Auditors warn NHS will finish the year £70m in the red

The NHS in Wales is likely be £70m in the red at the end of the financial year, a public spending watchdog has warned.

The Wales Audit Office's (WAO) worst-case scenario predicts the overspend could even top £130m by April 2013.

It comes days after the chief executive of the health service in Wales said he was confident that local health boards would balance their books.

But the WAO says most health boards "are unlikely to break-even".

Shadow health minister Darren Millar said: "The NHS is on the brink of financial meltdown."

He said it would be impossible for the NHS to find £130m without a big injection of cash from the Welsh government or cuts to services.

In a mid-year assessment, the WAO says the NHS is in a better financial position than at the same time last year, largely thanks to extra resources pumped in by the Welsh government.

Ministers hoped the money would end a cycle of additional funding being made available to deal with overspending by local health boards (LHBs).

"It now seems unlikely that the cycle has been broken," Auditor General Huw Vaughan Thomas says in evidence to the assembly's public accounts committee.

Health bodies had a combined deficit of £69m at the end of September, compared to £110m in September 2011.

An analysis shows they predict an end-of-year deficit of around £70m "but that it could be significantly higher".

Predictions range from a best-case scenario of £46m to a worst-case scenario of £131m.

The WAO's warning - based entirely on data that the NHS itself has submitted to the Welsh government - is not the first of its type.

In a report on the Welsh government's draft budget this month, the assembly's finance committee said it was not convinced LHBs could live within their budgets.

'Quality of care'

However on Sunday NHS Wales chief executive David Sissling told BBC Wales there was "increasing confidence" LHBs will hit their break-even targets "without in any sense compromising the quality of care".

In his own evidence to the public accounts committee, Mr Sissling says the NHS saved £285m last year "whilst driving up quality and patient experience".

He adds that the service faces a "significant challenge" this year to find "efficiency savings" of £317m in order to break even.

LHBs have a legal duty to break even.

But Mr Sissling says that as part of a new financial regime, the Welsh government is looking at "whether changes to the NHS statutory financial regime are required to provide greater flexibility in the longer term".

The initial findings of a mid-year review of health pressures says the service has struggled to meet demand from patients who need to be seen immediately.

It adds that health boards have failed to reduce the high cost of agency staff, and says a big reduction is unlikely before proposed changes to services are introduced.

The Welsh government said the WAO had confirmed the "urgent" need for service reconfiguration.

A spokesperson added: "NHS organisations are making significant progress on delivering savings.

"We will continue to work closely with all NHS organisations in monitoring and scrutinising the financial position on a continuous basis, with a view to ensuring that health boards will break even at the year end."