The Torbay model — widely studied and praised as a national exemplar of health and social care integration — is unravelling because Torbay and South Devon NHS Foundation Trust (TSDFT) formally served notice on its Section 75 Partnership Agreement with Torbay Council in late March, 2026.
This triggers a mandatory 12-month transition period, with the Council resuming full statutory responsibility for adult social care from 1 April 2027.
The history of progress by Health and Care organisations towards integration, in this area, goes back to 2003.
- 2003 — Torbay PCT leadership visited Kaiser Permanente; integration plans triggered
- 2004 — Brixham pilot project brought health and social care workers into single teams; the PCT and Council resolved to merge the posts of Chief Executive of the Trust and Director of Adult Social Services
- 2005 — PCT and adult social services combined to form Torbay Care Trust, a single pooled budget of £225m formed; a formal partnership agreement with Torbay Borough Council established from December 2005
- 2006 — Integrated care programme extended to the whole region
- 2012 — The Health and Social Care Act 2012 separated commissioning from provision, creating the need to restructure; the Trust became Torbay and Southern Devon Health and Care NHS Trust on 1 April 2012, then later Torbay and South Devon NHS Foundation Trust
The Section 75 Agreement: what was actually agreed
The legal architecture here matters enormously. The Section 75 arrangement in Torbay is a tripartite agreement — between TSDFT, Torbay Council, and NHS Devon ICB — under which the Council delegated its statutory adult social care functions (along with resources from the ICB) to the Trust. This is unusual: most s75 agreements involve pooled funds with joint commissioning, but Torbay’s model gave the Trust operational delivery responsibility for the Council’s social care functions — a much deeper delegation.
The agreement approved by Cabinet and Council in March 2024 was meant to be a new five-year commitment running from 1 April 2025 to 31 March 2030.
The financial terms that the Council agreed to, for delegating its responsibilities, on paper, were modest stepped increases:
- £2.55m additional base budget in 2025/26
- £2.55m additional base budget in 2026/27
- £1.7m additional base budget in each of 2027/28, 2028/29, and 2029/30
The total additional commitment from the Council was therefore only around £10.2m over five years — far below the scale of the problems that had already been observed.
The Core Legal Tension: who bears financial risk?
The Trust has stated explicitly that under the current arrangement it “carries all the financial risk” for adult social care. The annual funding gap between what the Council pays and what delivery actually costs has grown to approximately £33.7–£35m per year — a 48% cost increase over just three years.
From a legal standpoint, this raises a serious question about how the s75 agreement was drafted: a well-constructed arrangement under s75 of the NHS Act 2006 should apportion financial risk between partners, in light of the real legal framework applicable – i.e. is the exposure to expenditure going to be demand-led, or does it arise from a target duty or a mere power?
That is a basic problem in all s75 arrangements – a legal issue which this organisation’s managing director has been going on about since 1999 – the difference in the legal frameworks and in the nature and what public lawyers call the enforceability of the relevant statutory duties driving spending obligations of ICBs and the local authority sector.
The Trust’s own board papers stated that NHS Foundation Trust governance rules — specifically their legal duties not to run uncontrolled deficits — left them “no viable alternative” but to serve notice. In other words, the Trust was citing its own statutory duties as an NHS foundation trust (to NHSE/Improvement) as necessitating withdrawal from the partnership obligation.
What the Council Leader’s letter reveals (and omits)
Council leader David Thomas’s letter (published 19 March 2026 ahead of the Trust’s Board meeting and apparently ahead of receiving formal notice) acknowledged the financial pressure but disputed the Trust’s reasoning.
Key points he raised – apparently pre-emptively – were as follows:
- He claimed agreement had now been reached with NHS Devon ICB on a “fair and balanced risk-share arrangement” — suggesting the ICB was prepared to absorb some of the gap;
- He was “disappointed” the Trust would not proceed “even with those concerns addressed”.
This last point is legally significant: if the 5-year agreement signed in 2024 contained provisions requiring good-faith consultation before notice could be served, the speed of the Trust’s decision could be challengeable.
Councillor Swithin Long (Lib Dem) then publicly described the Trust’s financial reasoning as “flawed” and warned the handback could “bankrupt” Torbay Council.
If the practical decision to serve notice had already been communicated to external parties before the Trust’s Board voted, that raises questions about whether proper governance was followed. It is not unusual for Boards to be presented with a fait accompli by executives, but it is poor governance and potentially relevant if the Council wishes to challenge the process.
The deeper legal and governance issues
Several issues compound the raw financial dispute:
- The 2024 s75 renewal appears to have been signed on terms that were already unrealistic. The forecasted deficit at the time was £12m for 2024/25, rising potentially to £36m within five years — yet the new agreement only committed the Council to an additional maximum of £2m/year. It is hard to escape the conclusion that both parties signed a five-year agreement with a known structural funding hole.
- The Trust’s NHS foundation trust duties created an irreconcilable conflict. NHSE/Improvement’s financial oversight regime effectively prevents a foundation trust from indefinitely subsidising a local authority’s statutory functions. This structural incompatibility — between s75 flexibility and NHS foundation trust governance — is arguably the real systemic flaw the Torbay model exposed. And that is an issue that nothing other than the repeal of the Care Act and the concept of an individually enforceable statutory duty could cure – which is not considered to be politically acceptable by anyone we have heard on the subject…
- The ICB’s role is ambiguous. As the third party to the tripartite agreement, NHS Devon ICB’s position — apparently willing to support a risk-share deal that the Trust then rejected — suggests a fracture between the ICB and the Trust, which are legally distinct bodies with different financial accountabilities. We do not know whether the ICB delegated any of its own functions listed as capable of being delegated under the Prescribed Regulations to the Trust, but that is the whole point of a pooled budget under s75. Part of the pool’s overspend may therefore represent NHS functions that overlap with local authority functions that the ICB itself was insufficiently funding through its pool contribution. The framing of this entirely as a Council social care funding failure is therefore potentially misleading, and the ICB’s apparent willingness to agree a “risk-share” to keep the arrangement going may reflect its own exposure to the argument that its pool contribution was also inadequate, relative to the NHS functions being discharged through the integrated model.
