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Last Updated: Friday, 24 June, 2005, 10:41 GMT 11:41 UK
NHS bodies warned over finances
Surgery scene
It is the first time in four years the NHS has run up a deficit
Health Secretary Patricia Hewitt is to caution dozens of health bosses about their finances after the NHS in England ran up a deficit last year.

Unaudited accounts for 2004-5 showed that the NHS had a 140m deficit after underspending the year before.

It is the first time in four years the NHS has failed to balance its books. Managers said the deficit was only 0.2% of the NHS budget.

New figures also show one in five NHS bodies ran a deficit in 2003-4.

The National Audit Office and Audit Commission report shows 106 NHS bodies failed to balance their books in 2003-4 - a big rise on the previous year.

Mid Yorkshire Hospitals - 18.6m
Worcestershire Acute Hospitals - 12.8m
Maidstone and Tunbridge Wells - 9m
Brighton and Sussex - 7.9m
Plymouth Hospitals - 7.8m
Royal Wolverhampton Hospital - 7.6m

Twelve NHS trusts and four primary care trusts, which commission services, had overspends of more than 5m.

But even though the number of trusts with an overspend rose in 2003-4 the overall NHS books showed a 72m underspend.

By the following year this had reversed into a 140m deficit - the first overspend in four years - early figures showed.

However, 30m of the deficit belonged to foundation trusts which work on a five-year financial cycle.

The watchdogs warned pressure was set to increase on the health service as several of the government's reforms, including new staff contracts and payment systems kicked in.

And Audit Commission chairman James Strachan said: "Financial management is now a matter of major concern for the NHS."

He told BBC News: "If deficits are allowed to increase and increase, there will come a point when services will have to be cut back."


In her letter to the worst performing trusts, Ms Hewitt has said they needed to show better financial management and would not be bailed out.

She said: "The study shows that the vast majority of NHS bodies are managing the extra resources well, but it also clearly indicates that in a minority of organisations, leadership and financial discipline are weak."

And she also warned trusts services must not be compromised.

"What they need to be doing is to ensure excellent patient care and sound finances go hand-in-hand."

Niall Dickson, chief executive of King's Fund, a health think tank, said NHS bodies had to get to grips with the finances straight away as in a few years the "financial climate will get a whole lot colder".

Hammersmith and Fulham - 8.5m
Ipswich - 5.6m
Dartford and Gravesham -5.6m

But Nigel Edwards, director of policy at the NHS Confederation, said: "We should start by getting this into proportion.

"The overspend represents 0.2 per cent of the overall budget."

And he said while some of the problems were down to poor financial management, targets and the need to balance books yearly when large business would operate on longer cycles had a role to play.

Opposition parties also blamed the government.

Shadow Health Secretary Andrew Lansley added: "Extra costs, bureaucracy and waste are eating up the additional resources while deficits affecting the frontline are causing cutbacks to patient services."

And Liberal Democrat health spokesman Steve Webb said it was up to the government not to "destabilise the NHS with unnecessary or rushed reforms".

Listen to Patricia Hewitt discuss NHS trusts

340m deficit predicted for NHS
03 Mar 05 |  Health

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