The Auditor General has reported to the Scottish Parliament that NHS Ayrshire and Arran face significant financial challenges, which are likely to continue for years.
The report notes that the board is unable to deliver services within budget, savings targets have not been met and it will be difficult to achieve financial sustainability in future. A significant proportion of their savings to date have been one-off savings.
NHS Ayrshire and Arran required £23 million in loan funding, known as brokerage, from the Scottish Government to cover cost pressures. Additional loan funding from the Scottish Government will also be needed this year, with a projected shortfall of £22.4 million.
The report says that the board will not be able to balance its budget by 2020/21 and that it has no plans to repay the loans to the Scottish Government. It also highlighted the need to implement its Transformation Change Improvement Plan and to urgently act on the recommendations of an external review.
Auditor General Caroline Gardner said: “NHS Ayrshire and Arran’s board face significant financial challenges, and I have serious reservations about their ability to make the changes that are needed to achieve financial balance in future.”
However, in what may be a lifeline for NHS Ayrshire & Arran, Health Secretary Jeane Freeman issued a statement late last week saying the Scottish Government will no longer seek to recoup any loans dished out over the last five years. She said these will be written off to allow boards to start with a “clean slate”.
From the next financial year, health boards will be expected balance their books in three-year cycles, rather than annually, as happens at present.
Derek Lindsay, director of finance said: “We welcome the publication of the medium term health and social care financial framework. This will allow NHS Ayrshire & Arran to develop its three-year financial plan, which will now be unencumbered by having to repay brokerage received in 2018.
John Burns, chief executive for NHS Ayrshire and Arran said: “NHS Ayrshire & Arran is committed to delivering safe, sustainable services.
“NHS Ayrshire & Arran established a transformational change programme two years ago to co-ordinate service redesign proposals. Many of these redesigns can take several years before the benefit is seen in terms of operating costs.”