Welsh NHS Confederation response to the scrutiny of the Welsh Government’s 2027-28 draft budget proposals

The Welsh NHS Confederation represents the seven Local Health Boards, three NHS Trusts (Velindre University NHS Trust, Welsh Ambulance Services University NHS Trust and Public Health Wales NHS Trust), and two Special Health Authorities (Digital Health and Care Wales and Health Education and Improvement Wales). The twelve organisations make up our membership. We are part of the NHS Alliance and host NHS Wales Employers.

Our response reflects the views of NHS leaders across Wales and sets out the Budget decisions required to place health and care services on a sustainable footing by 2030. It focuses on multi-year funding, prevention, workforce sustainability, social care, capital and digital investment, and the contribution of the NHS to the Welsh economy.

To build a sustainable health and care system, the Welsh Government’s 2027-28 Budget should prioritise:

• Longer-term funding cycles: NHS leaders recognise the exceptionally challenging public finance context and welcomed the additional investment in health and social care in 2026-27. However, annual budgets and short-term funding constraints continue to limit effective planning, service transformation and investment in prevention. Both the UK and Welsh Governments should move towards longer-term budget settlements that give NHS organisations greater financial certainty and support delivery of their long-term plans.
• Investing in prevention: Increased investment in prevention is vital to shift the focus from treating illness to promoting health, reducing inequalities, and addressing wider determinants of health for long-term wellbeing and economic growth. We welcome that the Welsh Government has a dedicated Deputy Minister for Public and Preventative Health.
• Capital: The NHS requires a long-term capital strategy that invests in buildings, equipment and digital systems, while also leveraging technological advancements to improve efficiency, patient outcomes, and staff environments. This includes examining how fiscal rules might be amended to allow for the recycling of capital.
• Workforce: Support the development of an overarching long-term workforce plan and sustainably increase investment in the NHS workforce. This includes investment in alternative training and education pathways, including apprenticeships, and training to upskill existing staff and enable the adoption of innovative ways of working, including in digital skills.
• Social care: Further investment and an independent review are needed to secure a long-term, sustainable social care system that addresses workforce pay, conditions, access to publicly funded care, and data transparency. Such a review should involve all parties in the Senedd to support cross-party discussion and agreement on the long-term future of social care in Wales.
• Digital investment: The 10-year digital delivery programme in the Programme for Government is welcomed, but further investment in digital infrastructure is needed to maximise the benefits of digital innovation across the NHS. This would improve digital functionality throughout patient pathways, strengthen care delivery and capture data, support self-care, and connect health, care and wider public services so that people at greatest risk can be identified and supported earlier.
• NHS and the economy: The Budget should recognise the NHS's role as a key driver of economic activity and employment. As major employers, purchasers, and holders of capital assets, NHS organisations can use their spending power and resources to tackle the detrimental social, economic, and environmental factors that exacerbate inequalities and contribute to poor health. A well-resourced NHS is vital to the running of the economy, including supporting people to get work and remain in work. Research demonstrates that for every £1 invested in the NHS, the economy gets £4 back in gross value added (GVA). Furthermore, for every £1 spent on primary and community care, there could be increased economic output (GVA) by £14. 

NHS leaders recognise the extremely challenging public finance context and welcomed the additional investment in health and social care in 2026-27. The additional investment has been positive in addressing health and care needs of the population and has been necessary to meet the continued increasing demand on services. 

NHS organisations in Wales are facing a combination of immediate operational pressures and longer-term structural financial challenges between now and the end of this Senedd term. Demand is rising as the population ages, more people live with multiple long-term conditions and in poverty, and pressures in social care, housing and the wider determinants of health increase the volume and complexity of need presenting to health services.

These pressures are already evident in the financial position of NHS Wales organisations. Many organisations continue to carry significant recurrent financial deficits, requiring increasingly ambitious savings programmes to achieve financial balance. Audit Wales audit of NHS bodies 2025-26 accounts showed that six out of the seven health boards breached their statutory duty to break even over the most recent three-year period, with the cumulative three-year overspend across NHS Wales increasing from £457 million in 2024-25 to £506 million in 2025-26. Although Welsh Government funding for health and social care has increased (3.8% in real terms in 2025-26), this has not been sufficient to offset the combined impact of inflation, pay pressures, demand, delayed transfers of care, and the cost of maintaining sustainable services.

