Comment / Financial management ‘improving’ in Scotland

NHS Scotland is improving and managing its finances better but needs to improve its performance reporting, according to Audit Scotland.

A report on NHS financial and performance management found that the health service showed an overall underspend of £98m in 2006/07 and only one health board, NHS Western Isles, failed to stay within its revenue budget.

Despite this, the financial watchdog said continued strong financial management was vital if the NHS was to overcome cost pressures in the future, such as the costs of pay agreements, service redesign and rising drugs costs.

Auditor general for Scotland Robert Black, said: ‘Financial management has shown clear improvements over previous years, with all boards but one managing to stay within budget. We’d like to see this continue so that boards can adequately deal with the cost pressures they face in future.’

In a separate report, MSPs have cast doubt on whether planned spending increases in 2008/09 can cover expected cost pressures. In its analysis of the 2008/09 budget, the Scottish Parliament’s health and sport committee said a number of cost pressures faced the health service, including those highlighted by Audit Scotland’s report. It also noted the effect of changes in capital accounting from April 2007 that prevent profits from the sale of assets being used as revenue.

However, its greatest concern was NHS-specific inflation. The committee was unhappy there was no estimate of inflation for NHS Scotland and felt it was unable to scrutinise the budget properly without this information. The MSPs recommend that the Scottish government include sector-specific estimates of inflation in future draft budgets.