbers of clients in each authority. These changes affect the relative share of funding received by individual councils, representing a redistribution of existing resources rather than the introduction of new, ring-fenced funding for adult social care. Noting that these changes are exceptional in nature and may create volatility between councils, and to mitigate the impact of this the funding floor for 2026-27 has been increased to 0.5% below the average change, limiting the scale of any relative reduction in funding. The Scottish Government has stated an expectation that the technical changes to Adult Social Care GAEs are appropriately reflected locally and has emphasised the importance of partnership working between councils and Integration Joint Boards (IJBs) in this context. While the settlement provides councils with a high degree of flexibility over the use of General Revenue Grant, the policy intent is that revised assessments of adult social care need should inform local resourcing decisions for integrated services. North Ayrshire Position: • For North Ayrshire, the revised Adult Social Care GAE methodology will have influenced the Council’s overall settlement position for 2026-27, with implications for the resources available to support adult social care services. • The shift in Social Care based indicators is an increase of £3.3m based on the previous year. Other GAE indicators for funding have also been updated and have
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gone up and down in line with distribution. Despite this update for Social Care indicators and a greater relative share for North Ayrshire, what North Ayrshire Council gain through a more up to date assessment of need through the GAE indicators has been negated through less financial support through the floor mechanism in the local government funding settlement. • The extent to which this change is reflected in the Council’s contribution to the Integration Joint Board will be a matter for local agreement, taking account of: • the revised GAE distribution, • existing IJB financial commitments and demand pressures, and • the sustainability of integrated services. North Ayrshire Council has agreed to increase the IJB funding by £4.961m for 2026- 27 which reflects the increase in core revenue funding above the assumed 0% flat cash settlement for the Council overall. Financial Planning Considerations: • It should be noted that changes to the Adult Social Care GAE distribution do not remove underlying demand, cost, or workforce pressures facing adult social care services, however the updated distribution formula does highlight that appropriate funding reflecting demand for adult social care services through the Local Government Finance Settlement has fallen short for a number of years in North Ayrshire. • This increase in funding is not directly passed through to the IJB for the delivery of social care services and is instead part of the overall consideration of the funding allocation to the IJB by North Ayrshire Council. • There remains a risk that any future GAE driven changes to council funding do not fully align with the IJB’s assessed cost pressures, reinforcing the need for early and ongoing engagement between partners as part of budget setting and financial planning. 2.3.3 For years 2027-28 and 2028-29 the financial planning assumption of North Ayrshire Council is that, out with specific funding to be passed though by Scottish Government, that financial pressures facing the IJB will be fully met by savings, i.e. a flat cash financial settlement. This reflects the flat cash position predicted for Local Government in these years. 2.3.4 NHS Ayrshire and Arran NHS Boards will receive a 2% uplift on baseline funding to meet any anticipated pay deal, with pay fully funded and provides 2% inflation on non-pay lines. Additional funding will be provided to meet the costs of the 2026-27 pay deals where uplifts exceed 3% in line with public sector pay policy, and full funding has been included for the agreed Agenda for Change pay settlement. Pay funding should cover all staff including those delegated to Integration Authorities (IAs). NHS Ayrshire and Arran are required to passport the 2% through to IJBs (£2.890m to North Ayrshire) and furthermore the difference in the pay award for Agenda for Change staff from 2% and 3.75% (£1.824m for North Ayrshire delivered services). It is therefore anticipated that an additional £4.714m of funding contribution towards pay and inflation pressures will be allocated from NHS AA. NHS Ayrshire and Arran will meet on 7th April 2026 to set their budget for the coming year, the financial allocation for the IJB will be set at that meeting, however there is minimal risk of a deviation from the Scottish Government directive and allocation methodology from previous years.
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Additionally, there is funding of £150m nationally for Agenda for Change Pay Reform. A share of this funding will be allocated to the IJB towards the associated costs for NHS staff, this is being followed up for 2024-25 to ensure the correct roll-forward into 2025-26 and it is anticipated at this stage that the costs of the pay reform will be fully funded moving into 2026-27 including the implementation to the final hour reduction to the Reduced Working Week. While funding for reform and improvement measures will be routed through NHS Boards, elements will support activity in the community and delivered via IAs. Part of this package will be used to directly support our shared ambition to alleviate pressure across the health and social care system. Continuing from 2025-26, brokerage will not be available to support overspends, and NHS Boards must work towards a break-even position which remains the statutory responsibility of the Accountable Officer. Historic brokerage remains repayable and has not been written off. Non-recurring sustainability funding of £150 million will be provided to territorial boards on an NRAC basis. This funding must be used in full to reduce pressures and the reported deficit. NHS Boards at stage two and above on 2 the NHS Scotland Support and Intervention Framework for finance will receive additional support in 2026-27 to improve financial sustainability, including non- recurring deficit support funding as notified in early September 2025. The NHS AA financial position for 2026-27 is very challenging, on 13th February 2026 NHS AA Board was escalated to Stage Four of the NHS Scotland Support and Intervention Framework. This applies across three areas financial sustainability, financial control and financial governance and leadership. It is noted that the Board has been at Stage Three on the Framework since 2018 and the financial position remains unsustainable over the short to medium term. NHS AA has the highest level of outstanding brokerage of any Board in Scotland at over £130 million. The Board has also recently had a Section 22 report published by Audit Scotland and are not forecasting to meet their targeted deficit funding in 2025-26. 2.4 2025-26 FINANCIAL POSITION The overall projected outturn position for 2025-26, as at month 10, is a projected year- end overspend of £2.802m (0.85% of the annual budget). This excludes the Reduced Working Week funding request of £0.551m which if awarded in full would reduce the overspend to £2.251m. Since the initial recovery plan was agreed in June 2025 there has been a £2.833m reduction in the projected overspend. Whilst the full-year benefit of the financial recovery plan has not been realised in-year in the bottom-line outturn, it has supported the delivery of mitigating a further deterioration to the position introduced through other in-year unexpected financial pressures and supported addressing or reducing overspends in core services moving into the new financial year. The main areas of budget and demand pressure are: care at home, residential placements for children, physical and learning disability care packages, supplementary staff in wards, staff costs in Montrose House and Unplanned Activities (UnPACs) within the lead partnership for mental health. Demand for services, particularly for social care support is volatile and there are significant costs and risks associated with responding to the requirement for low volume high-cost placements.