Workforce costs, the largest area of NHS expenditure, will remain a significant financial pressure. Between 2020 and 2025, the NHS Wales workforce grew by 20.7% in contracted full-time equivalent (FTE) terms, from 82,815 to 99,964 FTE, while workforce costs rose from £4.8 billion in 2020-21 to £6.7 billion in 2024-25. NHS organisations must meet the costs of pay awards, pension and national insurance changes, agency staff where substantive capacity is unavailable, and measures to recruit, retain and support staff. It is positive that agency staff expenditure continues to fall, with expenditure in 2025-26 (£128 million) being 61% lower than its 2022-23 peak. Of the current agency spending, 73% covers vacancies and around 15% supports additional activity to meet demand.

Non-pay inflation is also a significant challenge. NHS organisations face rising costs for medicines, energy, clinical supplies, estates maintenance, diagnostics and digital systems.

Bringing down waiting lists remains a priority for NHS leaders. Reducing long waits for planned care, diagnostics, cancer services, mental health support and urgent and emergency care requires additional capacity, staff, theatre time and community alternatives. Sustained improvement will require both investment in additional activity and changes to the way services are delivered. Due to the demand on secondary care, health organisations have struggled to increase the proportion of funding being used for primary and community care in comparison to secondary care.

Pressures in social care are inseparable from NHS financial sustainability, with the care market a particular challenge. Councils help people remain independent and closer to home, prevent avoidable hospital admissions and support timely discharge, but rising demand, increasing complexity of need, demographic change, workforce costs and provider inflation are placing substantial pressure on adult and children's services. Delayed transfers of care, community capacity and difficulties accessing packages of care can increase hospital stays, reduce patient flow, delay ambulance handovers and increase costs across the system. On average, around 1,400 people are waiting to be discharged from hospital. The average rate of a hospital bed is £250 - £350 per night, this represents an indicative cost of £350,000 to £490,000 per night across NHS Wales. Although this calculation illustrates the scale of the pressure rather than the precise amount that could be released as savings, it reinforces the need for sustainable investment in social care, community services, prevention and early intervention to reduce demand on more expensive acute and emergency care.

Capital investment is another critical pressure. Much of the NHS estate requires modernisation, with backlogs in maintenance creating operational, financial and patient safety risks causing significant costs and equipment needing to be replaced. Many hospitals in Wales were built in the 1960s or earlier, with 10 per cent of the estate built pre-1948 and only 6 per cent post-2015. Ageing buildings and systems can affect safety, productivity and patient experience, while insufficient capital funding can prevent organisations from making the very changes needed to reduce future revenue costs. Investment in digital, data and technology is essential to improve access, support productivity, enable care closer to home, make better use of workforce capacity and mitigate cyber security risks.

The central challenge is that NHS organisations are being asked to meet rising need, improve access, reduce inequalities and transform models of care while also delivering efficiencies. To place NHS Wales on a more sustainable footing by 2030, the Welsh Government should provide greater certainty through multi-year funding, invest in prevention and community-based care, support sustainable workforce planning, and lead an honest public conversation about the choices needed to align service expectations with available resources.

The Welsh Government should undertake a robust assessment of the full costs, benefits and deliverability of policies to support transparent decisions. As highlighted above, funding should prioritise prevention, population health, workforce sustainability, community services, digital transformation, and interventions that demonstrably improve quality, safety, patient outcomes and health equity. Decisions to reduce expenditure should be based on clinical value, outcomes, inequalities and whole-system impact. 

Funding should be prioritised towards prevention, early intervention and community-based care. The NHS cannot sustainably meet future demand if resources remain concentrated predominantly at the point of crisis. Investment is needed in primary care, community services, rehabilitation, intermediate care, social prescribing, public health and support for people with long-term conditions. Action is also required on the wider determinants of health, including housing, poverty, arts and culture, employment, education and healthy environments, because many drivers of demand sit outside the NHS. To support this shift towards care outside hospital, national performance indicators should place greater weight on prevention and community outcomes rather than focusing predominantly on acute activity, which can reinforce investment in hospital-based services.

