National Health Service in Scotland: Annual Report 1998-99

	funding the nhs in scotland All NHS staff are an integral part of the team providing high quality care for patients

FUNDING OF THE NHS IN SCOTLAND

The amount of money spent on the NHS in Scotland each year is decided by the First Minister for Scotland within the overall resources available to him. A third of the Scottish Executive budget is spent on the Health Service.

Most of the money is allocated to Health Boards according to the size, age and health of the population they serve. Health Boards then use their funds to commission services from those who provide them - such as NHS Trust hospitals.

The amount of money spent on the NHS in 1998/99 was some £5 billion, an increase in money terms of 4.6% (£218 million) over the previous year, and of 2.0% after taking account of movements in pay and prices. Each year there has been an increase in real terms in spending. This is needed to meet rising demand due to medical advances, which leads to more effective treatment. It is also needed to provide health care for the growing numbers of elderly people, and to meet the public's expectations.

About 97% of the money spent last year came from general taxation and the NHS part of National Insurance contributions. The remaining 3% came from charges (e.g. prescriptions, dental examinations and treatments) and other receipts.

How this money is spent is set out in the pie chart above. Seventy five per cent is spent on hospital and community services (running costs and capital), 24% on family health services and the remainder on various centrally funded services like research and health education.

Staff salaries and wages are the biggest single cost to the NHS, amounting to 70% of the total. Local pay arrangements have been developed to give greater flexibility and efficiency in delivering health services. The money provided by taxpayers for the Health Service must be well spent to provide the highest quality of health care. In 1998/99 the NHS carried out a number of initiatives to provide better value for money. The money saved has been reinvested in patient care.

National Review of Resource Allocation for the NHS in Scotland

The report of the National Review of Resource Allocation for the NHS in Scotland, Fair Shares For All, was published on 15 July 1999, and has been the subject of a four-month consultation exercise ending on 14 November 1999. The independent review, chaired by Professor Sir John Arbuthnott of Strathclyde University, was tasked with advising Ministers on needs-based methods for distributing among Scotland's 15 area Health Boards some 80% of the annual Scottish health budget.

The review has addressed the distribution of revenue funds for hospital and community health services, GP prescribing and general medical services. It has recommended a new weighted capitation formula which more accurately reflects local resource needs arising from deprivation and remoteness, and has also proposed that an extra 'inequalities adjustment' be developed to take account of inequalities in access to healthcare. This adjustment will be issued for public consultation later this year.

The Executive will consider its response to the main report and to the proposed inequalities adjustment in due course, bearing in mind the outcome of public consultation.

Staffing

February 1999 saw the publication of reports from the independent Pay Review Bodies which recommended pay rises of at least 4.7per cent for all nurses, midwives and Professions Allied to Medicine (with newly qualified staff receiving up to 12 per cent), and at least 3.5per cent for doctors and dentists. The Government agreed to implement these recommendations without staging and subsequently published proposals for modernising the NHS pay system.