Two Scottish NHS boards are signalling that they will finish the financial year deeply in the red – with reports that proposed cost-cutting measures by one of them have been blocked by the Scottish government.

The board of NHS Tayside has been told that it is currently forecast to finish the 2022-23 year with its budget overspent by £39m.

Meanwhile, NHS Ayrshire and Arran says it now needs a plan to close hospital beds as it was already overspent by nearly £22m by the end of December 2022 – with another quarter of the year still to go.

NHS Tayside

According to the report by its Director of Finance, NHS Tayside must deliver £67.4 million of savings, equivalent to 11% of the budgets it controls.

The report states that this is not just to break even, but also to achieve the Scottish government’s target of identifying £12m (1%) of ‘efficiency’ savings. These are recurring savings, the money from which can be reinvested in other services.

In his report, the Director of Finance says:

‘The level of savings is unprecedented and will clear out all non-recurring operational efficiencies and financial flexibility, leaving nothing for future years,’ also stating that ‘to put this into context, the board has delivered an average of £27m efficiency savings over the last three financial years.’

A series of cost-cutting measures were approved by the NHS Tayside board at its meeting in December, the papers for which have now been published. £19.4m of the cuts identified in the board's financial recovery plan are categorised as medium or high risk.

Local MSP Michael Marra has written to the First Minister asking her to intervene immediately, saying the board plans a short-term cut in the number of surgical procedures carried out.

But today, according to the Courier newspaper, the Chief Operating Officer of NHS Scotland, John Burns has intervened telling NHS Tayside to scrap this part of their plans.

NHS Ayrshire and Arran

The financial report to the meeting of the NHS Ayrshire and Arran board this week, says it was overspent by £21.9m by the end of December, highlighting particular concerns on medicines and nursing budgets.

The report by Ayrshire and Arran's Assistant Director of Finance says that the nursing budget was overspent by £3.7m, largely driven by £6.6m of payments by acute services to nursing agencies to cover staffing shortfalls – costing £1m in November and £886,000 in December.

NHS Nursing Agency spend: Ayrshire and Arran NHS Board Financial Management Report for the nine months to 31 December 2022

The board was told that ‘the trend of increasing staff numbers over the pandemic years needs to be reversed in 2023 as there is no recurrent fund to support this level of staffing’, adding that this will require beds in acute hospitals to close.

However, addressing Scotland’s Policy Conference on workforce needs last September, Interim Director for the Royal College of Nursing (RCN) explained nursing staff levels are so low that staff cannot take a break.

Reports from the RCN found that almost 9 in 10 nursing staff said staffing levels on their most last shift when surveyed were not sufficient to meet the needs of patients.

The coming year

The Scottish government has increased health spending for the coming year by over £1bn, roughly half of which will be needed to meet pay awards.

The report by Tayside's Director of Finance suggests the budgetary situation will not improve in the coming year and the board will have to find ways to make further cuts:

‘Looking to 2023/24 and beyond, the Board will start next financial year with a significant financial gap, in addition to which a challenging budget settlement is anticipated. The Board is engaging at a national level, and with partners locally, to develop and implement solutions that support both the delivery of service objectives and the financial sustainability of the Board. The reality of the situation, however, will require a significant reduction in the Board’s current cost base.’

Read more: Planned primary care improvements on pause; NHS faces ‘extraordinarily difficult’ budget decisions; NHS Highland: ‘worst funding gap seen’

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