News / HFMA Scotland shortfall warning

The HFMA in Scotland has called for the introduction of multi-year budgets for health and warned that the service could require efficiency savings of up to 5% this year.

In its response to the Scottish Parliament Health and Sport Committee, which is consulting on the government’s draft Budget for 2017/18, the HFMA said budgets that covered a number of years would help develop longer term plans and support decision-making.

It recognised the extra funding allocated to health boards in the draft budget (a rise of £252m or 2.8%). However, the biggest additional sum was £107m for social care. The increase included the alcohol and drugs budget (almost £54m), which was previously in the overall health and sport budget. This leaves £91m available for health cost pressures (less than 1%).

While £72m of investment had also been ring-fenced for primary care, and extra cancer funding promised – £100m over the next five years – health boards are not clear how much should be spent each year.

The HFMA submission highlighted financial pressures, such as increased demand, new technologies, the apprenticeship levy of 0.5% of pay and historic pressures on prescribing costs. 

It also referred to the HFMA research paper Medicines costs in Scotland, which highlights the reducing funds for the New Medicines Fund and the increasing costs of these drugs.

HFMA Scotland Branch chair Derek Lindsay said efficiency savings of around 4% to 5% (more than £400m) would be needed this year. ‘The underlying budget increase available to meet health cost pressures is about 0.4%, after taking account of the reduction in the New Medicines Fund, and the remaining uplift in funding is committed to social care or other priorities defined nationally by the Scottish government. 

‘This means that to meet health cost pressures in the range of 4% to 5%, efficiency savings are required.’