NHS health boards will have £150m government loans written off, Jeane Freeman announces

Regional health boards in Scotland will have their debts to government written off ahead of a “new deal” which will give them three years to balance their books, Health Secretary Jeane Freeman has announced.

In a statement to MSPs, Freeman said a new medium term financial framework would be in place for health boards from 2019/20 which would represent a “clean slate”.

The announcement comes only days after spending watchdog Audit Scotland warned two health boards had become the latest to struggle to make savings.

NHS Highland and NHS Ayrshire and Arran face “significant financial challenges” despite having received ‘brokerage’ loans from the Scottish Government.

This follows NHS Tayside being placed under special measures and its leadership replaced earlier this year for financial irregularities.

Today Freeman announced an amnesty on these loans, effectively writing off regional board deficits from next year.

The estimated cost will be £150m, she said, and will be paid for from promised increases in health spending in England, which would come to Scotland under the Barnett funding formula.

“Today I am offering NHS boards a new deal. In return for their efforts to deliver the reforms for the future I am facilitating a new three-year financial planning and performance framework for our NHS territorial boards,” Freeman told MSPs.

“This change will require boards to deliver a breakeven position over a three-year period, rather than annually as is the case currently. In each year boards will have a one per cent flexibility on their annual resource budget to allow them scope to marginally under or over spend in that year.”

The move was welcomed by Scottish Labour and the Scottish Greens, while the Scottish Conservatives said health spending was increasing at a faster rate in England.

Freeman added that service reform would be needed to meet increasing demand on services due to an ageing population. Under current models of care, the health and care system would need a £5.9bn uplift in 2023/24, she warned, while the increase from UK Government funding is expected to be £3.3bn.