NHS (Wales) Summarised Accounts 1998-99

Sir John Bourn, head of the National Audit Office, today reported to Parliament on the worsening financial performance of the NHS in Wales and the rising cost of clinical negligence claims.

On the financial performance of the NHS in Wales:

  • the underlying cumulative deficit of the NHS in Wales rose by £21.8 million in 1998-99 to £53.9 million;
  • fourteen NHS trusts incurred deficits during 1998-99, and in four cases these deficits exceeded £1.5 million for the year. The appendices to his report consider the financial health of each of the five health authority areas in Wales, and the recovery actions being taken by health authorities in conjunction with their local trusts;
  • 25 of the 26 NHS trusts failed to meet one or more of their three key financial objectives; and
  • overall, the financial position of the NHS in Wales is expected to worsen during 1999-2000, with two of the five health authorities and 10 of the 16 NHS trusts forecasting deficits. The net forecast aggregate deficit for 1999-2000 is £26.2 million, which would increase the accumulated deficit to £80.1 million at 31 March 2000. The financial health of the NHS in Wales was examined by the ‘Stocktake Review’ in 1999 and the National Assembly for Wales is addressing the issues raised.

On recent developments in accounting, management and internal control:

  • during 1998-99, the total forecast maximum cost to the NHS in Wales of known clinical negligence cases rose sharply, from £145 million to £214 million. Assembly officials consider that this increase is due in part to a July 1998 House of Lords judgement that has impacted on the levels of damages awarded by the courts;
  • due to resource constraints, the Assembly has not yet agreed on a central body for the detection and prevention of fraud within the NHS in Wales, equivalent to the ‘Fraud Tsar’ appointed in England. Sir John notes that whilst prescription charge fraud in England has been estimated to total £95 million annually, no comparative assessment has been made for Wales; and
  • Sir John notes the co-ordinated approach to the management of risk being adopted by some health authorities and recommends that this is also developed within NHS trusts.

On asset management and the cost of primary care drugs:

  • the report notes that the NHS estate in Wales totals 1,100 hectares and is valued at around £1.1 billion. Of this, 260 hectares with an open market value of £42 million are considered surplus to existing NHS requirements. A disposal programme is underway, and is expected to yield some £23 million by 2003; and
  • the NHS in Wales spent £296 million during 1998-99 on primary care drugs. The annual cost of prescribed drugs is increasing faster than inflation, and the Assembly Secretary for Health and Social Services has set up a ‘Task and Finish’ Group to consider the scope for improving the efficiency and effectiveness of prescribing in Wales. Sir John notes that this group is due to report in June 2000.

"I remain seriously concerned at the worsening deficits being incurred within the NHS in Wales. The NHS Directorate of the National Assembly for Wales must urgently address this by ensuring that robust recovery plans are in place".

Sir John, 16 March 2000

Notes for Editors


NHS bodies in Wales are required to prepare annual accounts under Section 98 of the National Health Service Act 1977 as extended. The accounts are audited by auditors appointed by the Audit Commission for England and Wales. For 1998-99, the Secretary of State was required to prepare Summarised Accounts from these individual accounts, which were then subject to audit by the Comptroller and Auditor General. From 1999-2000, responsibility for preparing the accounts passes to the National Assembly for Wales and Sir John Bourn, as the Auditor General for Wales, will report the results of his audit to the Assembly.


There are five Summarised Accounts:


  • the five health authorities, which incorporate the accounts of general practitioner fundholders;
  • the 26 (now 16) NHS trusts in Wales;
  • the Welsh Health Common Services Authority (abolished on 31 March 1999);
  • the Health Promotion Authority for Wales (abolished on 31 March 1999); and
  • the 36 charitable NHS Funds held on Trust.

Clinical Negligence is a breach of duty of care, which is admitted as such by the employer or is determined as such by the legal process, by members of the health care professions acting in their professional capacity on relevant work. The £214 million quoted total cost comprises provision charges of £98 million and £116 million of contingent liabilities.


Press notices and reports are available from the date of publication on the NAO website at https://www.nao.org.uk/ Hard copies can be obtained from The Stationery Office on 0845 702 3474.


The Comptroller and Auditor General, Sir John Bourn, is the head of the National Audit Office employing some 750 staff. He and the NAO are totally independent of Government. He certifies the accounts of all Government departments and a wide range of other public sector bodies; and he has statutory authority to report to Parliament on the economy, efficiency and effectiveness with which departments and other bodies have used their resources.


PN: 16/00