NHS Ayrshire & Arran says its £26.4 million budget deficit won’t get worse despite higher than anticipated pay agreements and the increasing cost of medicines.
Finance director Derek Lindsay told Ayrshire and Arran health board that the ‘open cheque book’ that had seen considerable funding come from the Scottish Government during the pandemic would no longer be available.
Mr Lindsay pointed out that Ayrshire and Arran, which has a budget of around £762m, had operated deficit budgets – where expenditure is more than income – since before the Covid hit.
The £26.4m deficit, he said, included a £11.3m deficit from previous years and £3.6m in unrealised savings.
“There is an imbalance between the costs and funding,” he said. “The revenue plan in March put aside money based on a funding uplift of 2.6 per cent pay awards. The actual pay awards are going to be a lot higher than that.
“Our cost pressures are about £40m so we need £20m in efficiency savings to bridge that gap. However, we could only identify £8m.”
Mr Lindsay highlighted a significant part of the deficit centred on the new medicines fund. The fund helps health authorities cover the cost of drugs for rare conditions and end-of-life treatment.
He said that while £7.2m was provided for new medicines, NHS Ayrshire & Arran will spend £20m, and described this as a ‘mismatch’ which would contribute to the overall shortfall.
However, he did indicate that the authority was confident, but had no guarantee, that the Scottish Government would fund the balance of pay settlement above the two per cent budgeted, as well as a range of Covid services.
Mr Lindsay described the situation as ‘very difficult’ as the Scottish Government insist everyone requiring the drugs should have equal access, without ‘postcode prescribing’.
He added that the spend on new medicines had increased consistently since it was set up 10 years ago.
Health board chair Leslie Bowie argued that the Scottish Government had insisted boards provide the medicines, but would not fund them. She said: “Do we collectively push back on the Scottish Government?”
Linda Semple, the healthcare governance committee chair, added that different areas had different requirements.
She said: “Cystic fibrosis drugs are higher in Ayrshire and Arran due to the demographic. We shouldn’t be taking the hit.”
Mark Mazzucco asked whether there was a confidence that the figure of £26.4m would be achievable.
Mr Lindsay reiterated that, while the detail of funding was still being discussed, the indication of support from the Scottish Government on pay awards and Covid would be sufficient to achieve the target.
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