NHS in surplus at year-end but financial pressures continue

Despite record levels of funding and an underspend on its 2005/06 budget, the NHS in Scotland continues to face long-term financial pressures.

An Audit Scotland report finds that at the end of the 2005/06 financial year the health service, including the Scottish Executive Health Department, had an overall surplus of £70.6m on its £9bn budget. This compares with a combined deficit of £32m 12 months previously. All of the underspend was on capital funding, rather than the spending the NHS carries out in its day-to-day operation.

Robert Black, the Auditor General for Scotland, said: ‘The NHS budget will have grown by almost 40 per cent over the five years to 2007/08. But all boards continue to face cost pressures and have to deliver efficiency savings, highlighting the need for robust long-term financial and service planning to meet the challenges that lie ahead.’

Scotland is spending more each year on the health service. The total NHS budget in 2005/06 was £8.96bn and will reach £10bn by 2007/08. Scotland also spends more on healthcare per head of population than other UK countries. But the report highlights that the service continues to face a number of cost pressures such as pay deals for health staff and increasing energy prices. NHS bodies are also expected to contribute to the Efficient Government initiative by making £523m savings by 2007/08. The report therefore points to the importance of good long-term financial planning.

Although there was a £70.6m underspend overall, two boards ended the year in deficit – Lanarkshire and Western Isles. Also the Health Department cleared NHS Argyll and Clyde’s £81.7m cumulative deficit on its dissolution at the end of the financial year.