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Last Updated: Thursday, 22 November 2007, 11:49 GMT
NHS on course for large surplus
The NHS had been running a deficit
A clampdown on spending within the NHS has turned a massive deficit into an even bigger surplus in just two years.

The news has prompted criticism from MPs of a "boom and bust" approach and questions over whey patients are going without drugs when there are funds.

As much as 1.8bn, about 2% of the budget, will be left unspent this year, the Department of Health says.

The NHS was ordered to balance the books after running up a 547m deficit in the financial year 2005/06.

Ministers have said that any surplus will be put back into patient care next year.

If the NHS does end up with a significant underspend at the end of the financial year, that will be a real loss to patients
John Appleby
King's Fund

Over the past two years, the NHS has been under extreme financial pressure, with many trusts cutting jobs and making other savings in order to break even.

Last month, the Department of Health was forecasting a surplus of under 1bn, with approximately 20 trusts still expecting to be in deficit.

But the figures obtained by the Health Service Journal suggested that the actual underspend will be far bigger.

Some 729m of the predicted total was taken directly, or "topsliced", by strategic health authorities (SHAs) from primary care trust budgets at the start of the year, then kept in reserve in case of financial problems later on.

John Appleby, chief economist at the King's Fund, said that a surplus of that size was not necessarily a healthy sign, as the money could have been spent on services.

He said: "If the NHS does end up with a significant underspend at the end of the financial year, that will be a real loss to patients".


And, speaking at a Commons' health committee meeting which was quizzing NHS chief executive David Nicholson, independent MP Richard Taylor said: "I will have to go back and explain this to my constituents.

"They will not understand how the NHS can be in the black by so much and not be able to fund drugs they need.

"Can there not be a relaxation [of the rules] to allow trusts to fund some of these drugs?"

Mr Nicholson replied that it was up to individual trusts to decide how to use the money as it was not being held by central government.

But he added: "Any big organisation like ours, which turns over 100bn, within 2% it seems to me is a reasonable place to be."

And David Stout, the director of the NHS Confederation PCT Network - representing the primary care trusts who spend NHS money - agreed that the surplus was not necessarily a cause for concern.

In the context of the overall NHS budget this is not a huge surplus
David Stout
NHS Confederation

"In the context of the overall NHS budget this is not a huge surplus, but we don't want to lose that money, we want to reinvest it in health services in a planned way."

Shadow health secretary Andrew Lansley was more critical of the predicted surplus.

"The government's approach to the NHS has been one of boom and bust. They lost financial control and spent two years clawing back on NHS budgets.

"Top-slicing PCTs and holding large surpluses at the centre is undermining health service planning across the country and creating inefficiencies."

How one hospital has managed to balance its books


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