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Continued COVID-19 response alongside growing patient demand keeps NHS funding growing as three health boards breach financial duties again

31 August 2022
  • Our data tool shows the impact of the pandemic on NHS funding and NHS bodies’ current financial positions

    After an unprecedented funding rise of £1.8 billion in 2020-21 (14.3% real terms increase), health services in Wales received an uplift of 0.2 billion (2% real terms increase) in 2021-22. Three of the seven health boards in Wales failed to meet their financial duty to break-even over a three-year period, however in a year of significant pressure, the in-year deficit across NHS Wales has remained fairly static.

    It has been another high-demand year for NHS Wales. The continuing impact of COVID-19 and significant increases in patients waiting for treatment have kept the NHS under constant pressure.

    Despite the significant funding there remains an overspend across NHS Wales. Betsi Cadwaladr, Swansea Bay and Hywel Dda university health boards failed again to meet their duty to break even over a three-year period. However, against a backdrop of significant pressure, the total in-year deficit was fairly static at £47.4 million (£47.9 million in 2020-21) and the three-year cumulative over-spend across the NHS reduced from £233 million to £184 million.

    NHS bodies continue to keep track of COVID-19 related expenditure. Monthly returns to the Welsh Government show they spent an additional net £0.88 billion in 2021-22 due to COVID-19, a 25% reduction on the £1.1 billion reported for 2020-21. Of this £0.88 billion, specific spend areas included £0.27 billion on vaccination, tracing and testing, £0.06 billion on personal protective equipment and £0.05 billion on field hospital/surge capacity. Staff pay due to COVID-19 related activity was £0.4 billion, of which £0.03 billion was on agency staff. This is only a small proportion of agency staff spend in 2021-22, which saw a 23% increase from the previous year to £0.27 billion across NHS Wales in the main to cover continuing workforce vacancies.

    Positively, reported savings are increasing from the previous year, however a growing proportion are delivered through one-off actions such as delaying spend rather than driving efficiencies.

    Strategic planning will be key to delivering transformation in the NHS and bodies are now moving back to longer term planning from the more agile annual plans used in the last 2 years. For those bodies who have not as yet produced plans that have been approvable by the Welsh Government, this may be a significant challenge.

    This data along with further detail is set out in a new data tool [opens in new window] published today.

    In the context of the ongoing pandemic and needing to respond to unprecedented service pressures, high levels of funding continued to be made available to the NHS in Wales in 2021-22. NHS bodies have faced the challenge of using that money to both respond to immediate service pressures and to also start to recover and reshape services to tackle backlogs and new patterns of demand. The focus on recovery and remodelling must continue into the current year and beyond but our data points to challenges with the workforce as evidenced by a growing expenditure on agency staffing, and a need to develop a more strategic approach to service transformation. As the peak of additional COVID funding subsides, NHS bodies will need to use the reinstated medium term planning process to set out a financially sustainable path to service recovery and modernisation. Adrian Crompton, Auditor General