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The graph below illustrates the volatility over the year in the projected outturn position, and the significant improvement made during the year, noting that for 2025-26 financial balance will not be achieved. Many of the underlying overspend areas will continue into 2026-27 and services require to address these or there will continue to be a reliance on other budgets underspending and short-term high-risk measures to cease or delay spend. 2.4.1 2026-27 Opening Position The 2025-26 projected outturn of £2.802m has been reviewed to establish the anticipated impact on the 2026-27 position and any element of recurring over and underspends. Following a robust review by the Finance Team and budget holders the adjusted opening projection for 2026-27 is a predicted £2.992m overspend. This is higher than 2025-26 as the in-year position includes one off underspends due to a draw on reserves as part of the recovery plan. This reflects the full year impact of part year cost reductions achieved in 2024-25, including - care at home, Brighter Pathways, care packages, vacancy management and supplementary staffing – targeted improvement in other areas. Further information is contained in the Financial Monitoring Report for Period 10 which is also on the IJB agenda. It assumes all mitigations and controls established in 2024-25 and 2025-26 continue throughout 2026-27 as it is recognised that the same uncertainty and risks remain into 2026-27 and there needs to be tight grip and control over expenditure overall. The opening projected overspend for 2026-27 is predicated on maintaining Financial Recovery Plan Controls, and: • Removing the care home overspend and manging the number of placements in line with the budgeted level. • Reducing agency costs at Montrose House on Arran • The Brighter Pathways programme of work bringing children’s placement budgets into line across different settings including residential, fostering, kinship – recognising the impact of the change programme and new supports in place for 2026-27.
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• Significant reduction or removal of overspends on supplementary staffing across wards through focussed improvement work supported by the General Manager, Lead Nurse and responsible Senior Managers The main areas of continued risk and where overspends are anticipated as part of the £2.992m are: • Physical Disability Care Packages • Integrated Island Services • Learning Disability Care Packages • Section Payments • Inpatient Ward Staffing – for Community Rehab and Mental Health Wards • UnPACs • Psychiatry There are inherent risks in moving into 2026-27 with the level of overspends across a range of service areas and focus will remain across services to manage these, the IJB will receive regular updates through the financial monitoring report for 2026-27 on progress and on the final outturn position for 2025-26. 3. PROPOSALS 3.1 2026-27 REVENUE BUDGET PLANS The NA HSCP 2026-27 integrated budget is expected to be £300.720m (excluding Set aside) and £343.390m (including Set Aside budget of £42.670m). A summary of the 2026-27 total budget and net funding increase is detailed within Appendix A. The pressures and savings are detailed separately in Appendices B and C respectively. Sections 3.1.1 to 3.1.5 provide an overview of the pressures and savings. 3.1.1 BUDGET PRESSURES Service cost and demand pressures are detailed within Appendix B. Total net budget pressures for health and social care services total £22.007m. These have been developed in partnership, with Finance supporting front line services to identify current and emerging financial pressures, considering historic demand and costs and potential future variations. The provision of funding for pressures has the impact of increasing the budget gap to be addressed through savings, therefore the pressures are only included in budget plans where these are assessed as being absolutely unavoidable. The pressures are noted below with full detail in Appendix B: Category Social Care (NAC) Health (NHS A&A) TOTAL £m £m £m Pay pressures 10.325 4.262 14.587 Demographic Pressures 0.420 0.420 Transition Pressures 1.056 1.056 Contract Inflation 4.902 0.025 4.927 Lead Partnership Pressures:
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Pan Ayrshire Pressures 0.077 0.077 Other Pressures 0.449 0.491 0.940 Total New 2026-27 Pressures 17.152 4.855 22.007 Note that this excludes any expectation or plan for any debt repayment to North Ayrshire Council or NHS AA for the 2025-26 overspend, the Council and NHS Board would require to consider on what basis they would plan to fund any year-end overspend, i.e. through an additional contribution or repayment basis. Provision has been made for Health pan-Ayrshire pressures recognising the North Ayrshire contribution towards pressures faced for services led by East or South. These pressures were agreed with the Chief Officers and Chief Finance Officers with an agreement that the IJBs have a shared responsibility to fund. These will be monitored during the financial year. 3.1.2 LIVING WAGE The Living Wage will increase from £12.60 per hour to £13.45 per hour from April 2026. This uplift will be applied in the same way as the £10.90, £12 and £12.60 uplifts in the last three financial years. This will mean an uplift will be applied to a set percentage (national weighting) of contract values, in line with the average full workforce costs for residential and non-residential services. A separate agreed weighted percentage has been set for Personal Assistants who are paid directly through SDS Option 1 budgets. After the weightings are applied and the national insurance increase is taken into account the hourly rates being paid to providers and personal assistants as follows: *The 2026-27 rates continue to align with those which are proposed by East Ayrshire and South Ayrshire, ensuring a consistent pan-Ayrshire funding approach for our commissioned providers. 2025-26 Rate Per Hour 2026-27 Rate Per Hour Care at Home and Housing Support £23.08* £24.44* Sleepovers £15.45 £16.50 Personal Assistant Day Time Hourly Rate £16.94 £18.02 Personal Assistant Sleepover Hourly Rate £15.83 £16.89 3.1.3 NEW FUNDING GAP FOR 2026-27 The table below summarises the overall new funding gap for 2026-27: Social Care (NAC) £m Health (NHS AA) £m Total £m Funding Increase 11.147 4.714 15.861 Service Pressures – Appendix B (17.152) (4.855) (22.007) Budget Gap (6.005) (0.141) (6.146)
