NHS Grampian cannot balance its books without sweeping changes, report says

NHS Grampian will find balancing its books impossible without a “significant redesign” of local services or “fundamental changes” to funding, according to a “devastating” new report.

Scotland’s Auditor General has published a Section 22 report into NHS Grampian, prompted by concerns over its finances.

Moray based MSP Douglas Ross said the report was “devastating” and showed the impact of “years of gross mismanagement” at NHS Grampian.

Laura Skaife-Knight, NHS Grampian chief executive, welcomed the report as a “constructive way to reflect on our challenges and identify where we need to improve”.

According to the report, NHS Grampian has relied on Scottish Government loans to balance its budget for the last two years.

This included a loan of £65.2 million last year, the highest out of any health board.

In total, NHS Grampian owes the Scottish Government a total of £90 million, to be repaid once it has balanced its budget.

The Auditor General also said NHS Grampian had been placed one step from direct Scottish Government control over “significant risks” to Scotland’s entire health and social care budget.

Oversight measures had also been imposed due to “rising concerns about local services and performance against national priorities and standards”.

Within the report, the Auditor General also highlighted local health and care bodies, including the Moray Integration Joint Board, as playing an important role in NHS Grampian’s financial crisis.

Last year, NHS Grampian exceeded its savings target but this did not reduce its overspend.

The report said this was “mainly a result” of a £22.4 million overspend by local health and care bodies.

In total, the Moray Integration Joint Board required an extra £2.2 million from NHS Grampian last year to balance its own books.

The Auditor General singled out the IJBs as a “significant barrier to overcome” in trying to balance NHS Grampian’s books.

According to the health board’s projections, the three boards are set to face an extra £290 million of funding pressure over the next five years.

The expected rise is due to limited future increases in funding, rising costs and an aging population.

The auditor also highlighted areas in which NHS Grampian’s performance was falling behind national standards, including A&E pressures and ambulance delays.

Last year’s performance was also worse than the year before, despite an increase in expenditure, the report said.

NHS Grampian also has to deal with Scotland’s lowest bed base, at just 1.4 beds per 1000 people, compared to the Scottish average of 2.4 per 1000.

The auditor said “significant recurring investment will be required” to improve the board’s capacity.

“Hospital occupancy rates across Grampian are regularly above 100 per cent,” it added.

“The board are limited by the physical space they have in hospitals, meaning it is difficult to significantly increase the capacity of beds to deliver care.”

The report also highlighted concerns raised by inspectors and industry bodies about care at Dr Gray’s Hospital and throughout the health board.

In July 2024, Health Improvement Scotland (HIS) carried out an unannounced inspection at the Elgin hospital, following up on an October 2023 inspection.

Inspectors found 12 areas in which Dr Gray’s had failed to meet the required standards, with 10 issues identified in the previous inspection having not been fixed.

In February 2025, the chief executives of HIS and NHS Education for Scotland (NES) wrote a joint letter to the board raising concerns about the “effectiveness of the current leadership arrangements”, NHS Grampian’s governance arrangements and “significant workforce challenges”.

In the wake of the report, Highlands and Islands MSP Douglas Ross criticised the “unforgivable” actions of successive health secretaries and senior leaders at NHS Grampian.

“The staggering levels of debt and overspend are continuing to put frontline services at risk and ultimately it is patients and staff who suffer the devastating consequences,” he added.

“NHS Grampian is facing a winter emergency and simply do not have the resources they need to cope without patients facing longer waits at A&E departments, operations being cancelled and lives ultimately being put at risk.

“SNP ministers have been asleep at the wheel while NHS Grampian has lurched into a deeper and deeper crisis.

“This report must finally be the wake-up call for them and the new chief executive of NHS Grampian to act to get the health board back on a much sounder financial footing.”

NHS Grampian’s chief executive Ms Skaife-Knight said the report was an “opportunity for learning” which would help the health board deliver improvements necessary for patients, community and staff.

“Our focus remains delivering the improvements we have committed to, including those related to leadership, governance, the timeliness of planned and emergency care for our patients and our financial performance,” she added.

“We’ve already begun a programme of improvement, shaped further by the recently published KPMG diagnostic report and other external input, including learning from other health boards.

“We’re developing an improvement plan in close collaboration with our staff and partners, building on work already underway recognising this is how we will meet the challenges we face and that lie ahead.

“This improvement plan will come to our public board meeting in December 2025 for approval, for transparency, and regular progress updates will be shared with our community, partners and staff.

“The continued commitment of our staff to delivering safe and compassionate care to the communities we serve across Grampian is deeply valued and remains at the heart of everything we do, for which I would like to thank them.”