Council to plug health and social care funding gap via cash reserves
Getty ImagesEast Ayrshire Council is to use more than £6.5m from existing services and centrally held balances to shore up a projected £10m overspend in health and social care.
Frustrated councillors and senior officers expressed concern about a lack of action and direction from East Ayrshire Health and Social Care Partnership, despite the overspend being relayed over a number of months.
Officers were left scrambling to find money to plug the gap with less than two months left until the end of the financial year.
It is now proposed the local authority take money from existing cash reserves and transfer it to a new fund called the Health and Social Care Emergency Financial Support.
A report to cabinet revealed the council held total usable reserves of £117m at the end of the last financial year, including almost £60m earmarked for specific projects or liabilities.
Joe McLachlan, East Ayrshire Council's director of finance and digital, recommended £812,000 be released from individual services, alongside a further £5.725m from centrally held balances.
Rather than being transferred to the council's uncommitted general fund, the full £6.537m would go into the new reserve.
The report stated the move reflected an "urgent need" for one-off funding to support the Health and Social Care Partnership, while longer-term recovery measures are developed to address ongoing budget pressures.
East Ayrshire Health and Social Care Partnership previously said the situation was caused by several factors, including an increase in demand, ageing population and insufficient funding from the Scottish government.
Risks associated with transfer plan
McLachlan's report stated that the council sought to protect service balances where possible, to allow departments to manage inflationary pressures, rising demand and unexpected costs.
However, the scale of the health overspend has led to a temporary change in how these balances are treated.
The emergency reserve would only be drawn down once more information is available on the partnership's year-end financial position, the level of savings approved through the council's health and social care recovery plan, and any additional funding contributions from NHS Ayrshire & Arran.
If approved, the council's general fund uncommitted balance would remain at £10.58m, after taking account of previously agreed commitments.
The report also highlights risks associated with the transfer, including reducing the level of flexibility the council would have in order to respond to any future financial shocks.
Cabinet members are being asked to approve the release and transfer of balances at a meeting this week.