11 June 1999
In a report reviewing NHS finances in England and Wales over the past year, the commission said the deficit could rise to £641m next year.
The debts mean that services may have to be cut to balance budgets, NHS managers warned, including key government priority areas such as mental health, cancer services, emergency care and primary care development.
Publishing detailed guidance to health authorities and trusts on how to improve their financial management, the commission said that almost all had used some growth monies, intended to improve services, to solve financial problems instead.
Figures provided last month by Sir Alan Langlands, the newly reappointed NHS chief executive, show an in-year deficit of only £12m, compared with £220m two years ago.
Mike Barnes, head of technical support at the commission, said: 'Health authorities and trusts are doing much better because their in-year performance is significantly improved.
'But, as long as they are incurring an in-year deficit, the cumulative position will only get worse. There is a need to recognise this and do something about it.'
Audit Commission chairwoman Dame Helena Shovelton said that the NHS had a clear duty to manage its resources and provide the best possible care. 'However, this is not an easy balancing act and the challenges currently facing health bodies are formidable.'
Stephen Thornton, chief executive of the NHS Confederation, said: 'Our most recent research indicates that two-thirds of trusts and half of health authorities in England are now less confident about the financial situation than they were 12 months ago.
'We have evidence of over a third of trusts reporting they will be making cuts in service provision this year in order to balance their budgets.'
The Audit Commission report, A healthy balance: financial management in the NHS, makes four recommendations for health authorities and trusts to plan and monitor expenditure more effectively.
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