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Our Current financial position

Our financial position

This is a condensed version of the finance paper presented to the NHS Grampian board on 10 April; to read the paper in full, please click here (insert link) 

Health boards have a requirement to produce a balanced budget and historically NHS Grampian has always met this requirement. We requested brokerage (a type of loan) from the Scottish Government in the 2023/24 financial year, the first time we have ever done so. 

Our financial plan for 2024/25 outlined a gap in our finances of £59.1 million even after the delivery of savings totalling £34.9 million . During the 2024/25 financial year, it became clear our deficit was increasing beyond the level outlined in the financial plan. A recovery plan was put in place by the NHS Grampian Chief Executive Team which supported the acute hospital services to recover their financial position.

Why has this happened?

There are many factors contributing to our current financial position: 

  • The cost of providing healthcare. Medicine prices can vary, new medicines become available and innovation in healthcare can require new equipment, new facilities, and intensive training. We want to provide the best to the people of Grampian; this comes at a cost to the organisation. 
  • Staffing costs – implementing pay awards and changes to National Insurance contributions for our 17,000 staff. 
  • Other running costs – we are not exempt from energy bills, are required to pay council tax and have seen the prices for goods, like the food we purchase, rise significantly. This is felt across 308 buildings and the maintenance of thousands of pieces of equipment. 
  • Our partners - contributions to the Integration Joint Boards for Grampian (Aberdeen City, Moray, and Aberdeenshire). It is estimated a contribution of £24.7 million will be required from NHS Grampian to cover its share of any overspend. This reflects that health boards and local authorities (councils) each take a share of the financial risk of these bodies. We did not initially include any provision for IJB overspends, as their plans for 2024/25 all reflected a balanced budget. NHS boards do not receive additional money to support IJB overspends. 
  • Population change. Over the last 5 years, we have seen the highest percentage increase in our older population across Scotland - a 9% increase in over 65s. This increase is contributing to the pressures within our Health Board and our Health and Social Care Partnerships. The overall size of population has also increased over this period, predominantly in the over 65 and the 0–17-year-old age groups. During the same period our working age population has reduced by 1%. This reduction in working age population, who are traditionally use health and care services less, has led to a significant reduction in our overall funding from NHS Scotland. 

What have we been doing? 

We have taken a range of steps to cut our spending, while maintaining patient care: 

  • Enhanced Vacancy Control – we look very carefully at all vacancies, to ensure they need to be filled and that we are recruiting the right people. 
  • Enhanced controls on non-pay spending – every item is carefully scrutinised to ensure it is required, or to see if cheaper alternatives are available. 
  • Our Value & Sustainability programme has delivered savings of £XM 
  • Enhanced monitoring of our finances, both internally and externally. 

Include pdfs of Value & Sustainability newsletters 

What’s next? 

The Board formally requested brokerage (a type of Scottish Government loan) totalling £67.5 million for the 2024/25 financial year. We are very grateful this request has been approved. This takes the total brokerage we will need to repay to the Scottish Government once we return to financial balance to £92.2 million, which will be reflected in our 2024/25 accounts. 

Additional savings totalling £7million for the 2025/26 financial year have been put to the board for consideration. 

We will continue to work with Scottish Government, our staff, stakeholders, and the people of Grampian, to ensure NHS resources are used appropriately and we communicate how work to return us to financial balance will impact upon the services we deliver.  

Published: 04/04/2025 15:29