MPs: Prognosis for financial health of NHS is poor
The Department of Health is confident NHS deficits can be reversed in coming years
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Tuesday, 20, Mar 2007 08:31
The financial health of the NHS is continuing to worsen due to increasing number of bodies reporting deficits, an influential group of MPs has said.
According to the public accounts committee there is "no single reason" for why the cumulative deficit for all health service trusts rose to more than £1 billion 12 months ago.
Instead, the deteriorating situation is blamed upon a weak central control of finances, a lack of interest in budgeting by medical staff and poorly-costed national pay initiatives.
But amid claims the financing of the NHS lacks transparency, the Department of Health (DoH) insists it has introduced "new rigour and discipline" to procedures, with the health service on track to break even by the end of 2007.
Today's report criticises the DoH for allowing NHS bodies to run into deficit despite spending on the health service being the "fastest growing area of public expenditure"; predicted to rise by a third from 2005's total to £92.6 billion in one year's time.
Despite these unprecedented levels of investment however, the NHS still overspent by £251 million in 2004-05, more than doubling to £570 million the following year, with 74 per cent of bodies carrying their deficit over.
MPs claim that the effects of rising numbers of individual deficits have been felt in 903 compulsory redundancies in the six months ending September 2006, the number of open hospital wards being cut and recently qualified clinical staff finding it more difficult to be employed in the NHS.
The committee's chairman, Edward Leigh, adds that it is "too early to judge" whether the planned turnaround plan will "deliver financial balance and offer good value for money".
"The NHS must face up to two uncomfortable truths. There is an upward trend in the number of individual NHS bodies running hefty deficits. And the cumulative deficit for all NHS trusts at the end of March 2006 had soared to over £1 billion," he said.
Mr Leigh went on to say: "The transparency of the NHS financial reporting regime must be improved further to prevent deficits being hidden and to make sure the regime is being applied consistently to all bodies.
"Without this kind of transparency, there can be no spur to improve the standard of financial management in all NHS bodies. There is also no excuse for clinicians to distance themselves from money matters as if the quality of healthcare delivered by an organisation has nothing to do with whether it has to dig itself out of a deficit."
In response, health minister Andy Burnham insisted the hard work of NHS staff was resulting in more people being treated "than ever before with shorter waits, particularly in areas such as cancer and A&E".
"While the pay contracts cost more than we or the trade unions and professional associations first anticipated, we must remember that we were setting right the neglected and under-funded system we inherited - with low morale and severe recruitment difficulties endemic in the service," he added.
"Staff are now getting paid more for doing more - particularly GPs under performance-related pay."
But the chairman of the British Medical Association (BMA), Dr Jonathan Fielden, has said that new contracts for consultants and GPs are not to blame for NHS debts.
"The NHS is in a financial mess because of the millions spent on ill thought out and incoherent NHS reforms," he added.
"The DoH has already dismissed a link between new contracts for NHS staff and NHS debt and has stated that the main reasons for financial failure are that some trusts did not allow for the accounting change whereby trusts were no longer allowed to use capital money for revenue expenditure, and others suffered from the pressure to meet targets."