Resource Allocation Formula (NRAC)
Target shares for NHS boards for 2026 to 2027

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. This release reports on how the formula predicts the need for these services to be distributed in the financial year 2026/27, 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

This bar graph shows the NRAC unified shares in percentage terms for each NHS board in Scotland for the financial years 2024 to 2025, 2025 to 2026, and 2026 to 2027. NHS Greater Glasgow & Clyde consistently has the highest proportion of budget while NHS Shetland has the lowest.

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NRAC target shares for NHS boards 2024/25 - 2026/27

The chart above shows how the formula forecasts the need for healthcare services to be distributed across NHS boards in 2026/27, comparing against previous forecasts for financial years 2024/25 and 2025/26.

The two most recent runs of the formula covering financial years 2025/26 and 2026/27 have resulted in notable changes to the target shares of some NHS boards compared to previous runs. This is partly because findings arising from the 2022 national census have been incorporated into key datasets produced by National Records of Scotland and used by the formula. For example, while shares in recent years were generated using population projections based on 2018 mid-year population estimates, which were the latest available at that time, the formula run for 2026/27 uses updated projections based on 2022 mid-year estimates. The number of people with an activity-limiting health problem or disability has also been updated based on 2022 census data where previous runs of the formula used data from the 2011 census. Changes in these datasets, such as in the projected age of the population, have contributed to the reduction in NHS Greater Glasgow and Clyde's target share from 22.03% to 21.72%.

There have also been marked changes in the 2026/27 target shares for NHS Western Isles, NHS Orkney and NHS Shetland compared to 2025/26, increasing by 5.8%, 6.8% and 9% respectively. These changes are driven by increases, relative to other NHS boards, in the unavoidable excess cost of delivering services in these areas - these costs are typically higher in more remote and rural areas. For various reasons, including the impact of the pandemic on some national data collections, the data underlying this component of the formula have been updated for the first time since the 2022/23 shares. Changes in these data have also contributed to the reduction in NHS Greater Glasgow and Clyde's target share. For more information on the data sources used by the formula, please see the published Excel workbooks.

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 predicts how this need will be distributed at a low level of geography. The 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. The calculations for each step are carried out separately for the health and community health services (HCHS) and GP prescribing care programmes. HCHS care programmes consist of acute, mental health and learning difficulties, maternity, care of the elderly, and community. Note that GP prescribing has no excess costs adjustment as prescription costs do not vary with location. 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 continues to have an impact 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.