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NHS spending increases as two health boards breach financial duties again

17 June 2022
  • Eleven of the twelve NHS bodies’ 2021-22 audited accounts have been published today showing a clear picture of increased spending and some irregular spending in year.

    The Auditor General has concluded that the eleven published  NHS bodies’ 2021-2022 accounts present their financial positions fairly. However two of the six health boards whose accounts are published today, again failed to meet their financial duty to break-even over a three-year period. In addition eight bodies incurred irregular expenditure in year in complying with a direction by Ministers to fund clinicians’ pensions tax liabilities.

    The two 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. Both bodies show a broadly static financial position against the previous year, with their in-year deficits around £25 million and £24 million respectively.

    The Auditor General qualified his audit opinion on the regularity of these two bodies’ 2021-22 expenditure as failing this duty means they have exceeded their authority to spend.

    Cardiff and Vale UHB has met its three-year financial duty for the first time this year, whilst at Betsi Cadwaladr UHB, which in previous years also failed this duty, the audit remains ongoing, with the 2021-22 accounts expected to be published soon.

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

    This year the Auditor General qualified his regularity opinion at eight of these eleven NHS bodies due to the accounts including expenditure and funding in respect of clinicians’ pension tax liabilities. The amounts are included following a Ministerial Direction issued on 18 December 2019 to the Permanent Secretary of the Welsh Government to proceed with plans to commit to making payments to clinical staff to restore the value of their pension benefits packages, where taking on additional work increased their pension tax liabilities. All NHS bodies will be held harmless for the impact of the Ministerial Direction, however, in the Auditor General’s opinion, these transactions are irregular and material by their nature, because they are contrary to Managing Welsh Public Money and will leave the Exchequer as a whole worse off. This Ministerial Direction followed a similar one in England and ultimately aimed to facilitate the reduction of patient waiting lists. For context the estimated costs of funding these tax liabilities in these eight bodies is just over £7 million, against total expenditure in year of just under £10 billion.

    Considerable funding continued to be made available in 2021-22, including ongoing support in responding to the pandemic, and yet the financial position of the NHS remains extremely challenging. The pressures on NHS Wales continue as it shifts to recovery mode and responds to new cost and demand pressures including the significant backlog of planned care. I have qualified my regularity opinions at eight of the eleven NHS bodies whose accounts were published today. All those qualifications relate to these pressures, either overspending against financial limits, or funding of clinicians’ pension tax liabilities to facilitate clinicians taking on additional work in face of growing demand and staff shortages. In a few weeks’ time, I will be issuing my 2021-22 NHS Finances Data Tool which will set out the NHS Wales financial position in more detail, including spending on Covid. Adrian Crompton, Auditor General