Written by Audit Wales

Our new data tool shows NHS spending trends due to the pandemic and their current financial positions

Funding for Health services in Wales rose by £1.7 billion, much of it to cover the costs of COVID-19, but four of the seven health boards in Wales once again failed to meet their financial duty to break-even over a three-year period, according to their 2020-21 accounts.

It has been an extraordinary year for NHS Wales. The two waves of COVID-19 have put the NHS under pressure like never before. Services have been disrupted. Many staff have been redeployed from the day-job and NHS bodies are delivering different services in different ways.

NHS bodies have been keeping track of COVID-19 related expenditure over the course of the pandemic. Their monthly returns to Welsh Government show that they spent an additional net £1.1 billion in 2020-21 due to COVID-19. Of this, £702 million was non-pay expenditure and £477 million pay expenditure. Key elements of the spend were Field Hospitals at £182 million, Personal Protective Equipment at £171 million, the Test Trace Protect Programme at £102 million and the NHS staff bonus of £105 million.

These figures are all set out in a new data tool published today.

With the extra COVID-19 funding and other rises in core funding, the Welsh Government increased its revenue funding on health by £1.7 billion compared to 2019-20. Once inflation is factored in, that translated to a 12.8% increase in real terms and equates to funding of £2,620 for every person in Wales for 2020-21.

Despite the higher funding there remains an overspend across NHS Wales. Four health boards failed to meet their duty to break even over a three-year period. However, there is positive progress, the total in-year deficit fell from £89 million in 2019-20 to £48 million this year, and the three-year cumulative over-spend across the NHS reduced from £352 million to £233 million.

Two of the four bodies failing to meet their financial duty to break even over three years – Hywel Dda University Health Board (UHB) and Swansea Bay UHB – also failed to break-even in year. Whilst Hywel Dda UHB continues to show an improving trend in its financial position, the finances of Swansea Bay UHB have again deteriorated.

The other two bodies failing to meet their financial duty to break even over three years – Cardiff and Vale UHB, and Betsi Cadwaladr UHB – have both made significant financial progress, breaking-even in year.

The Auditor General qualified his audit opinion on the regularity of these four bodies’ 2020-21 expenditure as failing this duty means they have all exceeded their authority to spend.

The other three health boards, three NHS trusts and one special health authority all met their duties to break-even.

Ordinarily NHS bodies would be required to have approved plans in place for the next three-year period. This requirement was put on hold in 2020-21 and instead bodies planned on a quarterly basis in order to respond to the fast-moving environment. As part of the NHS recovery, annual plans are required for 2021-22 and beyond that the NHS will be looking to move back to three-year planning. For 2020-21 then, (except for Health Education and Improvement Wales which had no planning duty for this year), NHS bodies re-reported performance against their 2019-20 planning duty, which remained in place during this pause.

Auditor General, Adrian Crompton said:

‘This has been an exceptional year and I want to pay tribute to the dedication of all NHS Wales staff – those on the frontline and those working behind the scenes to support the delivery of lifesaving services.

Very considerable funding has been made available, largely to address the pressures created by COVID-19. Yet the financial position of the NHS remains extremely challenging as it continues to manage the ongoing COVID-19 pandemic, shifts to recovery mode and responds to new cost and demand pressures.

I intend to report in more detail on some of the big challenges facing public services in recovering from the pandemic as part of a series of ‘Picture of Public Services' reports in the autumn.’