External costs blamed as health board faces £2.9m overspend

Elgan Hearn, Local Democracy Reporter

Unexpected external costs are being blamed as a health board reveals they are £2.9 million adrift of where their budget should be at the end of October.

The fear is that the overspend at Powys Teaching Health Board (PTHB) could balloon to £5 million and above by the end of next March.

At a board meeting on Wednesday, November 26, members were given an update on how the PTHB budget had performed so far and how it stood at the end of month seven of the 2025/2026 financial year.

Finance director Pete Hopgood said that PTHB is reporting a £19.458 deficit, which is £2.942 million more than the expected deficit of £16.517 million.

This is calculated on the £28.3 million planned deficit being divided by 12 and this sum then multiplied by seven.

Mr Hopgood explained that if the health board had been able to stick to the budget plan they would have made an operational underspend of around £5.8 million, which could be used to offset gaps.

Mr Hopgood said: “This means that we’re broadly on track against our deficit plan.

“However, we do have a number of unplanned unforeseen costs, and these relate to the increase in tariffs with NHS England in relation to unscheduled care.

“This has an impact of £2.2 million (as of October) and a full year impact of £3.8 million.”

Other issues affecting the budget include an overspend from the Joint Commissioning Committee and £600,000 caused by the National Insurance contributions increase.

The budget also came with an expectation that £23.1 million needs to be made in cuts and savings.

Mr Hopgood continued: “The current position is that we have £18.2 million identified as green schemes which means they are on track to deliver – but we still have gap of around £4.8million.”

Independent member Mick Giannasi said: “We may not like the financial position we’re in, but I don’t think anyone can say we don’t understand what’s driving that.”

He asked a question on “tariff inflation” and whether the health board has any way of controlling this to stop further cost increases.

The report said that the price increases have cost PTHB £2.2 million to the end of October and could rise to £3.8 million by the end of next March

Mr Hopgood replied: “Every year in NHS England there is an uplift factor and this is something we are funded for from Welsh Government.

“But in terms of this year’s tariff increases for unscheduled care pathways this is a bit of a one-off situation which has resulted in additional cost for us and we continue to work and understand the impact of those.”

He explained that the £2.2 million is the cost to date and there “could be some movement” before the end of the financial year.

Mr Giannasi added: “It seems bizarre that we have planning process where we set our budget and then we’re subject to outside influences that take us off track.”

The board approved the report.