NHS plunging deeper into debt

NHS trusts and health authorities face huge deficits

The financial deficits facing health authorities and hospitals are set to worsen, official figures have confirmed.

Although the debt situation improved slightly in the year up to March 1999, predictions for 1999-2000 show a huge increase.

NHS debt: figures

1998-99: £18m combined deficit

1999-2000: £200m predicted combined deficit

50% of health authorities had deficit in 1998-99

20% of health authories, 12% of trusts in 'serious financial difficulty'

Potential medical negligence bill, March 1999: £2.4bn

And the burden of spiralling court action for medical negligence could amount to hundreds of millions of pounds over the next few years.

The figures are contained in the National Audit Office's summary of NHS accounts, published on Tuesday.

In the 1998-99 financial year, NHS health authorities and hospital trusts ended up with a combined deficit of £18m.

However, predictions for the following year, which ended last month, suggest this is about to rocket to almost £200m.

There is, however, encouraging news for those fighting prescription fraud in the NHS. Tougher measures introduced in November 1998 appear to have cut the annual bill by as much as £40m.

David Davis MP, Chairman of the House of Commons Committee of Public Accounts, said: "The report shows there are real and serious financial pressures facing the NHS in England.

"Signs of improved financial performance in 1998-99 were short-lived.

"Half of the 100 health authorities recorded a deficit in 1998-99, and one in four NHS trusts."

In fact, one in five health authorities and one in eight hospital or community trusts were officially classed as being in "serious financial difficulty".

This winter's "flu crisis" has placed extra financial pressure on hospitals.

Compounding the problem for the NHS is the fact that hospitals and health authorities work in three year cycles - at the end of these they aim to break even or show a surplus.

The cycle ended with the 1999-2000 financial year, suggesting that many will be left with huge deficits, and may need to be "bailed out" by government money.

The British Medical Association has called for these debts to be written off using a slice of the extra billions for the NHS announced in Chancellor Gordon Brown's Budget last month.

Negligence soaring

The potential cost of legal action against the NHS in March 1999 was £2.4bn - an increase of £600m from the previous year.

However, this could increase by another £1bn when some unreported cases are taken into account.

Some of the costs of negligence are picked up directly by the Department of Health, but hundreds of millions could still have to be paid by the health authorities and trusts.

Mr Davis said: "Funding successful claims for clinical negligence means there is less cash available to treat patients and I welcome the moves the department is making to improve clinical performance."

Health Secretary Alan Milburn, following a speech at the Royal College of Nursing congress in Bournemouth, denied that negligence claims could divert the government's plans for NHS reform.

He said: "Of course there are clinical negligence claims in the NHS, and we deal with these.

"But nobody should get the idea that we in any way, shape or form are being detracted from what we want to do or what nurses want to do, which is modernising services."

Stephen Thornton, chief executive of the NHS Confederation, which represents health authorities and trusts, said the government's recent allocation of £600m to the NHS would address the income and expenditure gap for this year.

The confederation had also been told that the remaining £1.4bn that government has yet to allocate may partly be used on a one-off basis to pay off a proportion of NHS debts.

Mr Thornton said: "Had we not had the new money a fortnight ago the NHS could well have been in serious financial difficulties, but now we can look forward to carrying out the long term modernisation of the service."