- The 12-month notice clause in the s75 agreement is functioning as intended procedurally, but it provides cold comfort for a Council facing a £35m structural gap in its social care budget with 12 months to build operational capacity it has not held for over 20 years.
What this means for the “Torbay Model” nationally
Other areas studying the Torbay model should note that its collapse was not caused by integration failing in service delivery terms — it apparently worked well, clinically and professionally.
It collapsed because the financial risk allocation in the s75 agreement was never sustainable at scale, and because the NHS foundation trust governance framework is ultimately incompatible with open-ended absorption of local authority social care cost pressures. That is the lesson for any area attempting to replicate it, individually or nationally.
However, commentators seem to have overlooked that under the Care Act 2014, a local authority cannot ultimately divest itself of its statutory duties by delegation. Section 79 of the Care Act makes it clear that where a local authority arranges for another person or body to carry out its functions, including decision-making ones, the authority remains liable for any failure to meet those duties or manage them compliantly with the legal framework.
A s75 agreement under the NHS Act 2006 creates a joint or delegated operational arrangement — it does not transfer statutory responsibility beyond the remit of public law. Torbay Council always remained the body in whom the Care Act duties were vested, throughout the entire period of integration.
This is not a technical footnote — it is constitutive of the entire arrangement. The Council could never lawfully have transferred the obligation to meet assessed eligible needs. It could only transfer the operational delivery function.
What the 2024 Report actually confirms
The Cabinet paper from March 2024 is explicit and unambiguous on this point. It describes the Section 75 arrangement as:
“the delegation of responsibility for the delivery of the statutory functions of adult social care and the pooled resources to support this to [the] Trust”
The word “pooled resources” is doing critical legal work here. Under a proper s75 pooled fund arrangement, the Council and the ICB contribute their mutually assessed budgets for any statutory functions chosen for this arrangement into the pool, and the delegate manages delivery from that pool. The financial risk of Care Act demand exceeding the pool falls back — legally — on the Council, because it is the Council’s statutory duty that must be met, regardless of what the pool contains. The Trust cannot be left holding an unfunded statutory obligation that is not legally its own.
So why is the Trust claiming it “bears all the risk”?
It is likely one of three things — or a combination:
- The pooled fund was structured as a fixed-price contract in substance, not a genuine pool. If the Council paid a fixed annual sum and the Trust agreed to deliver all statutory services from that sum, then in practice the Trust was absorbing demand risk — even though legally it should not have been. The 2024 paper’s commitment of only £1.7m/year additional against a known £29.7m deficit strongly suggests the Council was indeed treating this as a capped contribution rather than a proper share of statutory cost. There is no mention of an indemnity, even in contractual terms, from the Trust to the Council. If anything, the document in the 2024 Cabinet papers implies that the Trust expected the Council to be the body making good any shortfall — yet there is no contractual mechanism to remedy an entirely foreseeable running out of money, either way. Recourse to a professional indemnity insurance policy may well help here for the demonstrably potentially significant omissions that appear to have crept in.
- Governance and accountability had drifted from the legal framework. The paper references a “Well Led Review” and the need to embed governance frameworks, which hints that over 19+ years of integration, operational accountability had blurred to the point where the Trust was making spending commitments without adequate social work led legally literate sign-off on individual packages — exactly the kind of loss of financial grip the Care Act framework is designed to prevent through the local authority’s own decision-making obligations and room for manoeuvre identified in paragraph 10.27 of the Guidance.
- The Memorandum of Understanding (to be developed after the agreement was signed in April 2024) was where the real risk-allocation was supposed to be resolved — but this apparently never adequately addressed the fundamental mismatch. The principles listed include “shared view and clarity on financial envelope” and “joint decision making/accountability,” which reads as aspirational rather than legally operative. What should have been in the agreement — namely a clear statement that the Council remained liable for any demand-driven cost exceeding the pool, backed by a mechanism to trigger supplementary contributions — appears to have been deferred to the MOU that was apparently never adequately concluded.
The real legal problem obscured the media’s interest
What the public reporting — including the Council Leader’s letter — has consistently failed to articulate is this: if the Trust is running a £34m deficit attributable to adult social care, and the Council’s statutory duty under the Care Act requires it to meet all eligible needs, then that £34m liability is legally the Council’s issue already, regardless of the s75 arrangement.
The Trust’s serving of notice does not extinguish the debt already incurred. The question of who is responsible for the accumulated deficit during the period of delegation — and whether the Council can be made to cover it — is the genuinely explosive legal question that nobody in the public reporting is yet addressing.
The Trust’s framing of this as its financial risk, and the Council framing this as the Trust “walking away,” obscure the underlying legal reality: the Council was always the statutory body, the pool was always insufficiently funded, relative to assessed need, and the Trust appears to have been allowed to run up a structural deficit against functions it was delivering on behalf of a statutory authority that should have been funding them adequately all along.
The Council should now be taking urgent advice on whether its legal advisers at the time of each iteration of this agreement met the standard of care expected of solicitors advising a public authority on the delegation of statutory functions, and that if they did not, a claim against a professional indemnity policy may be available.