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Resource Allocation Formula


NHS National Services Scotland ISD Scotland & NHS National Services Scotland

The Resource Allocation Formula in Scotland


The Scottish Resource Allocation formula is used in the allocation of around 70% of the total NHS Budget between the 14 territorial NHS Boards in Scotland. This provides funding to NHS Boards for the provision of Hospital & Community Health Services (HCHS) and GP Prescribing. The Formula calculates target shares (percentages) for each NHS Board based on a weighted capitation approach that starts with the number of people resident in each NHS Board area. The formula then makes adjustments for the age/sex profile of the NHS Board population, their additional needs based on morbidity and life circumstances (including deprivation) and the excess costs of providing services in different geographical areas. The latest target shares are available here.

The final shares actually allocated to the Boards are different from the target shares calculated by the formula. The policy of the Scottish Government Health & Social Care Directorate (SGHSCD) is to phase in the Formula by way of 'differential growth' whereby all Boards would continue to enjoy real-terms growth in their allocations year-on-year, with those above parity (i.e. above their formula target share) receiving less growth than those below parity until the new distribution was achieved.

The Formula was developed by the NHSScotland Resource Allocation Committee (NRAC) between 2005 and 2007, with the final NRAC report being published in September 2007 ( The recommendations in this report were accepted by the Cabinet Secretary for Health & Wellbeing in February 2008, for implementation in the 2009/10 resource allocations. The Technical Advisory Group for Resource Allocation (TAGRA) was set up to continually maintain and develop the Formula and ensure that it remains fit for purpose into the future.

The 'NRAC' formula replaced the old Arbuthnott formula (introduced in 2001/02) which in turn replaced the old SHARE formula (which had been in place since the late 1970s). However, the basic structures of these formulae are very similar.

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