The Chief Executive of the NHS in Wales has admitted that the service will have to find £70m worth of savings if it's to break even at the end of this financial year. David Sissling said the figure which was described as the 'most likely scenario' by the Wales Audit Office last week was 'realistic.'
But he insisted that the local health boards which operate services will break even. He told AMs on the Public Accounts committee that the £70m figure sets out the 'level of pressure' facing the NHS.
£45m surge in demand
Mr Sissling pinned the blame for the difficulty in reigning in spending in the NHS on unforeseen increased demand which he said was costing it £45m. Most of that demand he said stemmed from an unexpected surge in the numbers of older people moving to Wales from England.
He also told the committee that the Welsh NHS has a contingency fund of £50m which could be used to help out those boards which are struggling most with the increased demand.
The Welsh Government has issued this statement in response to the Wales Audit Office report forecasting that the NHS will end the financial year at least £50m in the red.
We welcome the Wales Audit Office report on NHS finances, which recognises the NHS is in a better financial position than at the same time last year. The report confirms again the urgent need for reconfiguration of NHS services that are sustainable and deliver better quality services to patients.
Health boards across Wales have been undertaking a great deal of work and taking action to reduce their spending levels. They are currently forecasting to deliver a further £220 million savings this year in addition to the £600 million they delivered over the last two years.
The Welsh Government is very aware of existing and future potential financial pressures on the NHS and is currently undertaking a mid-year review to chart the progress of the health boards' financial position. NHS organisations are making significant progress on delivering savings.
We will continue to work closely with all NHS organisations in monitoring and scrutinising the financial position on a continuous basis, with a view to ensuring that health boards will break even at the year end.
The warning about the likely level of overspend in the Welsh NHS comes in a report by the Wales Audit Office for the Assembly's Public Accounts Committee (PAC) which is carrying out its own inquiry into NHS finances. A spokesperson for the WAO said:
This update report shows that NHS bodies have struggled to manage within their current resource limits in the first half of the year. It is likely that there will be a significant deficit by the end of the year. NHS bodies are making progress with their savings plans, but this is clearly not sufficient. Overspends in key areas like pay and medicines suggest NHS bodies are struggling to contain cost pressures.
The NHS in Wales will be facing difficult choices and challenging times and will be giving evidence in PAC.
The Wales Audit Office does not intend to provide any further comment at this time and awaits the outcome from the Public Accounts Committee’s inquiry.
– Elin Jones, Plaid Cymru Shadow Health Minister
The figures are alarming and show how vital it is that the Health Minister finally takes a hold of this situation.
The austerity cuts being imposed on the public sector by the Tory-Lib Dem government are now being felt in the NHS.
This crisis has been mounting for some time, despite the Minister’s assurances that bailouts to LHBs have ended.
She now needs to be honest about the scale of the problem.
Welsh Liberal Democrat leader Kirsty Williams says the Wales Audit Office report predicting that the Welsh health service could end the year up to £131m in the red is 'of grave concern.' She added:
This is a serious amount of money and I am deeply concerned that towards the end of the financial year, when budgets will be extremely tight, vital services will have to close putting patient care and safety at risk.
We saw this happen last year and some LHBs didn’t even manage to meet their financial targets. I fear that towards the end of this financial year, patients across Wales will start to really feel the consequences of Labour’s mismanagement of our NHS.
Responding to the Wales Audit Office report, the Conservatives' Shadow Health Minister Darren Millar said:
These damning figures confirm that the Welsh NHS is on the brink of financial meltdown.
The Wales Audit Office report flies in the face of recent assurances from the NHS Chief Executive that all health boards would break even by the end of the financial year.
This situation is now completely unmanageable. The financial challenge our health boards are facing is driving unpopular and dangerous service change; making targets more difficult to achieve and putting immense pressure on hardworking frontline staff.
The Welsh NHS could end the financial year £131.4 million in the red, according to the spending watchdog the Wales Audit Office. Its report says the best case scenario would see local health boards ending the financial year £46 million over budget.
The most likely scenario, according to the WAO, is that the combined overspend will be £69.6 million. In a letter to Assembly Members, the Auditor General for Wales, Huw Vaughan-Thomas warns that it'll be a 'major challenge' just to contain the overspending.
A Welsh Government spokesperson gave us this statement in response to the Wales Audit report into NHS finances;
– WELSH GOVERNMENT SPOKESPERSON
The Wales Audit office recognises the achievement of NHS organisations in meeting their financial targets and that we have taken a prudent course of action to support them.
It is important to note that additional funding was not a bailout. The Health Boards were allowed to draw down a small percentage (0.2 %) of the future year's funding in order to provide some flexibility to manage their finances across the financial year end. As a condition of this flexibility, an exteral financial review of these organisations' financial plans has been commissioned.
The statement went on to say;
– WELSH GOVERNMENT SPOKESPERSON
We are investing more than 43 per cent of the total Welsh Government budget in Health and Social Services, despite significant cuts to our budget by the UK Government.