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Last Updated: Wednesday, 28 April, 2004, 01:29 GMT 02:29 UK
Big deficits threaten NHS books
Most organisations met their targets
The number of NHS organisations who ran up big debts increased during 2002-03, a report has found.

Overall, the 607 individual NHS organisations reported an underspend of 96m on a total budget of 46.7bn.

But the National Audit Office found 51 organisations were significantly in debt - one to the tune of nearly 45m.

It is warning that the overall financial balance in the NHS could be at threat unless these deficits are balanced by surpluses elsewhere.

Part of the problem is the rapidly increasing cost of settling clinical negligence claims.

I am concerned by the variation in financial performance and the large deficits incurred by some NHS bodies.
Sir John Bourn
The NAO's Auditor General, Sir John Bourn, found that most NHS organisations achieved their financial targets.

However, 8% of NHS organisations reported significant deficits in 2002-03, compared with 5% the previous year.

Three Primary Care Trusts, all in Cornwall, and seven NHS Trusts reported in-year deficits of over 5 million and six NHS Trusts each had a cumulative deficit of over 10 million.

Bad example

Overspending trusts (2002-03)
North Bristol - 44.6m
Royal United Hospital Bath - 24.8m
East Kent Hospitals - 11.4m
Worcester Acute Hospitals - 9.9m
The report highlights the case of North Bristol NHS Trust, which ran up an in-year deficit of 44.6m - the largest ever incurred by an NHS organisation.

It says the true scale of the deficit was not reported to the Trust Board until the final quarter of the financial year, leaving little opportunity for remedial action to be taken.

The report says that more NHS organisations would have failed to balance the books if they had not received financial support from the government.

Planned support is a legitimate way to allocate resources where required, it says, but warns that unplanned support will be restricted in future.

Sir John said: "Although, overall, the NHS successfully met its financial targets in 2002-2003, I am concerned by the variation in financial performance and the large deficits incurred by some NHS bodies.

"Such deficits may put at risk the achievement of overall financial balance of the National Health Service if they are not matched by surpluses elsewhere in the NHS.

"The Department of Health has delegated detailed monitoring of NHS Trusts and Primary Care Trusts to Strategic Health Authorities.

"They must ensure that deficits of the scale of the 44.6 million incurred by North Bristol NHS Trust do not happen again."

Clinical negligence

The pressure on hospital managers to meet central targets should not endanger their ability to balance their books.
Paul Burstow
The NAO warns the cost of clinical negligence claims continues to drain resources away from patient care.

In 2002-03, the NHS paid out 446m to settle negligence claims - the same as in the previous year.

It is expected that outstanding claims will cost the NHS 5.89bn in the long term - a rise of 640m on the cost projected at the end of 2001-02.

There has been some success in cutting the level of pharmaceutical fraud, which has been reduced by 60% to 47m a year.

Great concern

Edward Leigh, chairman of the Public Accounts Committee, said he was "extremely concerned" that the number of trusts with significant debts had increased last year.

"The in-year deficits are more than matched by surpluses elsewhere and, for the present at least, the overall financial balance of the NHS has not been imperilled.

"But that situation could change if determined action is not taken by the trusts in question to claw themselves out of the red."

Mr Leigh said he was worried about the way the debt would affect the care of patients in those areas affected.

"I fail to see how they can generate big enough surpluses in future years to wipe out those deficits without, in so doing, giving their patients reduced levels of healthcare."

Andrew Lansley, Shadow Health Secretary, said: "It comes as no surprise that overall the NHS has finished this financial year in the clear, as it is obliged legally to do so.

"What is shocking is the increase in the number of NHS organisations that are now in financial trouble and the extent of their problems."

Paul Burstow, for the Liberal Democrats, said: "The fact that one in 12 NHS organisations had significant debts is worrying.

"The pressure on hospital managers to meet central targets should not endanger their ability to balance their books.

"NHS trusts need the freedom to deliver improvements locally to match local needs."

NHS Chief Executive Sir Nigel Crisp said he was pleased that the DoH had met its target of overall financial balance in 2002-03.

He said NHS spending would increase on average by 7.3% a year over the next four years.

Many NHS trusts facing debt
07 Jul 03  |  Health
Suspended staff 'cost NHS 40m'
06 Nov 03  |  Health

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