Scottish Government

4. Financial Performance

Finance Report

This section provides a summary of the key information relating to the financial performance of NHSScotland during 2008/09. The performance for the year was excellent with the key financial performance target, the Departmental Expenditure Limit ( DEL), showing a small underspend (-0.04 per cent).

Most NHSScotland bodies were less reliant on non-recurring resources to achieve their financial targets. In total, the level of reliance on non-recurring resources to fund recurring expenditure by NHSScotland bodies reduced from £92 million to £23 million between 2006/07 and 2008/09, indicating that NHSScotland is essentially in recurring financial balance.

NHSScotland Financial Performance Summary 2008/09

The level of spend available to NHSScotland is significant and it is important that it is managed effectively to deliver the best result for patients and good value for public funds. This is achieved by planning and managing financial performance across the whole of the budget, not only its constituent parts. The totality of the resource available to the Scottish Government Health Directorates is therefore used fully and effectively.

The bulk of the above expenditure lay with the 14 Territorial Boards and eight Special Boards, all of which achieved their financial targets in line with projections, all with unqualified accounts. The remaining expenditure of £826 million was incurred centrally. Of the total expenditure, revenue expenditure was virtually on budget.

This report does not present the full accounts of NHSScotland, which form part of the overall Scottish Government consolidated accounts. The audit of the Scottish Government consolidated accounts for 2008/09 is unqualified. Audit Scotland has reviewed the accounts of all NHS Boards for 2008/09 and given an unqualified audit opinion on each. It will provide an independent commentary on NHSScotland finances in its Overview Report *.

Good governance is an important aspect of the management of all NHS bodies, which are therefore required to follow Scottish Government policies in relation to financial, clinical, staff and information governance. These policies are advised in specific guidance issued through letters to NHS Accountable Officers from the Scottish Government, the NHS Annual Accounts and Capital Accounting Manuals, NHS Quality Improvement Scotland healthcare standards and the Scottish Public Finance Manual, incorporating the Audit Committee Handbook. Accountable Officers are also required to sign a Statement on Internal Control describing the arrangements in place to ensure that this guidance is adhered to.

Key examples of capital expenditure programmes, NHSScotland 2008/09 *

Capital expenditure was £504.5 million and showed a small underspend of £4 million compared with the capital budget of £508.5 million. The money was used to fund numerous NHSScotland projects across the country, key examples of which are presented in the following table.

* Many of the above projects are on a phased basis and will incur further expenditure in future years.

NHSScotland Expenditure 2008/09

Revenue Expenditure

NHSScotland's revenue expenditure of £10,085 million in 2008/09 represented almost £2,000 per person living in Scotland. Around 51 per cent of this funds staff salaries for NHSScotland employees. A further 9 per cent goes on prescription drugs; 13 per cent on general medical, dental and ophthalmic services; with the remaining 27 per cent funding buildings and associated running costs, equipment, supplies and services.

Efficient Government

The Efficient Government initiative was launched in June 2004 to help tackle waste, bureaucracy and duplication in Scotland's public sector and initially covered the period 2005/06 to 2007/08. The Scottish Efficiency Programmes continue through the period 2008/09 to 2010/11 with a target to deliver 2 per cent increasing cash-releasing efficiencies each year. In 2008/09, NHSScotland initially planned to deliver savings of £216 million against the target of £206 million.

The final outturn was significantly greater than planned with total savings of £297 million in efficiency savings being reported for 2008/09 - an over achievement of £81 million. Details of the savings in 2008/09 are as follows:

Some figures are provisional

Better Health, Better Care emphasised that NHSScotland, as an organisation that spends over £10 billion of public money every year, must strive to become even more efficient in everything it does. We established the NHSScotland Efficiency and Productivity Programme ( EPP) to drive forward national improvement programmes, benchmarking projects and the measurement of output and quality. The National Benchmarking Project delivered 'a whole system scorecard' which allows NHS Boards to compare themselves with others on a range of measures and helps identify areas of best practice and opportunities for efficiency improvement. It also includes separate projects to support NHSScotland in achieving greater efficiency in the use of operating theatres and in improving delivery of mental health services.

As part of the EPP, the NHS Efficiency and Productivity Steering Group ( EPSG), was established in April 2008 to assist NHS Boards identify improvements, share best practice and deliver efficiency savings to ensure optimal deployment of resources to support the delivery of frontline patient care.