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NHS (Scotland) Summarised Accounts 1998-99

Sir John Bourn, head of the National Audit Office, reported to Parliament today on the Summarised Accounts of the National Health Service in Scotland for 1998-99. The report describes the findings of the appointed auditors of the individual health bodies, discusses developments in accounting and financial control, considers the financial performance of the NHS in Scotland and reports progress in accounting for the likely costs of clinical and medical negligence.

The principal points made in the report are that:

  • overall Health Boards reported a surplus of £13 million for the year (cumulative deficit at 31 March 1999 £15 million) and NHS Trusts a deficit of £28 million (cumulative surplus at 31 March 1999 £61 million); the Boards’ cumulative deficit is technical and arises largely due to the Boards’ reporting income on a cash basis and expenditure on an accruals basis;
  • as a result of NHS reorganisation the number of NHS trusts decreased from 47 to 28 with effect from 1 April 1999;
  • eighteen of the 47 NHS Trusts reported deficits for the year ended 31 March 1999, but had sufficient accumulated surplus to achieve break-even. 5 Trusts failed to meet one or more of their 3 financial targets but in three cases this was due to disposals of property;
  • the appointed auditors of individual health bodies noted that generally the overall financial stewardship within the NHS continued to be of a high standard given the demanding workload arising from the reorganisation. However, the auditors for one Trust reported on an unexpected deterioration in the Trust’s in-year financial position, attributable to poor financial management and reporting;
  • as a result of the reorganisation a number of issues were highlighted with regard to post-payment verification of Primary Care expenditure – that is payments to GPs, Pharmacists, dentists and opticians;
  • revaluation of Health Board assets resulted in a write- down of £11 million for the year (£11 million write-down for 1997-98) and NHS Trusts a write- down of £110 million for the year (£51 million write-down for 1997-98), arising from hospital closures, PFI projects and rationalisation of services;
  • only one health body met the Treasury’s target of paying no less than 95 per cent of undisputed bills within 30 days. One Health Board failed to disclose their payment performance, while over 50 per cent of Trusts did not comply with this disclosure; and
  • provisions in respect of claims for medical or clinical negligence have risen from £20 million at 31 March 1998 to £25million at 31 March 1999. Contingent liabilities, for claims where the possible outcome is less certain, increased from £27 million to £35 million in the same period.

Notes for Editors


In 1998-99, the 15 Health Boards, 47 NHS Trusts and other health organisations in Scotland were required to prepare annual accounts under Section 86 of the National Health Service (Scotland) Act 1978 as extended. The accounts were audited by the Accounts Commission or by registered auditors appointed by the Accounts Commission.


The Secretary of State is required to prepare Summarised Accounts from individual accounts which are then subject to audit by the Comptroller and Auditor General. There are seven Summarised Accounts for 1998-99:


  • the 15 Health Boards which incorporate the accounts of general practitioner fundholders;
  • the 47 NHS Trusts in Scotland;
  • the Common Services Agency for the Scottish Health Service;
  • the Health Education Board for Scotland;
  • the State Hospital Management Committee;
  • the Scottish Council for Postgraduate Medical and Dental Education; and
  • the Mental Welfare Commission for Scotland.


The Health Boards spent approximately £4.4 billion in 1998-99 of which approximately £3.2 billion was expended by NHS Trusts. The Comptroller and Auditor General will also certify the summarised accounts for the NHS in Scotland for 1999-2000. Thereafter, following the creation of Audit Scotland under the Public Finance and Accountability (Scotland) Act 2000, responsibility for auditing these accounts will pass to the Auditor General for Scotland.


The Comptroller and Auditor General, Sir John Bourn, is the head of the National Audit Office employing some 750 staff. He and the NAO are totally independent of Government. He certifies the accounts of all Government departments and a wide range of other public sector bodies; and he has statutory authority to report to Parliament on the economy, efficiency and effectiveness with which departments and other bodies have used their resources.


PN: 54/00