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£6.146m is the new budget gap for 2026-27 only and does not include the £2.992m underlying deficit from 2025-26 which also requires to be addressed through savings plans, the table below demonstrates the full budget gap which requires to be met through savings. Social Care (NAC) £m Health (NHS AA) £m Total £m Funding Increase 11.147 4.714 15.861 Service Pressures – Appendix B (17.152) (4.855) (22.007) Budget Gap (6.005) (0.141) (6.146) Estimated Opening Gap from 2025-26 (1.400) (1.592) (2.992) Total 2026/27 Opening Budget Gap (7.405) (1.733) (9.138) 3.1.4 BUDGET SAVINGS Savings in relation to NAC and NHS commissioned services are detailed within Appendix C. The savings are RAG rated informed by an overall assessment of the ease of delivery and the impact on services, indicating an overall risk of deliverability. The savings are split into: • Previously agreed savings • Adjustments (payroll turnover and recharges) • Operational savings • Policy – Models of care or efficiency • Policy – Service reduction or cessation • Eligibility Criteria – Subject to a separate report The IJB are recommended to approve the savings proposals. Approval will allow: 1. The IJB to work towards a balanced budget – with all savings being recurring. 2. Give the maximum time to implement the savings. 3. Reduce the risk around financial sustainability. 4. Reduce the risk to our funding partners. These savings proposals do not fully address the funding gap, as illustrated below: Social Care (NAC) £m Health (NHS AA) £m Total £m Budget Gap (6.005) (0.141) (6.146) RAG Deliverability Status Social Care (NAC) £m Health (NHS A&A) £m Total £m Red - - - Amber 0.100 0.041 0.141 Green 1.477 1.198 2.675 TOTAL 1.577 1.239 2.816
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Funded by: - Savings – Appendix C 1.577 1.239 2.816 2026/27 Budget Position (4.428) 1.098 (3.330) Estimated Opening Gap from 2025-26 (1.400) (1.592) (2.992) 2026/27 Opening Budget Gap Position (5.828) (0.494) (6.322) The Partnership has undertaken extensive community engagement which commenced early December 2025 on the challenges of delivering social care services within budget. There is a separate paper on the IJB agenda for consideration, it is recommended that the remainder of the Social Care/Council gap is met through the review of eligibility criteria for access to funded adult social work and social care services. The remaining budget gap for Health/NHS services is smaller in value and primarily reflects current year pressures recurring to an extent next financial year, rather than a significant pressure on core funding, therefore it is recommended that the remaining health services gap is monitored closely in-year during 2026-27 with further recovery actions identified as required. 3.1.5 LEAD PARTNERSHIP MENTAL HEALTH SERVICES The North partnership lead on acute and specialist Mental Health services across Ayrshire and therefore require to ensure that the services have plans to balance the budget moving into 2026-27. We have developed plans to ensure that lead partnership Mental Health services are sustainable and are not impacted by pressures elsewhere in services. The overall position for the lead partnership element of the North managed budget is summarised below: £m 2026-27 Baseline Increase 2.550 Pay Pressures (2.557) Demand Pressures (0.029) Budget Gap/Savings Requirement (0.036) Previously agreed savings - Adjustments (payroll turnover and recharges) 0.090 Operational savings 0.016 Policy – Models of care or efficiency 0.272 Policy – Service reduction or cessation 0.511 Net position – surplus 0.853 Estimated Opening Gap from 25/26 (0.892) Net position – deficit (0.039) 3.2 ACUTE SET ASIDE BUDGET Each Health Board, in partnership with the Local Authority and IJB, must fully implement the delegated hospital budget and set aside budget requirements of the legislation, in line with the statutory guidance published.
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The full implementation of the set aside arrangements is key to delivering a commitment to planning across the whole unplanned care pathway and partnerships must ensure that set aside arrangements are fit for purpose and enable this approach. Work has been ongoing with partnerships to progress and develop set aside arrangements to fully implement the legislative requirement. This includes 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 2024- 25 activity at 2025-26 prices inflated by 2% for 2026-27 prices. Note that this is estimate pending final information being available. IJB 2024-25 Activity at 2025- 26 prices inflated by 2% for 2026-27 East 34,003 North 42,670 South 34,844 Total 111,517 The NHS AA Chief Executive had previously requested the development of a joint strategic commissioning plan to enable the setting of directions to provide to NHS Ayrshire and Arran for Unscheduled Care, aligned with the Set Aside resources. The NHS AA Chief Executive had previously requested the development of a joint strategic commissioning plan to enable the setting of directions to provide to NHS Ayrshire and Arran for Unscheduled Care, aligned with the Set Aside resources. Furthermore, seeking the support from the 3 IJBs in the review, and onward approving and monitoring of the delivery of a Strategic Commissioning Plan in line with the provisions laid out in the Integration Schemes, as outlined below: The NHS Board will consult with the Ayrshire Integration Joint Boards to ensure that any overarching Strategic Plan for Acute Services and any plan setting out the capacity and resource levels required for the Set Aside budget for such Acute Services is appropriately coordinated with the delivery of Services across the Ayrshire and Arran area. The parties shall ensure that a group including the Director for Acute Services and Chief Officers of the three Ayrshire Integration Joint Boards will meet regularly to discuss such issues. The initial Set Aside base budget for each Integration Joint Board will be based on their historic use of Acute Services. The actual unit cost which would apply as part of any change to activity or service redesign is dependent on the scale of change planned and requires agreement in advance by all Parties. Any redesign of service requires to be agreed across the three Integration Joint Boards and be reflected in the Strategic Plans.
