Audit Wales said that although the figures showed some improvement the financial situation remained ‘unsustainable'.

The auditor said: ‘NHS organisations - especially health boards - urgently need to find more efficient and financially sound ways to provide services, while continuing to meet essential standards of quality and safety.'

In 2023-24, NHS organisations achieved their highest savings since 2018-19 with a greater share being recurrent, however, the £425m provided by Government was not enough to balance the books. A further injection of £450 million was provided by the Government in 2024-25.

While organisations delivered significant savings in staff pay (£87m), medicines management (£31m), and non-pay costs like utilities and premises (£65m), the auditor said there was room to cut costs further, especially in service delivery. Agency costs were highlighted as an area for savings, accounting for £262m in 2023-24.

The auditor found use of benchmarking data was inconsistent, with a need to apply all available data and insights more effectively and consistently to make the most of cost-saving opportunities.

The financial body said there was still an over-reliance on non-recurrent savings although they fell as a percentage of total savings delivered by NHS organisations from 60% in 2022-23 to 41% in 2023-24.

Audit Wales said more engagement with clinical and frontline staff was needed in identifying cost savings and found NHS boards did not always receive clear updates on how they were being delivered. The auditor has developed a checklist to help identify savings.

The auditor said: ‘It's encouraging to see NHS organisations achieving higher levels of savings than in previous years. But opportunities remain for them to strengthen their efforts further to meet the scale of the financial pressures they continue to face.'