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Last Updated: Tuesday, 20 February 2007, 13:02 GMT
Viewpoints: NHS deficits
Many trusts face big debts
One in three NHS hospitals and primary care trusts in England are not expected to balance their books this year, according to latest official predictions on health service finances.

This is despite the fact that the NHS as a whole is set to break even - and is expected to make a 13m surplus.

Health chiefs have built up a contingency fund by making savings from training and public health budgets and holding back money from the NHS.

David Nicholson, NHS chief executive

Dr Gill Morgan, NHS Confederation

Niall Dickson, King's Fund

James, Johnson, British Medical Association chairman

Andrew Lansley, Shadow Health Secretary

Norman Lamb, Liberal Democrats


"We said we would deliver overall balance in the NHS, and we are really on target to do that.

"When you think this time last year we were looking at a deficit of over 700 million, I think significant progress has been made in the NHS as a whole.

"I think we will get it in a much better position to plan services for next year.

If you look at all the organisations as a whole I think you are seeing significant financial improvement
David Nicholson, NHS chief executive

"There are over 300 organisations in the NHS, and in any one year some will be in surplus, and some will be in deficit.

"When you add the two together you come up with a surplus overall of about 13 million, which I think is a significant improvement.

"It has been tough, and there are undoubtedly organisations in the NHS who are having real, serious financial difficulties.

"But over half of the deficit is in a very small number of organisations.

"If you look at all the organisations as a whole I think you are seeing significant financial improvement, 82% of hospital trusts' financial performance have improved since last year, and 69% of PCTs' financial performance have improved.

"So I think you are seeing an overall picture of improvement, but that is not to say that there are not organisations who have difficulties, and we need to support and help them to get that right.

"We spend over 3.5 billion a year on training, and for one year only we have said we are going to have to reduce that number.

"We are still spending more than 3 billion, which I suspect is more than any other organisation in Europe.

"But one year we decided that was certainly worth doing in order to balance the picture overall.

"The alternative was to reduce patient services, which is certainly what we did not want to do.

"We want to improve them, not reduce them."


"These figures show us that whilst there are still tough times ahead for a minority of NHS trusts who face financial problems, the NHS overall is getting back on track.

"NHS organisations are working hard to achieve financial balance in their income and expenditure by the end of the financial year and the majority of trusts are delivering services to patients within budget.

"The deficits are concentrated in a small number of NHS organisations - over 50% of the deficit is in just 6% of trusts.

"As we have said in the past, the way that deficits are accounted for by the centre makes the challenge of financial balance very difficult for many NHS organisations.

The deficits are concentrated in a small number of NHS organisations
Dr Gill Morgan, NHS Confederation
"We continue to be disappointed that the Department of Health still has not revised the NHS accounting rules which means that many trusts in financial difficulty are, in effect, penalised twice.

"The Resource Accounting and Budgeting (RAB) principle means that if a trust reports a deficit in one year, its income is reduced by that amount the following year.

"In addition to receiving a smaller allocation for the following year, the trust also carries forward the original deficit onto next year's balance sheet. This is known as the double whammy.

"The NHS Confederation and the government's own independent financial watchdog, the Audit Commission, has called for the removal of RAB from the deficits' calculation to give a fairer picture of trusts' financial circumstances and help them achieve financial balance."


"The goal this year has been to ensure that the NHS as a whole makes a net surplus - turning around last year's net deficit of 547m.

"By holding back around 1.6billion from PCT and other budgets this year the NHS will achieve this goal.

"But financial performance across NHS organisations remains variable; in part as a result of these tactics, nearly half of all PCTs and a third of trusts forecast a deficit by the end of this year - an increase on last year.

"Today's figures once again highlight that if the NHS is going to survive and prosper it will need to get to grips with the underlying causes of the financial deficits - in some respects what we are seeing now is still a short-term fix for a long-standing problem.

"There is a need now to tackle low productivity, and deal with the widespread and often unexplained variations in performance."


James Johnson, BMA chairman, said: "Yesterday the Prime Minister was talking about hospitals operating around the clock.

"How is the NHS supposed to achieve that when so many primary care trusts (PCTs) - which pay for the operations - are in the red?

"In the light of the financial realities facing the NHS, politicians' promises seem somewhat hollow.

"Hospitals are fighting hard to be able to maintain current levels of care, let alone being able to make more cuts to waiting times.

"There's a major risk of highly qualified doctors and nurses - trained at the taxpayers' expense - being forced to find work overseas, because the NHS can no longer afford to employ them."

Dr Jo Hilborne, chairman of the BMA's Junior Doctors Committee, said: "Training and education are increasingly being targeted for NHS cuts.

"Across the country doctors are being told that they can't go on essential courses because their trusts can't afford it.

"If they carry on adopting this short-sighted approach there's a risk of long-term compromise to patient care."


"Labour are able to claim that the NHS will finish this year in surplus, but the surplus they have generated is a sham.

"There are more NHS organisations, saddled with worse deficits, than there were last year.

"Health Secretary Patricia Hewitt's skin is being saved only by savage cuts to centrally-held budgets, which will all need to be restored in the years to come.

"When these budgets are restored, the NHS will plunge back into the red, because Patricia Hewitt has not even attempted to tackle the underlying causes of the deficits.

"The service is in worse financial shape than ever before in its history.

"The NHS suffers from too much inefficient use of the private sector, has too many uncosted initiatives imposed on it by Whitehall, and is appallingly managed by the Department of Health.

"All of this needs to be swept away."


"The impact on patient care around the country could be very damaging.

"Deficit-ridden trusts are paying a heavy price for the government's political priorities.

"There is little cause for celebration in these figures.

"The projected surplus amounts to a drop in the ocean of the billions spent by the NHS.

"It masks the increasing number of trusts in heavy deficits caused by the government's incompetence.

"Scores of trusts are under immense pressure to clear historic deficits, and are forced to make cuts in so called 'soft target' services.

"The government is employing all sorts of tricks by shifting debts from one organisation to another.

"These accounting rules would make Del Boy proud but won't make the problem disappear."

NHS slipping into deficit again
09 Nov 06 |  Health

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