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In year pressures in respect of Set Aside budgets will be managed in year by the Health Board, with any recurring over or underspend being considered as part of the annual budget setting process. In any joint strategic commissioning plan each IJB will consider and outline a clear framework for commissioning, at a strategic level, the urgent and unscheduled care service funded from the ‘set aside’ budget. There is an ambition that the commissioning plan will indicate an expectation of service delivery that will see sustained and affordable improvement in relation to performance outcomes for the citizens of Ayrshire and assure best value to support the financial balance of urgent and unscheduled care provision through a review and system wide redesign of the preferred models of care. This work remains ongoing and there is an opportunity to refresh this alongside the national focus on NHS Renewal for Unscheduled Care. There have been recent discussions on a Pan Ayrshire and the recent establishment of an Ayrshire Transformation Board with representation from the 3 HSCPs, 3 Councils and Health Board to progress this work during 2026-27. 3.3 NHS RENEWAL – Operational Improvement Plan – Unscheduled Care In January 2025, the First Minister described plans to renew the health service and deliver the change that people in Scotland need. This Operational Improvement Plan is the first component, to be followed by publication of a population health framework and a health and social care service renewal framework. Together these plans will progress reform to ensure long-term sustainability, reduce health inequalities, further harness the benefits of digital technology, and improve population health outcomes in Scotland. They will set out how we will plan our services for our whole population over the short, medium and longer term. This Operational Improvement Plan describes a number of commitments and actions across NHS Scotland that are needed to improve the experience of patients. The plan brings focus to four critical areas that the Government is committed to delivering: • improving access to treatment • shifting the balance of care • improving access to health and social care services through digital and technological innovation • prevention – ensuring we work with people to prevent illness and more proactively meet their need NHS Boards, in collaboration with Health and Social Care Partnerships, were asked to evidence how they would deliver whole-system and sustainable improvement through the £100 million to deliver the Operational Improvement Plan. In 2025-26 the level of funding requested from Boards across Scotland exceeded the total additional funding available and the Scottish Government were unable to approve the entirety of each NHS Boards plan. In June 2025, the Scottish Government confirmed £10.079 million additional funding for NHS Ayrshire & Arran for 2025/26. This allocation is designed to support whole- system transformation and is broken down as follows:
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• £1.681m – Hospital at Home (H@H) expansion, including virtual capacity and care closer to home. • £6m – Discharge without Delay (DwD) and Frailty Services, embedding early discharge planning and front-door frailty models. • £2.399 million – Core Unscheduled Care funding to maintain essential flow and resilience. North Ayrshire HSCP has £1.081 million ring-fenced within this allocation as follows: • £746k – Enhanced hospital-based multi-disciplinary team (MDT) to deliver seven-day working, front-door frailty, and discharge-to-assess. • £335k – Mental Health Officer (MHO) capacity to address statutory compliance and reduce Adults with Incapacity (AWI)-related delays. The NHS Renewal allocation of £10.079m for Ayrshire & Arran, including £1.081m ring-fenced for North Ayrshire, has enabled progress on enhanced hospital-based MDTs and MHO capacity. However, delays in approval and recruitment have limited impact to date, and the non-recurring nature of funding poses significant risks to sustainability. Revised improvement trajectories show slower progress than originally planned, with delayed discharge numbers projected to remain high into mid-2026 unless additional interventions are implemented. Community unmet need is also escalating, with average waiting times for care packages for those who experience a delay in the community exceeding 120 days. Funding is conditional on achieving agreed outcomes such as embedding DwD principles, implementing front-door frailty services, and expanding virtual capacity, with robust monitoring and trajectory reporting required to secure future recurrent funding. The Scottish Government budget for 2026-27 includes £100m across Scotland, the individual allocations to Health Boards and IJBs have not been received to date. There remains a risk of recurring funding to meet the existing financial commitment in North Ayrshire of over £1m in addition to the further release of funds to take forward investment in other areas which would support hospital demand and flow. 3.3 FINANCIAL RISKS There are a number of ongoing financial risk areas that may impact on the 2026-27 budget during the year, these include: • 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. • 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.
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• The ability to re-pay funding partners in-year for previous year overspends given continued financial challenges. • The overall sustainability of commissioned care providers • Progress with the work to develop set aside arrangements and the risk sharing arrangements agreed as part of this. • 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. • Risk related to NHS Reform investment being allocated by Scottish Government on a payment by results basis and in arrears. • A risk of meeting legal obligations to deliver a balanced budget set against continued increased demand for services, inflationary impacts on the cost of care and the more difficult decisions which are required to reduce spend. These risks will be monitored during 2026-27 and any financial impact reported through the financial monitoring report. 3.4 IJB RESERVES The IJB is established as a Local Government body therefore has the ability to hold reserve balances. Reserve balances are held as part of an approach to good financial management, the purpose of reserves is as follows: a) As a working balance to help cushion the impact of uneven cash flows. b) As a contingency to manage the impact of unexpected events or emergencies; and c) As a means of building up funds, often referred to as earmarked reserves, to meet known or predicted liabilities. The balance of reserves should be considered as part of the budget setting process. The IJB has a reserves policy in place which outlines an optimum value of reserves to be held uncommitted in contingency, this is currently set as 2% to 4% of net expenditure, based on the lower value this would be around £6.014m of the 2026-27 budget (exc set aside). The IJB reserves position projected to 31st March 2026 is summarised in the table below. This reflects a significant in-year draw on both earmarked and unearmarked reserves. 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) Projected Balance – 31 March 2026 - - - - The final position for reserves will be outlined in the year-end outturn report in June 2026 and in the Annual Accounts, however at this stage it is anticipated that the IJB will not carry any reserves moving into the new financial year.
