News / Wales rethink heralds new break-even duty

By Seamus Ward

Wales health minister Mark Drakeford is to introduce legislation that will allow local health boards to balance their books over a three-year period.

Over the past year, calls have been growing to introduce greater year-end flexibility for the health boards. Under current legislation, they must break even at the end of each financial year.

However, this has led to criticism. Last year, the Wales Audit Office (WAO) called for greater flexibility. It said the government had regularly given organisations in-year financial support to help them break even. In 2011/12 the government supported four health boards in this way, giving them a total of £24m. But, in a break from previous policy, where boards did not have to repay the funds, in 2011/12 they were largely in the form of brokerage.

In February, the Welsh Assembly public accounts committee backed the WAO. It said breaking even over three years, combined with stronger planning and financial monitoring, would ensure the focus was on achieving sustainable savings throughout the year, rather than looking for non-recurrent savings at the end of each financial year.

Announcing the bill, Mr Drakeford said the change in the break-even duty would give the NHS the scope to make prudent long-term decisions.

‘A significant downside of the current financial regime is that it may encourage short-term decision-making around the current year. Introducing this change will help the NHS focus its service planning, workforce and financial decisions over a longer period,’ he said.

?But he added: ‘Let me be absolutely clear that moving to a three-year financial planning regime does not in any way mean a diminution of the rigour with which health boards have to manage their finances.’

The bill will be published in the autumn and, if passed, the changes will be implemented in the 2014/15 financial year.

Welsh NHS Confederation director Helen Birtwhistle welcomed the proposal. ‘We are confident that a three-year financial planning system will benefit patients, as the greater flexibility will allow health boards and trusts to take a longer term approach,’ she said.