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A £20m financial deficit faced by the Aneurin Bevan University Health Board following the Covid-19 pandemic will mean cutbacks have to me made over the coming years, a watchdog has warned.

An Audit Wales report has found the health Board has “effective financial management arrangements” in place, but an underlying £20.8 million deficit presents “a risk to financial sustainability going forward”.

The deficit has been brought forward from the 2020/21 financial year following the impact of Covid-19.

Cuts, or savings, planned to tackle the deficit have been deferred during the pandemic and may be “a significant challenge” to implement in future years, auditors have said.

“As a result, the underlying financial deficit brought forward from 2020-21 of £20.8 million remains and will not improve during 2021/22 due to in-year cost pressures and continuing financial pressure,” an Audit Wales report says.

“This represents a risk to the financial sustainability of the health board as savings will need to be achieved in future years to reduce the underlying deficit.”

The Audit Wales report also highlights that the health board has gone through “a period of high turnover amongst its senior leaders”, with several top roles currently being carried out on a temporary basis.

Interim arrangements are currently in place for the roles of chief executive, director of finance and procurement, deputy chief executive and interim director of operations, while the health board is also recruiting a new director of primary care, community and mental health.

The Audit Wales report says maintaining these temporary arrangements, alongside the turnover of independent members on the board, “presents risks at a time of significant operational pressures”.

It recommends permanent appointments are made to these roles “at the earliest possible opportunity”.

The report, which details the findings of the Auditor General’s structured assessment, found the health board has taken steps to strengthen its staff wellbeing arrangements, but that it will need to monitor the impact of these.

The measures have been taken after concerns raised by the Royal College of Physicians (RCP) following a visit to Cwmbran’s Grange University Hospital, where it identified “serious concerns around excessive workloads and chronic understaffing, lack of support from health board managers, inappropriate responsibilities of the medical registrar role, and lack of clinical engagement and action from the health board”.

The health board has worked with RCP and Health Education and Improvement Wales to develop an action plan to address the findings and is “making good progress” in implementing these, the Audit Wales report adds.