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Whilst the ambition would be to plan to replenish the contingency reserves for the IJB in future years, the reality is in the current financial operating environment there is not the ability or scope to plan for this in the short term. 3.5 2027-28 and 2028-29 3.5.1 A detailed Medium-Term Financial Outlook was presented to the IJB in December 2025. At that time the projected position for 2027-28 and 2028-29 was as follows: 3.5.2 The MTFO uses three possible scenarios to estimate what our additional funding could look like across the financial years 2027-28 and 2028-29. These are as follows: • Best Case – an annual uplift of 2% for social care and health. The funding assumptions have been scaled back based on the Scottish Govt Medium Term Financial Strategy 2025. This includes a forecast 3.3 per cent real-term average growth per annum, however, this is before required savings and efficiencies. • Medium Case – this allows for 1% uplift in 2027-28 and 2028-29. This is linked to the midpoint between Best- and Worst-case scenario. • Worse Case – flat cash from both Council and NHS Board. The MTFO sets out a range of cost pressures across each of the financial years. These cover pay inflation, demand and demographic pressures across health and social care services, and the possible costs of delivering national priorities. As Scottish Government budgets continue to be for one year only, assumptions are made for future years. Cost pressures are currently estimated at £11.536m for 2027-28 and £11.592m for 2028-29. 3.5.3 The modelling from December 2025 has been updated to reflect updated pressures and savings (full year impact of 2026-27 savings). This has been carried out across best, medium and worst-case scenarios has identified the following potential positions for 2027-28 and 2028-29:
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3.5.4 Our budget position for 2026-27 has proven to be closest to the medium and the worst- case scenario which was previously projected for that year and it would be prudent to assume a similar position for the following years. • For 2027-28 this would mean identifying savings between £7.971m and £10.761m • For 2028-29 this would mean identifying savings between £5.842m and £11.592m. Cost pressures have continued to be assumed on a consistent basis with 2026-27 excluding the impact of the increased to employers’ superannuation contributions in 2026-27. 3.5.5 On that basis, it is highly likely that the IJB will continue to face significant budget gaps which will require to be addressed in order to set a balanced budget. The IJB Finance Working Group will continue to meet regularly and will be presented with opportunities and options to work towards a sustainable financial position for future years. 3.6 NATIONAL FINANCIAL POSITION OF IJBs AUDIT SCOTLAND FINANCE BULLETIN 2024-25 (published 26-02-26) Local government in Scotland: Financial bulletin 2024/25 | Audit Scotland Key Messages for IJB Members:
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• Despite a 2.3% real-terms increase in funding, IJB finances continue to deteriorate as cost pressures outstrip available resources. • Total IJB reserves are now lower than the forecast 2025/26 budget gap, reducing financial resilience. • Audit Scotland is explicit that difficult decisions are unavoidable, including potential changes to service models, eligibility criteria, charging, or withdrawal of non-essential services. National Financial Position (2024/25) • Net cost of IJB services: £12.5 billion • Savings delivery: 78% of planned savings achieved nationally • 22 of 30 IJBs reported an in-year deficit • Increasing reliance on additional in-year partner contributions, which Audit Scotland considers unsustainable Reserves and Financial Resilience • Total reserves at year-end: £404 million (of which £316 million is earmarked) • Reserves fell by 12% compared to 2023/24 • Almost half of IJBs hold no contingency reserves • Only two IJBs meet the commonly referenced 2% contingency reserve threshold Savings and Transparency • Savings targets increased to £364 million in 2024/25 • Public reporting remains inconsistent, particularly on recurring versus non- recurring savings • Reliance on non-recurring savings (e.g. vacancies) presents significant financial risk 2025/26 Financial Outlook • Forecast national budget gap: £449 million • Average gap: 3.6% of net service costs • Gap-bridging plans include unidentified savings (10%) and use of reserves (5%), which is not sustainable Governance and Leadership • 86% of IJB audits raised financial sustainability risks • Over 50% of IJBs experienced senior leadership turnover in 2024/25 • Leadership instability undermines long-term financial planning and transformation Implications for IJB Decision-Making Audit Scotland concludes that maintaining current service levels within existing resources is not feasible. IJBs will need to lead strategic service redesign, review eligibility thresholds, consider charging and prioritisation, and engage transparently with communities about the impact of change. 3.6.1 Presentation of position There is regular reporting by IJBs of the individual and collective financial position thorough internal governance mechanisms but also through audit and directly through returns to Scottish Government Health Finance directorate. Chief Officers met with the Cabinet Secretary on 5th March 2025 to present an overview of the national picture for IJBs, some of the context around the rising pressures and cost of services, and to bring to life the impact of a critically challenging financial position for service delivery, risks and performance expectations in the coming year. North Ayrshire IJB is not alone in facing these challenges and whilst there is variation around the scale of the gap for IJBs, there are many similarities in the pressures facing us across Scotland. The Cabinet Secretary received a presentation which highlighted:
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• 2025-26 projected budget gap, including the worsening position for reserves. • Historical funding settlements for IJBs • Trends in health and adult social care spend. • Risks to the financial position, service provision and performance • Scale of the impact in terms of service provision levels • Social Care provider sustainability risks • A case study from an area illustrating the link between financial resources and delayed discharge performance. • Priority of need and risk management • Links to national priorities and policy directives Chief Officers set out a number of asks in relation to: • appreciated the opportunity to share the scale of the collective challenge and have this understood and heard – and want the opportunity to build in more regular visibility of this • recognise there is limited resource available which has not already been committed on other priorities – however would seek to influence decision making around priorities for future resources. Currently working within local systems on the whole system plans to inform the NHS Renewal submissions. Chief Officers would ask that consideration is given to the priority for investment in community services and that any resource asks from IJBs are prioritised • Would ask that there is a greater appreciation that there is local variation and complex reasons for this, the solutions and decisions required across areas may therefore be different • Lastly, seek that our positions are understood and appreciated at a national and local level, and that there is a level of understanding and honest reflection of the reality of the financial pressures and difficult decisions required. Would ask for support to manage public and political expectations around the scale of change, service impacts and implications for performance. COSLA highlighted a significant gap for social care services moving into 2026-27 and called for an urgent £750million investment to stabilise the sector and prevent service crisis. Raising concerns of a structural financial crisis facing social care, warning that failure to invest results in reduced care packages and increased pressures on families. This investment is not reflected in the Scottish Government budget for 2026-27. The North Ayrshire IJB Chief Officer met together with Craig Hatton, Chief Executive of North Ayrshire Council on Thursday 12th February with the Cabinet Secretary and Minister to discuss the financial position of the IJB. This was following a request in December 2025 for the Chief Officer to write to set out our challenges and request consideration of further funding for North Ayrshire IJB particularly to meet demands and needs for social care services. The Cabinet Secretary and Minister acknowledged the difficulties we face and referred to opportunities to work with NHS Ayrshire and Arran on shifting the balance of care and risk-share and hospital at home service developments and confirmed there is no further funding available from Scottish Government. 3.7 Strategic Risk Register
