Auditor general warns Scottish health authority faces ‘significant’ financial challenges

Scotland’s auditor general has issued a highly critical report on NHS Tayside, saying the health authority continues to face significant financial challenges despite its aim of achieving a financial balance within two years, while there is no sign it is currently able to repay over £30m in loan funding from the government

The auditor general has reported to the Scottish parliament for a third consecutive year on NHS Tayside's progress with addressing significant financial difficulties. The authority has a five-year transformation programme and has said it plans to achieve financial balance by 2018/19.

The report found the board delivered £45.5m of efficiency savings in 2016/17. However, while this is a significant sum, and nearly double the savings achieved in the previous year, it was £1.3m below target.

In 2016/17, the board received £13.2m in loan funding, known as brokerage, from the Scottish government to cover cost pressures related to prescribing, pay and use of agency staff, and allow it to break even. The auditor general says this brings the total brokerage received by the board over the last five years to £37.5m.

Of this, £33.2m is still to be repaid but the Scottish government has suspended repayments and it is not yet been confirmed when they will resume.

The board recognises that its cost base remains too high and further significant savings are needed in future. It has identified that to be financially sustainable in the long term, it must save £205.8m over the next five years. This includes the suspended brokerage repayments.

A funding gap of £49.8m is currently projected for 2017/18. The board plans to achieve efficiency savings of £45.8m, with the balance of £4m provided via further loan funding.

The auditor general says there is a risk that more financial support will be needed, and the 2017/18 savings also include £5m which have yet to be identified or are high risk.

An independent advisory and assurance group established by the Scottish government to scrutinise the progress of the transformation plan has reported that the pace and scale of change needs to increase if the proposals are to be successful. The auditor general agrees with the group's findings.

Caroline Gardner, auditor general, said: ‘NHS Tayside continues to face an extremely challenging position which will make it difficult to achieve financial balance in the future.

‘Some of the changes required to address these challenges will take time to fully implement. It's important that the board put in place a realistic action plan, accompanied by the capacity and resources required to deliver it.’

Report by Pat Sweet

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