Health bosses in North Wales must prepare a financial recovery plan to deal with an £89m budget deficit in the coming year.

And the situation could get worse if Welsh Government decides to withdraw an annual funding pot of £82m awarded to Betsi Cadwaldadr University Health Board (BCUHB) conditionally last year.

At its latest meeting BCUHB admitted it will not be able to submit a balanced budget for 2026/27 this week as it faces a shortfall of £89m.

The board is legally required to set a balanced budget each year and over three years as part of its Integrated Medium Term Plan (IMTP).

But Chief Executive Carol Shilabeer said that would not be possible for the coming year.

“The budget does not meet the statutory duty to break even and we must continue to escalate the work to get to a financial break even position in the context of continuing to improve access to services and improve quality standards,” she said.

“We will require savings, cost reductions and redesign and redistribution of resource as we move through.”

Failing to submit a balanced budget raises question marks over the conditional funding provided by Welsh Government. If BCUHB loses that, it’s deficit would almost over £170m.

“We have about an £89m resource gap,” said Executive Director of Finance Russ Caldicot. “We’ve traditionally hit above £40m of savings delivery and we’ve set ourselves a target of £46m of savings. That leaves us with a £43m deficit reported position. That means we would not hit our key financial duty to set a balanced budget.

“We have £82m of Welsh Government funding which was conditionally recurrent. It is discretionary and comes with conditions. It would give us a hole if we didn’t have that resource.”

The board has received assurances it will get the £82m for the coming year, but Paolo Tardivel, BCUHB’s Interim Executive Director of Transformation and Strategic Planning, admitted it was not guaranteed.

The board also has to find savings to fund it’s commitment to invest an additional £50m into primary care next year.

While board members expressed confidence BCUHB could manage its way out of special measures soon, there were concerns that failing to meet ministerial expectations – for example around waiting lists – could result in further financial impacts.

Chair Dyfed Edwards said: “We need a discussion with any new government regarding what their priorities are and what they want us not to do,” he said.

“We can save £85 million, we can save £185 million, it’s not a problem – but it’s about choices. What are we not going to do in order to deliver a balanced plan?”

The immediate situation however requires the board to prepare a financial recovery plan to get back on track.

“Submitting a deficit plan requires us to come up with a financial recovery plan,” said Mr Tardivel. “We’re now looking at savings opportunities over the longer term – not just in-year – so that we’re setting ourselves up sustainably for the future.

“Welsh Government have been quite clear with us all the way through. In our most recent scrutiny meeting they said their delivery expectations are not optional, they are mandatory.”