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The Strategic Risk Register (SRR) is normally made available on the same agenda as budget setting, with the IJB last reviewing this is in June 2025. The SRR helps to ensure the IJB are proactive in identifying and managing the risks to the successful delivery of our Strategic Plan. The scoring of risks on the SRR are informed by the severity of risk multiplied by the likelihood of it happening. Given the significant budget challenge and significant recommendations to balance the financial position the SRR will be reviewed following the budget meeting and presented to the next IJB. The current risks on the SRR are: SRR01 Financial Sustainability SRR02 Infrastructure (ICT Integration) SRR05 Transformational Change Programme SRR06 Governance SRR07 Demography and Inequality Pressures SRR08 Workforce SRR09 Local Impact of Scottish Government Policies SRR12 Clinical and Care Governance SRR13 Provider Failure (commissioned services) SRR14 Asylum Arrivals SRR15 Risk of Harm SRR16 Growth and expansion of specialist complex care developments 3.8 Anticipated Outcomes There are a number of outcomes anticipated in relation to the 2026-27 Budget: • The proposed plans will work towards a balanced budget for 2026-27. • Transformational Change for financial and service sustainability will feature at the forefront of the IJB and NAHSCP agenda throughout 2026-27 and beyond. • The remaining financial gap will require further decisions to be considered in relation to eligibility criteria for social care services, this will overall lead to a reduction in the level of care delivered next year. 3.8 Measuring Impact • Full year financial outturn forecasts will be compiled monthly with variance analysis and relevant explanations. • Regular financial review sessions will be undertaken with the Director, all Heads of Service and relevant senior managers in NAHSCP to ensure timely action is being taken where needed to stay within budgets. • Regular financial performance reports will be presented to the IJB to ensure it is kept fully informed of performance and importantly any major areas of concern requiring corrective action. • The Transformation Board will meet regularly to review progress with savings and any corrective action required to bring any plans back online. 4. IMPLICATIONS 4.1 Financial It is essential that the IJB and NAHSCP operate within the 2026-27 delegated budget, this is supported by approving a balanced budget before the new financial year. The report outlines estimated delegated funding and the pressures required to be met from within the overall integrated budget. It is estimated there is a requirement to deliver £9.138m of planned savings during 2026-27 alongside dealing with a number
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of other known pressures and the risk of managing fluctuating demand for services. There remains a balance of £6.322m of savings to be approved, with most of this aligned to the requirement to re-set eligibility criteria for access to social care. The estimates are based on a robust understanding of the additional resources available, the risks and challenges faced by the Partnership and the anticipated budget pressures. Appendix A shows the total 2026-27 IJB Budget Appendix B shows the proposed service pressures. Appendix C shows the proposed savings. Appendix D shows the Scottish Government Finance Settlement letters. 4.2 Human Resources There will be full consultation with the Trade Unions as appropriate. 4.3 Legal The IJB has an implicit obligation to funding partners to set a balanced budget prior to the start of the new financial year. The financial position and funding as detailed out would result in both partners complying with the Scottish Government directives re delegated funding for Integration Authorities. Legal advice has been sought on proposals aligned to the budget, to ensure alignment with the Council and Health Board continuing to meet their statutory duties and obligations. 4.4 Equality/Socio-Economic All budget proposals are assessed for any potential impacts using Equalities and Children’s Rights Impact Assessment (ECRIA) Screenings. If any potential impacts are identified, a full assessment is carried out. The previously agreed savings were assessed as part of the 2025-26 budget. A copy of all the relevant assessments across the budget savings categories is available. 4.5 Risk Failure to operate within the delegated budget would impact on the overall financial sustainability and reputation of the partnership and would expose both funding partners, North Ayrshire Council and NHS Ayrshire and Arran to additional financial risk. The IJB has no reserves available to mitigate the risk to partner bodies. 4.6 Community Wealth Building Effective delivery of services as per the 2026-27 budget and associated plans should allow key strategic priorities to be met which should maximise benefits for the North Ayrshire community as a whole but also benefit those areas of the community most in need, with a focus on ensuring HSCP resources are directed to those most in need in our communities. 4.7 Key Priorities The IJB approved a refreshed Strategic Plan in December 2025, this plan highlighted the fiscal constraints and impact and risk on achieving outcomes and ambitions. Whilst the HSCP Strategic Plan Priorities would remain unchanged a follow up assessment will be carried out to review the performance and service delivery ambitions in light of the significant financial saving requirement and impact on service delivery.
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5. CONSULTATION 5.1 The budget plans detailed in this report have been produced in consultation with relevant budget holders, the Partnership Senior Management Team, the Finance Working Group and IJB members. The funding assumptions align with information shared and agreed with the Head of Finance at North Ayrshire Council and the NHS AA Director of Finance. The financial position, outline savings proposals and approach to reviewing and budget consultation was shared with NHS Ayrshire and Arran and North Ayrshire Council. Engagement has been undertaken with all Elected Members as part of North Ayrshire Council’s budget planning process including an HSCP hosting an all members session in January 2026. Extensive public engagement has been undertaken on proposals relating to social care eligibility criteria with further details included in the separate report on the agenda. For more information please contact: Eleanor Currie, Chief Finance Officer at eleanorcurrie@north-ayrshire.gov.uk Appendix A North Ayrshire Health and Social Care Partnership 2026-27 Total Budget
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NAC £m NHS AA £m Total £m Baseline Budget 140.359 144.500 284.859 Baseline Funding Increase 11.147 4.714 15.861 2026-27 Budget excluding set aside 151.506 149.214 300.720 Draft set aside budget - 42.670 42.670 2026-27 Budget including set aside 151.506 191.884 343.390 2026/27 Budget
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DIRECTION Reference No. 260313-07 Title 26-27 Budget From Caroline Cameron, Integration Joint Board/Chief Officer To NHS Ayrshire Arran Name/Contact Details Local Authority Name/Contact Details Both Name/Contact Details 1. IJB Report Reference No. 260313-07 2. Date Direction Issued/Approved by IJB 13th March 2026 3. Report Author/Contact Details Eleanor Currie (eleanorcurrie@north-ayrshire.gov.uk) 4. Date Direction takes effect 13th March 2026 5. Does this direction supercede, amend or revoke a previous direction – if yes, include the reference numbers(s) Yes This Direction supersedes all previous budget-related Directions issued for: • 2025/26 Revenue Budget Direction • Any in-year Directions issued during 2025/26 relating to financial recovery, savings, eligibility criteria, or service redesign • Any previous Directions concerning delegated budget allocation that are replaced by decisions taken for 2026/27 No 6. Description of services/functions covered by the direction This Direction covers all delegated health and social care functions under the North Ayrshire Integration Scheme, including: • Delivery of all services within the 2026/27 integrated budget of £343.390m, including Set Aside (£42.670m). • All social care functions delegated by North Ayrshire Council, including adult and children’s social work and social care services. • All delegated community health services and hosted/lead partnership services delegated by NHS Ayrshire & Arran. • Lead Partnership responsibility for acute and specialist Mental Health services across Ayrshire. • Delivery of statutory duties (community care, mental health, SDS, Carers Act, public protection, clinical & care governance).
