Region's NHS in £100m debt

PUBLISHED: 09:35 08 June 2006 | UPDATED: 10:58 22 October 2010


The true extent of the financial crisis affecting the region's health services became clear yesterday after it was revealed that our hospitals and health providers account for a fifth of the country's total NHS debt last year.


The true extent of the financial crisis affecting the region's health services became clear yesterday after it was revealed that our hospitals and health providers account for a fifth of the country's total NHS debt last year.

Of the total £512m national deficit, primary care trusts (PCTs) and hospitals in Norfolk, Suffolk and Cambridge were a staggering £100.4m in the red.

The only other Strategic Health Authority area to do worse was Bedfordshire and Hertfordshire, which also falls within the eastern region's catchment area.

Health Secretary Patricia Hewitt announced yesterday that although the NHS deficit for 2005/06 had doubled from the previous year, it was down on the Government's estimate of around £620m.

However, there are fears that the actual audited figure could end up much higher and the Government came under attack from both health representatives and political opponents, who blamed the deepening financial crisis on its "interference" and the pressure of performance targets.

Ms Hewitt said the deficit amounted to less than 1pc of the overall NHS budget and that she would be "held accountable" if the NHS was not, as promised, returned to overall financial balance by March next year.

Last night, in an apparent show of support for the beleaguered health secretary, Richard Bacon, Conservative MP for South Norfolk and member of the influential Commons Public Accounts Committee, said the fact that 70pc of the NHS bodies could stay within budget suggested that it was a local management rather than a systematic problem.

"A lot of it is down to poor local management", he said. "There may of course be particular problems - those of the N&N, for example, in being a PFI pioneer - but generally speaking the quality of management is the issue. It is variable - from extremely good to truly dreadful. And the average is far too low. That is the central problem."

Overall, nearly a third of the 566 NHS organisations failed to break even in the year 2005/6 but Ms Hewitt said two-thirds of the deficit was concentrated in one tenth of all NHS organisations.

In Norfolk, Suffolk and Cambridgeshire, although the Strategic Health Authority reported an underspend of £15.7m, the area's PCTs recorded a £78.5m deficit and the NHS trusts, including the hospitals, had a £37.6m deficit.

Among those breaking their budgets were the Queen Elizabeth Hospital at King's Lynn and the South Norfolk PCT, which blamed its £10.5m deficit on its revenue budget being sapped by a sharp rise in spending on drugs and commissioning services.

Both the Norfolk and Norwich University Hospital and the James Paget Hospital at Gorleston broke even last year.

Bosses at the embattled N&N had predicted a substantial overspend for 2005/06, but managed to end the financial year £145,000 in the black.

However, hospital chairman David Prior said that despite the positive outcome, it was extremely tight and the under spend equated to just two hours worth of spending from the trust's annual budget.

This year, the hospital has predicted a £14m deficit amid growing speculation that widespread job cuts are imminent, and Mr Prior warned: "To break even was an extraordinary achievement and it took a lot of blood, sweat and tears to do it as we were predicting a £5m overspend. But this current year is going to be even tougher as there is less opportunity to cut back."

More than 12,000 job losses have been announced since early March, but the Government insists most of those will go through redeployment, not filling vacant posts, and reducing reliance on agency staff.

Yesterday, Ms Hewitt told MPs in the House of Commons there were difficult decisions ahead but disputed that there would be widespread redundancies.

She also denied that Government targets were to blame for the deficits, which revealed the most intense problems in the south and east of England.

She said: "If targets were responsible for deficits, then we would be seeing deficits everywhere and we're not seeing that."

The Tories and the influential think tank, the King's Fund, said the figures did not reflect the true state of NHS finances.

Shadow health secretary Andrew Lansley said the figures would "deepen the crisis of confidence" in how the Government steers the NHS.

Strategic health authorities (SHAs) managed to save money and under spent by £524million. That was set against the overall deficit which otherwise would have topped £1billion.

Mr Lansley said: "The gross deficit - the figure for NHS Trusts and PCTs - is £1.27billion. It is this vast sum that directly gives rise to the serious consequences in cuts in services and front-line posts. The Health Secretary is living in a parallel universe, in which everything gets better and nothing is wrong."

King's Fund chief executive Niall Dickson said there had been improvements in the NHS such as reduced waiting times, better cancer services and treatment of coronary heart disease.

But he added: "These figures mask the true scale of financial problems in the health service. The gross deficit has increased throughout the NHS to £1.27billion and has been reduced to a net of £512million only by using increased surpluses from other parts of the service.

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