Bail outs plug NHS Fife £23m black hole – but it still won’t balance the books

The Scottish Government is bailing NHS Fife out of a £23 million blackhole this year with £10.2 million in additional money from the UK’s HM Treasury.

It’s a vast change from the financial position just a few months ago when the Fife board last met. Since November, it has warned about a £23 million overspend by the end of March due to “significant pressures.”

Now, the overspend is projected to be much lower - at £12.8 million - but a report from Maxine Michie, NHS Fife’s deputy director of finance, said it’s still unlikely that the board will be able to break even without more help from the Scottish Government.

“Current projections indicate an overspend against budget at the end of the financial year of £12.8 million which is £2 million more than our planned deficit but significantly less than our previously reported forecast outturn of £23 million,” the report stated.

However, the report continued: “It is [still] unlikely the board will be able to breakeven without brokerage support from the Scottish Government and significant improvement in the financial position between now and the financial year end.”

Why has the position changed so suddenly?

It mostly comes down to one off funding from the UK’s HM Treasury that’s being passed onto boards by the Scottish Government.

Ms Michie’s report explained that the Scottish Government has received confirmation of “additional consequentials funding” from the HM Treasury, which will be provided on a one-off basis.

The Scottish Government has also confirmed that health board contributions to the national Clinical Negligence and Other Risks Indemnity Scheme (CNORIS) will be also reduced. This has taken an additional £2 million worth of pressure from NHS Fife this year.

In total, these one off windfalls have reduced the projected budget gap by nearly half.

What happens next?

The Scottish Government has confirmed that any board deficits reported at the end of the financial year will be “subject to repayable brokerage.”

That means that the unexpected windfall has not changed NHS Fife’s requirement to break even by the end of the year.

“Boards should continue to take action to move towards break even,” Ms Michie’s report states.

She said it was “unlikely” that NHS Fife will be able to break even without help from the Scottish Government or without a serious improvement between now and the end of the month. Ms Michie’s latest financial report will be discussed at the next board meeting next Tuesday.