Resource Allocation Formula (NRAC)
Target shares for NHS Boards for 2025 to 2026
An Official Statistics publication for Scotland
- Published
- 27 August 2024 (Latest release)
- Type
- Statistical report
- Author
- Public Health Scotland
About this release
This release by Public Health Scotland (PHS) presents a summary of the latest outputs generated by the National Resource Allocation Formula (NRAC). The Formula is used to inform how the majority (approximately 70%) of the NHS Budget in Scotland, covering the cost of hospital and community health services (HCHS) and GP prescriptions, is allocated geographically in a particular financial year. It does this by predicting how the need for these services will likely be distributed at a low level of geography. This release is concerned with reporting on how the Formula is predicting this need to be distributed in the financial year 2025/26, particularly in respect of the share of need that will be present in each territorial NHS board area (target share), which is the main level of geography of interest for budget setting.
Main points
The chart above shows how the Formula forecasts the need for healthcare services to be distributed across NHS boards in 2025/26, comparing against previous forecasts for financial years 2023/24 and 2024/25.
There have been significant changes to the target shares of some NHS boards compared to runs of the Formula in previous years. This the largely due the starting point of the Formula being the projected size of the population in each area and there have been some changes arising from the findings of the 2022 national census which has highlighted some previous misestimation of the population in some areas in the statistics produced by National Records of Scotland (NRS). For example, NHS Lanarkshire's projected NRAC population share has increased from 12.06% in 2024/25 to 12.23% in 2025/26 and this has driven the increase in their target share from 12.31% to 12.48%.
Please note that population projections produced by NRS are a key data source used to derive the projected populations used by the Formula. The NRS projections have not yet been updated using 2022 census information, and so this run of the Formula used the latest available projections which are based on the 2018 mid-year population estimates. It is therefore possible that target shares in future releases of this publication will experience further shifts as more up-to-date projections become available.
Background
It is crucial that resources are distributed fairly, taking account of the many factors that influence the need for healthcare in particular areas and the costs of supplying those services. The NRAC Formula was originally developed by the NHS Scotland Resource Allocation Committee (established in 2005) to assist with achieving this, replacing the previous Arbuthnott Formula. The Technical Advisory Group for Resource Allocation (TAGRA) is set up to steer the maintenance and development of the Formula and ensure that it remains fit for purpose.
Whilst the main driver of an NHS board's share is the projected size of their resident population in the year of interest, the Formula also takes into consideration other factors that may impact on the need for services such as the age and sex composition of the population, levels of morbidity and the influence of other 'life circumstances' the population may be experiencing. The Formula also adjusts for the unavoidable excess costs that some NHS boards may experience in delivering services, for instance in remote and rural areas. More detail on structure of the Formula and how it is calculated can be can be found on the NRAC information page.
The Formula relies on a wide range of national data sources, some of which are crucial to understanding ongoing patterns of service usage and expenditure. The COVID-19 pandemic has had an impact on this in two ways. Firstly, collection of some national datasets was deprioritised during the pandemic and so some trend data is incomplete. Secondly, many services were impacted, particularly in the early stages of the pandemic, and so these patterns were interrupted or distorted, with some remaining different to that observed prior to the pandemic. Consequently, some of the data currently available to the Formula may not always be fully reflective or predictive of future patterns, as recovery from the pandemic continues. In running the Formula, PHS has attempted to navigate and overcome these constraints but it should be acknowledged that there may be some unanticipated variation or instability in the outputs of the Formula until data becomes available that provides firmer clarity of likely ongoing patterns.
Further information
The next release of this publication is to be confirmed and will be highlighted on the PHS website at a future point.
General enquiries
If you have an enquiry relating to this publication, please contact Martin McKenna at phs.costsinfo@phs.scot.
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If you have a media enquiry relating to this publication, please contact the Communications and Engagement team.
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Older versions of this publication
Versions of this publication released before 16 March 2020 may be found on the Data and Intelligence, Health Protection Scotland or Improving Health websites.