Topic Background: Health Service Finances to March 31 06 - NPA

Background

In an announcement to the House of Commons on 7 June Health Secretary, Patricia Hewitt revealed that NHS trusts overspent by £1.28 billion last year, but savings in some areas meant the total deficit across the health service was £512 million.

She revealed that the actual figure for the NHS deficit is £100 million less than estimated, standing at £512 million. However, the deficit accumulated this year is over double the £221 million debt accumulated last year. She maintained that the deficit was less than 1 per cent of the NHS's total budget and was overall concentrated in a relatively small number of organisations.

Issues / Events

the health service struggling to cope The unaudited figure is less than the £620 million predicted in December last year, but almost double the £216 million deficit last year – despite record investment in the NHS

Hewitt was keen to point out that 70 per cent of the debts were in just 11 per cent of trusts, and that seven out of ten trusts were operating within their budgets.

Dozens of NHS trusts have announced job cuts in recent months as they struggle to improve their finances, leading to warnings that the pace of reform has left.

Polilitical / Stakeholder comment

Conservatives

Shadow health secretary Andrew Lansley insisted the deficits were caused by government targets, which distorted the way resources were spent, overspending on staff pay and a mismanaged IT programme which was already two years late.

"This is a government that has let the NHS down. Policy failures and mismanagement have left healthcare in serious deficit. Staff are offering improved patient care, but they complain that it's not because of the government, but in spite of the government", he said. He condemned Ms Hewitt's speech to the Commons as an "excursion into a parallel universe", and urged her to "come back down to earth" and realise the NHS was in financial trouble for the fourth year in a row.

Lib-Dems

The Liberal Democrats also condemned the announcement, with health spokesman Steve Webb noting: "It takes incredible mismanagement to spend huge investment on the NHS and come back to the House and admit the worst deficits in years. "What is happening is breakneck NHS reform because the prime minister has said he won't go until the NHS is sorted out. "This is not measured organised change, or long-term planning, but emergency cuts packages to deal with an emergency financial crisis. That is no way to run the NHS."

UNISON

Warned that privatisation, PFI and Independent Treatment Centres were the prime culprits behind the NHS' deficits.

BMA

Dr Paul Millar, a member of the British Medical Association's consultants committee, recommended that the NHS's latest deficit figure indicates the need for a temporary 'halt' to be placed on its health polices to assess whether these policies are working or not. He called for the de-politicisation of the NHS arguing that constant re-organisations were undermining the service.

King’s Fund

The chief economist at the King's Fund think tank said that the blame should not be directed at any one individual or organisation over the amount of debt the NHS currently finds itself in.

BJHCM

The editor of the British Journal of Health Care Management, Andy Cowpar, said NHS debts sit far higher than today's figures would suggest, saying it is inevitable that the Government will have to bail out those hospital trusts struggling most.

Last updated : 28-Jun-06