“The NHS presents one of the most challenging operating environments in terms of financial management.
“Pressures including changing demographics such as a growing elderly population, lifestyle factors such as obesity, and unforeseen cost pressures such as funding the availability of new drugs mean that balancing the books over a one year period has become increasingly difficult.
“Allowing the NHS greater financial flexibility to manage their responsibilities over a number of financial years, rather than each and every year, will allow the NHS the scope to make prudent long term decisions.
“A significant downside of the current financial regime is that it may encourage short-term decision making around the current year. Introducing this change will help the NHS focus its service planning, workforce and financial decisions over a longer and more sustained period rather than focusing too much on a one year, and specifically end of March, approach.
“Let me be absolutely clear that moving to a three year financial planning regime does not in any way mean a diminution of the rigour with which Health Boards have to manage their finances.”