The cost of covering extra work to bring down NHS waiting lists in Wales has forced health boards and other NHS bodies to overspend to cover £7m in tax for staff pension payments.
The figures are revealed in a new report showing two health boards failed their duty to break even in a three year period racking up nearly £50m in deficits. The Auditor General’s report also shows NHS spending in Wales has increased again.
The accounts of eleven NHS Wales organisations for 2021-22 have been audited by the Auditor General for Wales and were today laid before the Senedd on Friday, June 17.
Despite the challenges posed by the pandemic, nine of the 11 NHS organisations operated within their budgets in 2021-22. The audit of Betsi Cadwaladr University Health Board’s accounts has not yet been concluded.
But the audited accounts show a clear picture of increased spending overall and "some irregular spending in year”, Auditor General Adrian Crompton warned.
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Eight NHS bodies in Wales incurred “irregular expenditure” by complying with a direction by ministers to fund clinicians’ pensions tax liabilities when they were asked to work extra hours to bring down waiting lists.
The two health boards failing to meet their financial duty to break even over three years – Hywel Dda University Health Board and Swansea Bay University Health Board - 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 £25m and £24m respectively, the document says.
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.
Amounts spent on clinicians’ pensions follow a Ministerial Direction in December 2019 to the Permanent Secretary of the Welsh Government to commit to payments to clinical staff to restore the value of their pension packages, if they took on extra work increasing their pension tax bills.
While NHS bodies will be “held harmless for the impact of the Ministerial Direction” in the Auditor General’s opinion, these transactions are listed as “irregular” because they are contrary to managing Welsh public money and will leave the Exchequer as a whole worse off.
The Ministerial Direction in Wales followed a similar one in England and was aimed at cutting patient waiting lists. 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.
Auditor General, Adrian Crompton said: “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.”
Health Minister Eluned Morgan said in a Written Statement: "I am pleased at the progress made by Cardiff and Vale University Health Board in returning to in-year financial balance. The health board has met its three-year break-even duty for the first time since the implementation of the 2014 Act.
"As announced by the former Health Minister, any historic deficits incurred will no longer be repayable. My officials are preparing a summarised account of the health boards, NHS trusts and Health Education and Improvement Wales, which will be published in August following sign-off by the Auditor General for Wales."
