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NHS crisis as boards forced to take loans

THREE health boards have been bailed out of the red with Government loans worth millions of pounds as the NHS struggles to make savings of £271 million this year.

NHS Forth Valley, NHS Fife and NHS Orkney all used Scottish Government support packages to make ends meet last year – but did not clearly show this in their accounts, the public spending watchdog found.

The NHS in Scotland is having to make the savings to balance the books this year and those that borrowed are having to make repayments, putting further strain on budgets.

Audit Scotland points to the loans in a report published today as a sign of how difficult health boards are finding it to run services within the funds available.

The report shows one-fifth of cost-cutting schemes outlined for 2012-13 are at high risk of failing, according to managers themselves.

It warns, in the face of other pressures such as a rising demand for treatment from an ageing population, it will be "difficult to reduce costs while maintaining high-quality services". Plans to shed 1000 jobs across the Scottish health service by next April have already been outlined.

Dr Mark Hellowell, lecturer in health systems at Edinburgh University, said: "Clearly health boards are expected to balance their income and expenditure accounts year on year.

"Being given a loan from the Scottish Government to do this is unusual and it is clearly attributable to the fact that there's really severe spending constraints and they are struggling to generate the efficiencies they need. It is the kind of thing we would expect to see more of."

South London Healthcare NHS Trust was put into administration this summer after running up debts of more than £150m.

Although the overall Scottish health budget has not been cut during the recession, rising costs, such as the escalating bill for prescription drugs, mean health boards have had to manage real-terms budget cuts since 2009-10. This is expected to get more severe in the next three years.

The report says that, while boards reported breaking-even last year, this bottom line disguises the struggle they faced. Nine boards, including NHS Lothian, NHS Tayside and NHS Highland, overspent their core funding on frontline services and had to make up the difference from elsewhere.

Between them Fife, Forth Valley and Orkney received more than £7m in loans from the Scottish Government.

Auditor general for Scotland Caroline Gardner said: "The annual accounts show a picture of good financial performance, but this doesn't reflect the pressure boards faced in achieving this. Money was moved between boards, several relied on non-recurring savings, and some needed extra help from the Scottish Government to break even.

"The requirement for boards to break even each year encourages a short-term view, and the NHS needs to increase its focus on longer-term financial planning."

Budgets for capital projects have been slashed and there is now a £1 billion maintenance backlog. The report warns there is a risk "that the investment needed to maintain and develop the clinical estate, equipment and ICT will be unaffordable".

Royal College of Nursing Scotland director Theresa Fyffe said savings targets are becoming increasingly unrealistic. She added: "We need brave decisions to be taken to ensure an affordable and high-quality NHS. This can only be achieved if Government and health boards are more open with the public about what money is available and where it is being spent."

NHS Forth Valley said the loan had been necessary while it was opening the new Forth Valley Royal as during the transition stages it had to double running costs.

NHS Fife said its financial plan could not be delivered as expected because of problems including issues with the sale of some assets.

NHS Orkney said it had agreed a longer term financial plan to get them out of recurring deficit which included the loan, and they were on target.

Health Secretary Alex Neil said: "We are committed to protecting spending on health, and our latest, £11.5bn budget reflects a funding increase in real terms."

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Finance

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