Workforce sustainability across health and social care must remain a core priority. The ability to deliver improvements depends on recruiting, retaining and supporting staff across the NHS and social care. This includes investment in workforce planning, education and training, staff wellbeing, flexible working, leadership, digital skills and new multidisciplinary models of care. Commitments on fair pay, workforce reform and a National Care Academy must be fully and sustainably funded. Without a sustainable workforce across health and social care, additional funding for activity will not translate into better access or outcomes.

Funding should support transformation, digital infrastructure and capital investment. NHS organisations need modern estates, equipment, diagnostics, data systems and digital tools to improve productivity and patient experience. A lack of capital investment creates revenue pressures by forcing services to operate from outdated buildings and systems. Capital and digital investment should therefore be viewed as essential enablers of long-term efficiency, quality and safety. Multi-year capital allocations should provide sufficient flexibility to manage project slippage and funding across financial years, so investment decisions are driven by value rather than year-end deadlines.

The Welsh Government should also protect and grow preventative funding across departments. A more transparent budget process should use a consistent definition of prevention, identify departmental prevention budget lines, map spending against agreed levels of prevention and tag allocations against the wellbeing goals and five ways of working. Budget documentation should show what proportion of spending is preventative, whether that proportion is increasing over time, the outcomes it is expected to achieve and the long-term costs of inaction.

On de-prioritisation, the Welsh NHS Confederation would caution against identifying broad service areas for cuts in isolation. The health and care system is highly interconnected, and reducing expenditure in one area can simply displace costs elsewhere, often into more expensive urgent and emergency care. Instead, de-prioritisation should be based on value, outcomes and whole-system impact.

There is a risk that annual planning cycles can constrain longer-term transformation, where benefits often require multi-year investment before being realised. There should also be a stronger focus on reducing unwarranted variation, scaling evidence-based models consistently across Wales, and stopping activity that does not improve quality, safety, equity or value.

Ultimately, the Welsh Government should prioritise funding that helps shift Wales from a system focused on treating illness to one that creates health and wellbeing. This requires multi-year funding certainty and transparent criteria for investment and disinvestment.

In relation to the health and social care budget, the Welsh NHS Confederation would emphasise that efficiency must be understood as improving value, outcomes and productivity across the whole health and care system, not simply reducing expenditure within individual organisations.

NHS Wales has already delivered significant savings, with Audit Wales reporting £256 million of savings in 2025-26, an increase from previous years. However, a significant proportion of those savings were non-recurrent, demonstrating that short-term measures alone will not deliver the sustainable change required. As Audit Wales stated, “the NHS still relies too much on one-off savings, and the current savings profile is not enough to stem to tide of rising demand and other cost pressures, including around staff pay”.

The Budget could be allocated more efficiently by moving away from annual and reactive funding arrangements towards a clearer multi-year settlement that enables long-term planning. Greater use of multi-year settlements, fewer short-term funding streams, and better alignment between funding and organisational planning cycles would support longer-term workforce, service and capital planning. A one-year budget cycle can drive short-term decisions and in-year savings that may balance immediate pressures but do not address the causes of rising demand.

A more efficient allocation of the Budget would also require better alignment between health and social care. Pressures in social care, community services and primary care often result in higher costs elsewhere in the system, particularly through delayed transfers of care, ambulance handover delays, avoidable admissions and longer hospital stays. More timely assessments, consistent decision-making and clearer accountability would improve outcomes and release resources for prevention and community services. Investment in reablement, care at home, community rehabilitation, intermediate care and unpaid carer support should therefore be seen as essential NHS sustainability measures, not separate discretionary spending.

The Welsh Government should also accelerate value-based approaches to allocating resources. NHS Wales Performance and Improvement defines value-based healthcare as improving patient outcomes, reducing health inequalities and using resources more effectively across Wales. Funding decisions should therefore favour pathways and interventions that deliver the greatest benefit for patients and populations, while identifying and reducing unwarranted variation and duplication.

There are also opportunities to improve efficiency through national and regional collaboration. Governance and assurance arrangements should be simplified where they impede delivery, with funding aligned around shared outcomes across health, social care, local government and other partners.

Digital and data should be treated as core to productivity. Better digital infrastructure can reduce administrative burden, improve scheduling and patient communication, support remote monitoring, enable better demand and capacity planning, and help clinicians make more informed decisions. However, benefits from artificial intelligence, shared records and automation will depend not only on purchasing technology but on sustained investment in workforce capability, implementation support, interoperability and cyber security.

