Scottish Government to write off health boards’ debts

8 Oct 18

Health boards in Scotland are to have their debts written off as part of a new, more flexible three-year financial framework.

Health secretary Jeane Freeman told members of the Scottish Parliament that under the new framework, health boards would be required to break even over a three year period instead of on an annual basis.

From 2019-20, boards would have 1% flexibility in their annual budget to allow scope for marginal in-year overspends or underspends, she said.

However, for the new arrangements to succeed, she said, boards would need a “new start”, which meant the Scottish Government would not seek to recover loans paid to boards that had overspent their budgets.

Last week, auditors issued warnings over the financial health of two Scottish health boards, which had required loans from the Scottish Government in order to balance their books.

Ms Freeman said she wanted boards to be able to deliver on the measures of the Scottish Government’s health and social care delivery plan and financial framework while focusing their attention on patient care and the provision of services that were “safe, effective, person centred and timely”.  

She estimated that the cost of loan funding from the Scottish Government to health boards over the last five years had been around £150m.

“We are, in effect, clearing the slate and introducing the three-year planning cycle, which gives flexibility within those three years,” she said.

However, boards were still expected to show sound financial stewardship, she said.

“We cannot continue with a situation in which boards have significant overspends on their budgets, albeit that those spends were made on patient care,” she said.

“All our boards are required to demonstrate…that they are managing their budgets prudently and seeking value for money,” she said.

Boards unable to do this would receive help from Scottish Government finance officials, Ms Freeman said.

She also confirmed that the Scottish Government would pass on to the health service all extra funding received from Westminster as a result of increased health spending south of the border, money known as “Barnett consequentials”.

Although this figure was still to be finalised, she expected it to amount to around £3.3bn between now and 2023-24.

However, Miles Briggs, health spokesman for the Scottish Conservatives, said the NHS in Scotland had been “shortchanged” at a time of record health funding by the UK Government, with funding in Scotland increasing by only 14% between 2011 and 2016 compared to the 20% increase seen in England. 

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