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 2019-20 accounts.
Across NHS Wales, the total in-year deficit fell from £96 million in 2018-19 to £89 million. The three-year cumulative over-spend across the NHS reduced from £411 million to £352 million.
These figures are all set out in a new data tool published by the Auditor General.
The Welsh Government increased its revenue spending on health by £650 million for 2019-20. Once inflation is factored in, that translated to a 6.8% increase in real terms. However, this extra funding included several one-off allocations for specific services, rather than a general increase for the day-to-day running of the NHS.
These allocations include £170 million to cover additional pension costs, £95 million for pay awards and £52 million to support improved performance, particularly for elective waiting times. The Welsh Government also allocated an extra £192 million to help integrate health and social care and wider transformation of services, some of which will be shared with local government and other partners. The Welsh Government expects this investment to result in longer-term improvements to the cost-effectiveness of health and care services.
NHS bodies reported that they collectively achieved £130 million in savings in 2019-20. This was around £18 million less than in 2018-19. Recurrent savings, which continue in future years, fell substantially: from £125 million in 2018-19 to £87 million in 2019-20. This indicates that the NHS is facing a challenge to find sustainable savings by making long-term operational changes.
Although it started in February, the immediate effects of the COVID-19 pandemic on NHS Wales finances were limited. Overall, NHS bodies’ expenditure during the final quarter of 2019-20 remained largely in line with their pre-COVID forecasts. However, we expect the significant additional COVID-19 related spending to have a major impact in the 2020-21 financial year.
Three of the bodies that failed to meet their financial duty to break even over three years – Hywel Dda University Health Board (UHB), Betsi Cadwaladr UHB and Swansea Bay UHB (formerly known as Abertawe Bro Morgannwg UHB) – also failed to meet their legal duty to have an approved three-year plan. As a result, the Auditor General has had to qualify his audit opinion on the accounts of all three bodies.
Cardiff and Vale UHB has made positive progress. It broke-even on its annual budget for the first time since 2015-16. It also now has an approved three-year plan to 2021-22. Nevertheless, the fact that its budgets still do did not balance, as required, over the three-year period to 31 March 2020 means meant that the Auditor General had to qualify his audit opinion on the 2019-20 accounts.
The three other health boards, three NHS trusts and one strategic health authority all met their duties to break-even and have had approved plans in place.
Hywel Dda UHB and Betsi Cadwaladr UHB largely sustained their financial position compared to last year, recording similar in-year deficits but failing to meet the reduced deficit ‘control totals’ set for them by the Welsh Government. However, the finances of Swansea Bay UHB deteriorated. Having set out to break-even, the health board recorded an in-year deficit of £16.3 million.
Auditor General, Adrian Crompton said today:
“Whilst any improvement in the overall financial health of NHS Wales is to be welcomed, I am concerned that several health boards continue to record annual deficits, despite some significant increases in their funding.
Looking ahead, NHS Wales clearly faces a huge challenge in trying to improve its financial performance whilst also grappling with the exceptional impacts of the Covid-19 pandemic. I will be closely monitoring its progress throughout 2020-21 and publishing updates as appropriate.”