Finally, efficient allocation also means recognising that shifting care from hospitals to communities is unlikely to be cost-neutral in the short term. Existing capacity often has to be maintained while new primary, community and preventative services are established and begin to reduce demand. The Budget should therefore provide dedicated, multi-year transition funding and avoid withdrawing resources from the acute sector before alternative services can safely absorb activity.

The Welsh NHS Confederation does not take a detailed position on individual tax rates or specific tax changes. However, any use of devolved tax-raising powers should be guided by fairness, the reduction of inequalities and improvement in population health.

Consideration could be given to targeted fiscal measures that support public health objectives, provided that their likely impact is evidence-based and that vulnerable households and communities are protected from disproportionate financial hardship.

The Welsh Government can and should link funding for policies more clearly to outputs and outcomes, but the measures must be meaningful, limited in number and proportionate, and must support improvement rather than create additional bureaucracy. A simplified allocation approach, supported by robust accountability arrangements, would be more effective than a complex outcomes-based resource framework and would assist the Welsh Government in managing the Main Expenditure Group effectively.

For health and care, the focus should be on a small number of meaningful outcome measures rather than extensive reporting requirements and funding should be linked to a balanced framework that distinguishes outputs from outcomes. Outputs could include delivery milestones such as workforce recruitment, service redesign, expanded community capacity and implementation of digital systems. Outcomes should cover population health, quality, safety, patient experience, access and reduced health inequalities. The framework should avoid relying predominantly on short-term activity measures and should allow sufficient time for transformation and preventative interventions to demonstrate their impact.

Multi-year funding and evaluation will be essential. Many of the outcomes that need to be achieved, including prevention, reducing inequalities and better community-based care, cannot be demonstrated within a single financial year. Funding agreements should therefore include short-term milestones, such as service redesign or workforce recruitment, alongside longer-term outcomes, such as reduced demand, improved population health outcomes or fewer emergency admissions.

However, outcomes-based funding must be designed carefully. Health and care outcomes are influenced by many factors beyond the control of any single organisation, including poverty, housing, employment, education and social care capacity. Measures should therefore encourage collaboration and whole-system improvement rather than penalising organisations for factors outside their control.

The Welsh NHS Confederation believes the Welsh Government should treat investment in health and care as a core part of its economic strategy. The Budget should prioritise measures that improve population health, strengthen workforce participation and productivity, and enable people to live well, work and contribute to their communities. This requires coordinated investment in prevention, skills, infrastructure and public services to support fair, green and inclusive growth across Wales.

Investment in health and care should be recognised as an economic enabler rather than solely a cost. As one of Wales’s largest employers, a major purchaser, a significant land and asset holder, and an anchor institution in communities across the country, the NHS has an important direct and indirect economic impact. Research has shown that for every £1 spent on the NHS, it corresponds to an approximate £4 economic benefit through gross value added. The Budget should therefore support health and care infrastructure, digital innovation, skills development and measures that help people remain healthy, return to work and participate in the economy. Investment should also maximise social value and strengthen local and foundational economies across Wales, where this is consistent with quality, value for money and financial sustainability.

The Budget should invest in workforce skills, education and fair work to strengthen both public services and the wider economy. For health and social care, this means supporting sustainable recruitment, retention and progression through apprenticeships, further education, digital skills, leadership development and staff wellbeing. These investments should form part of a broader skills agenda that supports access to good-quality employment in health, social care, life sciences, green industries and the foundational economy. Reducing workforce shortages and improving retention would support productivity while limiting the additional costs created by vacancies.

The Welsh Government should use the Budget to accelerate digital innovation, research and life sciences. Investment in data, digital infrastructure, artificial intelligence and diagnostics can improve productivity and patient experience while supporting innovation-led growth. Wales should build on the strengths of universities, NHS organisations, industry and the third sector to turn research into practical improvements for patients and economic opportunities for communities.

Capital investment would support modern, sustainable public infrastructure and should be targeted towards projects that improve service resilience, productivity and local economic development. Many NHS buildings and systems require modernisation, and continued underinvestment reduces efficiency, constrains service redesign and affects staff and patient experience. Investment in healthcare estates, equipment, decarbonisation and digital connectivity would improve public services while supporting jobs, supply chains and economic opportunity, particularly in rural and disadvantaged communities.

