Health board hopeful 83% of deficit will be wiped out by grant funding

Alec Doyle – Local democracy reporter

North Wales health bosses are hopeful the Welsh Government will wipe out 83% of their £188.5m underlying deficit from next year – if savings and service delivery targets are met.

The Betsi Cadwaladr University Health Board (BCUHB) received two one-off grants last year to reduce its deficit by £156.6m. As result the board – which is in special measures – was able to implement manageable cost savings while preserving core health provision across the region.

Discussions with Welsh Government ended with an agreed set of targets for BCUHB to hit to secure that money for future years – giving the board a fresh start in investing in healthcare services.

Bosses now believe they have done enough to secure part of that funding – with work to guarantee the remainder still underway.

The deficit is an accumulation of increasing demand on services, underfinancing, inflation and historic inefficiencies.It was addressed in BCUHB’s integrated medium term plan (IMTP) – a three-year budget schedule which the board must balance to ensure there is no overspend.

BCUHB – the biggest organisation within NHS Wales – has an annual budget of around £2.4bn. It also carries the biggest underlying deficit.

Deficit

Carrying a deficit is not unique to the north Wales board. All health boards in Wales received a one-time deficit support grant of £74.6m from the Welsh Government  in 2024/25 to help them deal with their underlying financial issues.

Last year BCUHB received a second grant – a Performance and Transformation Fund payment worth £82m. Combined those payments erased £156.6m of the board’s underlying deficit.

If the board successfully secures the full funding amount for future years, it would see 83% of its deficit wiped out. That would allow it to balance the books with an annual cost reduction plan to save an additional £40m each year as it aimed for a break-even position from 2025/26 onwards.

“This health board has never had a financially balanced IMTP,” said BCUHB’s Executive Director of Finance Russ Caldicott. “We have calculated over the next three years that we start with the underlying deficit of £188.5m each year.

“I hope that would move. I am looking for the £74.6m to become a recurrent allocation once we achieve our £8.6m control target. That moves the grant away from being non-recurrent and puts it into our books for the forthcoming years.

“There are some more conditions for us to deliver to secure the £82m. Within the three-year budget cycle we would clearly have an ambition to move that into the same place (as a recurring payment) as well.”

Savings

Key to securing those vital funds is BCUHB’s commitment to annual savings and efficiencies.

“We have to work hard to ensure we deliver those £40m of savings,” said Russ. “We have some costs to mitigate. Inflation is a challenge.

“There are more savings coming through the pipeline that will hopefully help us to achieve that target and to further invest into services we’d like to.”

Clare Budden, CEO of Clwyd Alyn Housing and an independent member of BCUHB, said the board must achieve its targets.

“£40m is not a lot in a £2.4bn budget,” she said. “We have got to deliver it.”