New legislation to reform NHS financial regime in Wales
A new Bill giving NHS organisations greater flexibility to manage their budgets will be introduced in the next Assembly term as part of the Welsh Government’s legislative programme, Health Minister Mark Drakeford has announced.
The Bill would propose that the statutory requirement for local health boards to balance their books over a one-year period should be changed to a three-year cycle.
Mark Drakeford said:
"The NHS presents one of the most challenging operating environments in terms of financial management.
"Pressures including changing demographics such as a growing elderly population, lifestyle factors such as obesity, and unforeseen cost pressures such as funding the availability of new drugs mean that balancing the books over a one year period has become increasingly difficult.
"Allowing the NHS greater financial flexibility to manage their responsibilities over a number of financial years, rather than each and every year, will allow 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 and more sustained period rather than focusing too much on a one year, and specifically end of March, approach.
"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 National Assembly for Wales Finance Committee, Health and Social Care Committee and the Public Accounts Committee have all recommended that a more flexible planning framework for the NHS, including the management of their finances across financial years, should be introduced.
The Bill is scheduled to be introduced early in the next Assembly term and, if passed, the new financial regime would come into effect for the 2014/15 financial year.