Finance

How our budget works

NHS Fife's budget of almost £1.1 billion this year mostly comes from the Scottish Government. 

Like other health boards, we are allocated funds based on a national resource allocation formula that considers factors such as population size (around 380,000 in our case), health needs, and deprivation levels. We are currently not at full parity in terms of our share of national funding.

Find out more about the Resource Allocation Formula.

How much does NHS Fife have to spend?

NHS Fife’s annual budget is around £1.1 billion, which is a fixed amount to provide health and care services. This is mostly spread across:

• Staffing (salaries and pensions)
• Medicines (drugs and medical supplies)
• Infrastructure and facilities (such as buildings, equipment, technology and energy)
• Services (such as hospitals, primary care, mental health and community care)

You can read more at our annual reporting.

Addressing the financial gap

NHS Fife is legally obligated to stay within its budget and must assign funds to services and departments based on priority and need.

NHS Fife is not authorised to spend more than has been allocated and must develop cost efficiencies to close any financial gap between what our services cost and what our funding is.

For 2024/25 that gap is £51.4 million.

Over the last two financial years, NHS Fife has required a cumulative total of £23 million in brokerage to balance our financial position. Brokerage works much like a loan arrangement from the Scottish Government, however for the 2024/25 financial year we have been advised that there is no brokerage available. This is very challenging, and we are working hard to develop and deliver plans to reduce our costs.

Why is NHS Fife ‘overspent’?

Like other health boards, NHS Fife has been impacted by significant cost pressures. These include:

• Staffing costs (including supplementary staffing)
• COVID legacy costs (such as waiting list backlogs)
• Rising energy costs
• Inflation
• Ongoing surge capacity (opening extra ward space when things are very busy)
• High costs of medicines
• High costs for treatments from other Health Boards

Due to these rising cost pressures, in the last few years NHS Fife spent more than the budget that was allocated – we were able to do this through a process of brokerage. Brokerage is effectively a loan that is agreed in partnership with Scottish Government that must be paid back over an agreed time. We do not anticipate being able to begin repaying our cumulative brokerage before 2026/27.

NHS Fife predicts an overspend of around £51.4 million this financial year. This means that to break even the organisation must make a 6% saving across services. This is one of the reasons that Scotland’s head of health and social care described the current financial landscape as ‘by far the most challenging since devolution’.

NHS Fife’s financial situation is regularly reported at the NHS Fife Board.

How are we making the savings we need?

A significant amount of work has gone into looking at what we do, where we do it, and how we work both now and, in the future, to ensure that we make the most of every pound that we spend. We need to increase efficiency, reduce costs, and balance the need to fund essential services with the desire to invest in new initiatives and technologies. It is very difficult to do the latter in the current financial context.

Re-form, Transform, Perform (RTP) is NHS Fife’s initiative to make the changes we need to maintain patient safety and quality of care, while managing our financial challenges.

It's inevitable that the financial landscape means we'll have to make some changes to services, their structure and care delivery and numerous initiatives and activities are already underway, which have generated significant savings:

• Increased use of renewable energy solutions (such as the roll out of solar panels)
• More efficient medicines prescribing, supply, administration, and reduced waste
• Strategic realignment of areas of unscheduled care into acute services
• Finance contract reviews
• Reduced use of supplementary staffing 
• Streamlined procurement options
• Consolidation of infrastructure (such as the closure of underused admin buildings)
• Further oversight and management of spending in all areas

We estimate around £25 million worth of savings will be delivered by the end of the year, however we have a minimum target of 3% which is non-negotiable so we need to increase this.

There is still a long way to go, and difficult decisions will likely need to be taken if we are to make the additional £26.4 million of savings we need.

What does this mean for our services?

Whilst we require to make significant savings, we are committed to doing so without compromising patient safety or the standard of care we provide.