The Budget should maximise the social value of public spending through local procurement, community wealth-building and support for the foundational economy. As major purchasers and employers, NHS organisations can use their spending to support Welsh suppliers and local employment. This approach is particularly important in communities where public services are among the largest sources of stable employment and economic activity.

In summary, the Budget should treat health and social care as economic infrastructure and prioritise prevention, primary and community care, workforce skills and fair work, modern capital and digital systems, research and innovation, connectivity, social value and the foundational economy. Together, these actions would improve population health and workforce participation, strengthen public service resilience and support a more productive, inclusive and sustainable Welsh economy.

The single biggest issue in the Budget that would make a difference to NHS Wales would be a sustainable, multi-year funding settlement for health and social care, covering both revenue and capital. Without this certainty, NHS organisations will continue to work within short-term financial cycles rather than being able to plan and deliver the transformation needed for sustainable services.

The current position demonstrates why this is so important. Annual budgeting cycles limit organisations' ability to invest in transformational change, workforce planning and service redesign. A multi-year settlement could support better value for money, improve planning certainty and enable more effective delivery of long-term strategic objectives. It would support Integrated Medium-Term Planning, enable organisations to develop realistic savings and transformation plans. This is essential because many of the changes Wales needs will not deliver benefits within a single financial year.

Capital investment is equally important. Too much of the NHS estate, equipment and digital infrastructure is outdated, which can reduce efficiency, limit service redesign, affect patient experience and make it harder for staff to work productively.

In summary, the single biggest issue would be having long-term funding certainty that enables NHS Wales and its partners to shift from managing annual financial pressure to delivering sustainable transformation. A budget that provides this certainty would make the greatest difference by supporting better planning, better value, improved outcomes and a health and care system that is more resilient for future generations.

A greater proportion of funding should be directed towards prevention, early intervention and community-based services. This should be supported by joint planning across health, local government and the third sector, agreed outcome measures, and realistic evaluation periods that recognise that many preventative interventions deliver benefits over several years rather than within a single financial cycle. The challenge is that prevention often requires investment today while benefits may not be realised for several years. 

Wales cannot secure the long-term sustainability of the NHS and social care by focusing primarily on treating illness once it has already occurred. A greater proportion of funding must be directed towards preventing poor health, intervening earlier and supporting people to live well in their communities. The case for prevention is clear. Public Health Wales has highlighted that prevention initiatives such as early years education, vaccination, smoking cessation and support for carers can provide strong value for money, with an average return of £14 for every £1 invested. Preventative action can improve outcomes, reduce inequalities, support people to remain independent and reduce avoidable demand on primary, community, urgent, emergency and planned care services. Investment that tackles the root causes of ill health is therefore essential to reducing future demand and narrowing inequalities.

To achieve this, the Welsh Government should first make preventative spending more visible through a clear and consistent definition, transparent budget lines and reporting on whether investment is increasing over time. Prevention should encompass primary prevention, including action on housing, poverty, early years, education, active travel, arts and culture, and healthy environments; secondary prevention, including screening, vaccination and early diagnosis; and tertiary prevention, including rehabilitation, reablement and support for people with long-term conditions.

Prevention must be treated as a whole-government responsibility and as an investment in creating health and wellbeing. Health outcomes are shaped by housing, income, employment, education, transport, access to the arts and culture, the environment and community networks, as well as the NHS. Budget decisions across all portfolios should therefore be assessed for their impact on health, inequalities, resilience and long-term wellbeing.

The Welsh NHS Confederation recognises the difficult choices facing the Welsh Government as public finances remain constrained and demand for health and care continues to rise. 

The central test for the Budget should be whether it helps build long-term resilience. This requires sustainable multi-year funding, investment in the workforce, modern capital and digital infrastructure, stronger social care and a decisive shift towards prevention, early intervention and community-based support. These areas are not optional additions; they are essential to reducing future demand, improving access, tackling health inequalities and enabling people to live healthier, more independent lives.

NHS leaders are committed to working constructively with the Welsh Government, local government, the third sector, communities and partners across Wales to secure better outcomes from the resources available. Success will depend on honest public debate about the choices ahead, realistic expectations of what services can deliver, and a shared commitment to sustained, system-wide transformation.