Seven health boards given £230m bailout loans despite record funding

Seven health boards received £230m in bailout loans from the Scottish government last year, despite record levels of NHS funding.

The figures were revealed in the annual review of the NHS by spending watchdog Audit Scotland.

New analysis shows that in total, health boards have received just over £500m in bailout loans from the Scottish government in the last six years - and just £7m has been repaid.

Audit Scotland warned that the NHS was "not in a financially sustainable position" but the Scottish government said it was "making good progress" in transforming health services.

In its annual review of the NHS, the watchdog returned to a number of familiar themes from previous years - including increased patient demand, emergency care pressures and waiting times targets not being met.

Recent modest falls in waiting times provided the bright spots of the review.

But Audit Scotland repeatedly makes the point that - despite more money and staff - the performance of the NHS has not improved in line with commitments made by the Scottish government.

Productivity remains below pre‑pandemic levels and seven of Scotland's 14 regional health boards were unable to balance their books last year.

Health spending in 2024/25 totalled £20.6bn, which is 24.9% higher in real terms than it was 10 years ago.

Nearly all of that cash is handed over to health boards - but for seven of these authorities, it was not enough to meet their statutory duty of breaking even.

Data from Audit Scotland shows that an unprecedented amount of loan funding, totalling £230m, was required by boards in 2024/25.

These soft loans, also known as brokerage, are meant to be repaid when a board returns to a breakeven position.

A total of £503m has been distributed to health boards since 2019/20 - but only NHS Tayside has repaid a loan (£7m) over that period.

A breakdown of the bailout loans which were given in 2024/25 also shows that attempts to cap the amount paid out failed.

For example, NHS Grampian was initially told by Scottish ministers its limit for any bailout would be £15.3m but ended up receiving £65.2m.

One of the biggest annual financial challenges for health boards is meeting savings targets set by Scottish ministers.

These efficiency savings - worth more than £657m across NHS Scotland last year - are important as the money saved can then be retained by health boards to help them balance their books.

The boards failing to make these reoccurring savings targets are the ones asking for bailouts.

Other big financial pressures facing boards include soaring staffing costs, which now account for nearly 60% of all expenditure across NHS Scotland.

The NHS staffing bill in 2017/18 was £6.6bn but last year it topped £11.5bn.

The Audit Scotland report points to problems with the management of the health boards in receipt of bailout loans.

The Scottish government has formal "oversight" of the running of six NHS boards due to poor performance in areas such as financial management and leadership.

Audit Scotland also recently issued reports into two of the health boards which needed bailouts.

Auditor General Stephen Boyle said there was "no evidence that NHS Ayrshire and Arran can achieve financial sustainability" due to its previous loans and projected deficit of £33.1m this year.

A separate report on NHS Grampian warned that a return to financial balance was unlikely without "a significant redesign" of its health and social care system.

Despite the challenges, some bosses at these struggling health boards have been handed "superior" and "outstanding" performance appraisals in recent years.

The Scottish government has now scrapped the system of bailout loans after ruling it had become unsustainable and was unfair on the boards balancing their books - including the biggest authorities NHS Lothian and NHS Greater Glasgow and Clyde.

Instead, struggling boards will be allocated "deficit support funding", although Audit Scotland notes there is a "lack of clarity and transparency" around this plan.

Returning to its concerns about performance, Audit Scotland has said that the delivery of efficiencies and reform within the health and care system is vital to the financial sustainability of the NHS.

Auditor General Mr Boyle said ministers needed to deliver "detailed, measurable actions that will enable change" in the health service.

He added: "Despite increased spending, the NHS in Scotland remains unsustainable and it will be extremely challenging to eradicate long waits by the spring of 2026.

"The plan and frameworks the Scottish government has put in place for reforming the NHS are welcome.

"But there is still a persistent implementation gap between policy ambitions dating back over a decade and delivery on the ground."

Health Secretary Neil Gray said: "We are making good progress transforming Scotland's health services.

"Last year we delivered a record number of hip and knee operations, long waits over 52 weeks have reduced for five consecutive months, and performed operations are at their highest since January 2020.

"To protect the NHS's long-term future sustainably, we plan to invest in a range of reforms including shifting care from acute to community settings, dedicating £531m to general practice over three years and expanding Hospital at Home capacity to 2,000 beds by the end of 2026."

The most senior Scottish doctor from the Royal College of Emergency Medicine told me this week that emergency units, for both adults and children, are completely overwhelmed.

No beds, no chairs, no cubicles – no space for patients who desperately need care.

It means mistakes are made, ambulances can't get back on the road to another 999 call and patients don't get the care they need.

I've been covering health stories in Scotland for the best part of a decade and these stark warnings have become increasingly familiar.

Many of us will have struggled to get a GP appointment, or will be one of the 600,000 people on a waiting list, or 2,000 patients each day who are unable to get out of hospital.

Year-on-year more money is spent on the NHS and yet performance continues to deteriorate.

This year, the government targeted millions at reducing waiting lists and there are small signs of improvement but some experts question whether this is sustainable.

This is why the Auditor General and other leading healthcare experts say difficult political decisions now need to be made about what the NHS can and cannot afford.