NHS organisations achieve savings in a number of different ways. These include stopping certain activities, reducing expenditure, and reshaping services to deliver care more efficiently. In 2023-24, NHS organisations in Wales recorded their highest level of savings since 2018-19, with a greater share of these savings being recurrent. However, despite these efforts - and the additional £425 million provided by the Welsh Government - the savings were not enough to balance the books. More information is available in the infographic below.

Although my audit of NHS accounts for 2024-25 is still underway, an early look at the figures shows that NHS organisations in Wales achieved £253 million in savings, 61% of which were recurrent. Despite this positive progress - and a further injection of £450 million by Welsh Government on top of the additional £425 million provided in 2023-24 - they still ended the year with a collective deficit of £124 million.

I’ve recently shared a series of reports on our website reviewing how NHS organisations approached cost savings in 2023-24. A more detailed analysis will be included in the upcoming 2024-25 NHS Finances Data Tool.

Although the figures for 2024-25 show some improvement, the financial situation remains unsustainable. NHS organisations - especially health boards - urgently need to find more efficient and financially sound ways to provide services, while continuing to meet essential standards of quality and safety.

Key findings from my work

The key findings from my work are outlined below. Whilst the findings are common across all NHS organisations, it is important to note that they do not apply equally as some were more evident in certain organisations than in others.

NHS organisations have a good understanding of cost drivers

NHS organisations have a strong understanding of what drives their costs. They delivered significant savings in high-spend areas such as staff pay (£87 million), medicines management (£31 million), and non-pay costs like utilities and premises (£65 million). However, there’s still room to cut costs further - especially by transforming how services are delivered. A key area for improvement is reducing reliance on costly agency staff, which cost NHS Wales £262 million in 2023-24 alone.

Not all savings opportunities are being realised

While NHS organisations are using some benchmarking data to identify potential savings, I found that their use of this information is inconsistent. As a result, they need to apply all available data and insights more effectively and consistently to make the most of cost-saving opportunities.

There is still an over-reliance on non-recurrent savings

One-off non-recurrent savings as a percentage of total savings delivered by NHS organisations dropped from 60% in 2022-23 to 41% in 2023-24. But I found that most NHS organisations still depend too much on short-term one-off savings. This approach does not support their long-term financial health or tackle underlying budget shortfalls.

More engagement with clinicians and staff is needed

I found limited involvement of clinical and frontline staff in identifying cost-saving opportunities. Engaging these key staff members more actively is essential to ensure that changes are grounded in day-to-day service delivery.

I also found that NHS boards do not always receive clear updates on how savings are being delivered. As a result, I’ve developed a checklist to help board members ask the right questions to ensure their organisations have strong processes in place for identifying, delivering, and tracking sustainable savings. This checklist is available on our website.

What needs to happen?

It’s encouraging to see NHS organisations achieving higher levels of savings than in previous years. But opportunities remain for them to strengthen their efforts further to meet the scale of the financial pressures they continue to face.

To move toward long-term financial health, NHS organisations should:

• Continue to focus on identifying and delivering recurrent savings rather than one-off savings.
• Maximise all opportunities to use data and benchmarking tools more consistently and effectively.
• Strengthen financial skills across the workforce.
• Involve clinical staff, operational teams, and service users more in planning savings and transforming services.

My recent reports on cancer services and the implementation of the Well-being of Future Generations Act also show that shifting toward prevention can have a positive impact on public sector budgets. This kind of long-term thinking must be central to how NHS organisations and the Welsh Government plan for the future - especially as they work to meet the financial pressures linked to the growing healthcare needs of the population.