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• Delivery of all approved savings, eligibility policy changes, and operational and service redesign measures required to balance the 2026/27 budget. 7. Full text of direction North Ayrshire Council is directed to: • Deliver all delegated social care functions within an approved 2026/27 budget of £151.506m (excl. set aside). • Implement the approved Real Living Wage uplift to £13.45 per hour and apply contract uplifts accordingly. • Implement social care savings totalling £1.577m and support further savings through service redesign, charging uplifts, workforce restructuring, and operational efficiencies. • Consider alongside the recommendation and outcome of the review and resetting of eligibility criteria for adult social care, as identified in the 2026/27 budget. • Continue tight financial controls, vacancy management, and demand-management actions required to respond to demographic pressures, high-cost placements, and volatile demand. • Ensure all delegated functions operate within allocated resources and provide required monitoring returns to the IJB. NHS Ayrshire & Arran is directed to: • Deliver all delegated health services within an approved 2026/27 budget of £149.214m (excl. set aside). • Apply the required 2% uplift to delegated services and implement pay settlement requirements (including AfC pay reform and reduced working week). • Deliver NHS-related savings totalling £1.239m, including workforce redesign, reduced supplementary staffing, and service efficiencies. • Support IJB oversight of recruitment risks, supplementary staffing controls, and operational recovery actions across Mental Health, UnPACs, inpatient wards, and integrated island services. • Provide all required information for in-year monitoring, including progress against statutory performance requirements. The IJB directs both partners to: • Deliver all delegated functions within the total 2026/27 integrated budget of £343.390m (incl. set aside).
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• Take all necessary steps to deliver the £9.138m savings requirement, including £6.322m still to be formally approved (primarily through eligibility changes). • Implement all financial controls required to ensure a legally compliant, in-year balanced budget. • Participate in joint improvement work in support of the NHS Operational Improvement Plan, Discharge Without Delay, Frailty Pathways, and community capacity improvements. • Provide monitoring information required by the IJB in line with statutory guidance (Sections 5.1–5.7). • Work collaboratively to deliver the IJB’s refreshed Strategic Plan 2026– 2030. 8. Specification of those impacted by direction. • North Ayrshire Council: Adult social work, children’s services, justice services, commissioning, finance, business support, digital telecare, and community services. • NHS Ayrshire & Arran: Primary care, community health teams, Mental Health services, specialist hosted services, inpatient wards, and pan-Ayrshire functions. • Commissioned Providers: Care at home, residential care, supported living, SDS, third sector services, mental health providers, ALD services, and children’s care placements. • Service Users and Carers: Individuals receiving adult social care, children’s services, mental health services, LD/PD services, and unpaid carers through Carers Act supports. • HSCP Workforce: All HSCP-managed and delegated staff, including community health teams, Mental Health teams, social work, and integrated services.
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9. Budget allocated by Integration Joint Board to carry out direction Component Budget 2026/27 NAC-delegated Social Care £151.506m NHS-delegated Health £149.214m Set Aside Budget £42.670m Total Integrated Budget £343.390m New 2026/27 Budget Gap £6.146m Opening Recurring Deficit from 2025/26 £2.992m Total Savings Requirement £9.138m Approved Savings £2.816m Further Savings Required £6.322m 10. Outcomes/Link to Strategic Priorities This Direction supports delivery of the IJB’s refreshed Strategic Plan (2026–2030), including: • Prevention and early intervention • Shifting the balance of care toward community-based models • Improving outcomes and experience for people with complex needs • Supporting unpaid carers and community capacity • Ensuring sustainability of integrated health and social care services • Transformational change aligned with the Operational Improvement Plan and national reform agenda • Targeting resources to those most in need, in the context of tightening eligibility and prioritisation Audit Scotland’s 2024/25 findings further reinforce the necessity to prioritise sustainable models of care. 11. Timescales/Review/Monitoring Arrangements This Direction takes effect on 13 March 2026 and remains in force until 31 March 2027, unless superseded, varied, or revoked. The IJB will monitor delivery through: • Regular financial monitoring and performance reports • Oversight by the Finance Working Group • Quarterly Strategic Plan delivery reporting • Transformation Board oversight of savings and service redesign
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Partner bodies must report promptly on any risks to delivery of functions or achievement of financial balance. Revised Directions will be issued if material changes arise (e.g., funding changes, national policy directives, service redesign decisions). 12. Lead Partnership Arrangements North Ayrshire IJB, as Lead Partnership for Acute & Specialist Mental Health Services, directs NHS Ayrshire & Arran to: • Deliver the Mental Health Transformation savings plan for 2026/27, ensuring a sustainable net position. • Address overspends in UnPACs, Psychiatry, and inpatient ward staffing through operational redesign and supplementary staffing reductions. • Report on performance, financial risk and service impact to all three Ayrshire IJBs. • Support pan-Ayrshire planning for Set Aside budgets, including engagement with the Ayrshire Transformation Board and development of a joint Strategic Commissioning Plan for unscheduled care. • Ensure that redesign proposals are agreed by all IJBs in line with statutory governance requirements.
