NHS Ayrshire and Arran says its £26.4m budget deficit won’t get worse despite higher than anticipated pay agreements and the increasing cost of medicines.

Derek Lindsay, NHS Ayrshire and Arran’s finance director, told the health board that the ‘open cheque book’ that had seen considerable funding come from the Scottish Government during the pandemic, would no longer be available.

Mr Lindsay pointed out that Ayrshire and Arran, which  has a budget of around £762m, had operated deficit budgets – where expenditure is more than income – since before the pandemic hit.

The £26.4m deficit, he said, included a £11.3m deficit from previous years and £3.6m in unrealised savings.

“There is an imbalance between the costs and funding,” he said.

“The revenue plan in March put aside money based on a funding uplift of 2.6 per cent pay awards. The actual pay awards are going to be a lot higher than that.

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“Our cost pressures are about £40m, so we need £20m in efficiency savings to bridge that gap.

“However, we could only identify £8m.”

Mr Lindsay highlighted a significant part of the deficit centred on the New Medicines Fund. The fund helps health authorities cover the cost of drugs for rare conditions and end-of-life treatment.

He said that while £7.2m was provided for new medicines, NHS Ayrshire and Arran will spend £20m, and described this as a ‘mismatch’ which would contribute to the overall shortfall.

However, he did indicate that the authority was confident, but had no guarantee, that the Scottish Government would fund the balance of pay settlement above two per cent budgeted as well as a range of Covid services.

Mr Lindsay described the situation as ‘very difficult’ as the Scottish Government insists that everyone requiring the drugs should have equal access, without ‘postcode prescribing’.

He added that the spend on new medicines had increased consistently since it was set up 10 years ago.