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Appendix B North Ayrshire Health and Social Care Partnership 2026-27 Budget Pressures Council NHS (non lead) NHS (lead) TOTAL Basis of Budget Pressure £m £m £m £m Pay: Pay awards 3,067,090 1,604,007 2,406,010 7,077,107 Council 3.5% NHS 3.75% Superann increase impact 7,243,087 7,243,087 Reflects the increased rate of 17.5% employer contributions Apprenticeship Levy 15,335 8,020 12,030 35,385 0.5% of the payroll increase NHS ENICs shortfall 92,800 139,200 232,000 This is the shortfall carried forward from 25-/26 TOTAL PAY PRESSURES 10,325,512 1,704,827 2,557,240 14,587,579 Non Pay: Demand Pressure Mental Health 139,747 139,747 Reflects historic demand Transition Pressure Mental Health 162,113 162,113 Reflects historic demand Demand Pressure Learning Disabilities 280,000 280,000 Reflects historic demand Transition Pressure Learning Disability 893,874 893,874 Reflects historic demand NCHC Pressure 1,579,373 1,579,373 Estimated increase (final increase TBC when the 2026-27 rate is confirmed ) Contract Inflation outwith the NCHC 3,322,721 25,000 3,347,721 Reflects the increase in the Living Wage Care at Home Management System 75,000 75,000 Additional annual contract cost (full year) Analogue to Digital 80,000 80,000 Additional hardware costs Brighter Pathways Programme 785,313 785,313 Net cost of Boyle Street, new foster scheme and achieving an online position Resource Transfer inflation 490,960- 490,960 - 2% applied TOTAL NON PAY PRESSURES 6,827,181 515,960 - 7,343,141 Pan Ayrshire Pressures : Palliative Care Service 18,000 18,000 : Mattress Replacement 25,000 25,000 50,000 : Office 365 increased costs 4,263 4,263 8,526 TOTAL PAN AYRSHIRE PRESSURES - 29,263 47,263 76,526 TOTAL 2026/27 PRESSURES 17,152,693 2,250,050 2,604,503 22,007,246 Agreed on a pan Ayrshire basis with East and South 2026/27
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Appendix C North Ayrshire Health and Social Care Partnership 2026-27 Savings Council NHS (non lead) NHS (lead) TOTAL RAG Deliverability Status Description Adjustments and Previously Agreed Savings: Inflate Payroll Turnover 107,348 60,150 90,225 257,723 Green Increased target to reflect the pay award Recharge to East for Ward 2 beds - 25,000 - 25,000 Green Increased charge to reflect the pay award Financial Inclusion Review 32,500 - - 32,500 Green Full year impact of the 2024/25 saving Social Care Model at Trindlemoss House - 175,000 - 175,000 Green Moving from a nursing led model to a social care led model 139,848 260,150 90,225 490,223 Operational Council NHS (non lead) NHS (lead) TOTAL RAG Deliverability Status Description Social Care Fees and Charges 5% increase 100% included 120,000 - - 120,000 Green Increased income to reflect the 2026/27 charges LES Payment - Buckreddan Care Home 43,000 - - 43,000 Green Service will be ither cease or be funded by the care home LES Payment - Toddhill 22,000 - - 22,000 Green Service will cease Third Sector Capacity Building 34,000 - - 34,000 Green Reduction of a post Business Admin - Phase 1 - Quick wins 251,979 - - 251,979 Green Reduction in 6.8 WTE posts Moving and Handling post 55,000 - - 55,000 Green Reduction of a post Business Admin Team - senior structure - 40,000 - 40,000 Green Saving following a retiral and resultant revised structure Carers UK Annual Subscription 3,500 - - 3,500 Green Cease the subscription NADARS NHS non staffing budget - 26,771 - 26,771 Green Saving in non staffing costs Pan Ayrshire Alcohol & Drug Services Management Team - 16,478 16,478 32,956 Green Saving in staffing costs Removal of SW Trainee Post 54,000 - - 54,000 Green Removal of a SW trainee post Child Health Assessment - Charge for Out of Authority cases - 6,000 - 6,000 Green New charge for Out of Authority health assessments Children and Families Throughcare Review 87,000 - - 87,000 Green Reduction in staffing (WTE TBC) Support Services outwith business support 100,000 - - 100,000 Amber Reduction in staffing (WTE TBC as it is a target) 770,479 89,249 16,478 876,206
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Policy - Model of Care or Efficiency Council NHS (non lead) NHS (lead) TOTAL RAG Deliverability Status Description Roslin House - shared respite/residential model 300,000 - - 300,000 Green Moved to respite and residential model. Assumes 4 external placements will move to Roslin House Trindlemoss - review of care delivery model 116,989 - - 116,989 Green Review of care delivery model. Budget reduction regarding the Pan Ayrshire Prevention & Service Support Team - - 40,817 40,817 Green Saving in non staffing costs Phase 1 - Children and Families -quick wins re: retirements, WLB and vacant posts 250,000 - - 250,000 Green Reduction in staffing (7 WTE) Phase 1 - Psychology - - 231,138 231,138 Green Reduction in staffing (2.5 WTE and a reduction in grade for 1 post) 666,989 271,955 938,944 Policy - Service Reduction/Cessation (all agreed with East and South HSCP) Council NHS (non lead) NHS (lead) TOTAL RAG Deliverability Status Description DBI - Distress Brief Intervention service - - 157,500 157,500 Green Cessation of the Distress Brief Intervention service (7mths assumed) MH Innovation Fund (reduction of posts) - - 41,331 41,331 Amber Reduction of Innovation Funded posts. 3mths of savings assumed as the posts will be redeployed. (2.7 WTE) RISE Team - Resilience in Stressful Events - - 192,131 192,131 Green Reduction in the RISE service Mental Health Practitioners (MHPs) in GP practices - - 120,000 120,000 Green Reduction in the MHPs ( est 3 WTE posts) - - 510,962 510,962 TOTAL DRAFT SAVINGS PROPOSALS 1,577,316 349,399 889,620 2,816,335
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Appendix D SCOTTISH GOVERNMENT FUNDING LETTERS 2026-27 LGF - Correspondence - 202 2026-27 - Scottish Government Budget L