23 September 2005
NHS organisations continue to face tough financial decisions because of chronic underspending in the 1980s and 1990s, the NHS Confederation said this week.
The claim comes in advance of the Labour Party conference in Brighton next week and follows the publication of English trusts' and primary care trusts' financial position on the Department of Health's website.
These unaudited figures showed that trusts overspent by £306m in 2004/05, while PCTs had an overall deficit of £266.5m, despite record funding. However, these deficits were partially balanced by underspends at the 28 strategic health authorities totalling £372.7m.
Therefore, in total, these three sectors, excluding the first three waves of foundation trusts, overspent by £200m. In June, the National Audit Office and the Audit Commission suggested the deficit would be around £140m.
The NHS Confederation said that during 2004/05, the NHS had used 73% of the extra £5.9bn it received to boost services that had been neglected in the past.
Confederation chief executive Gill Morgan said suggestions that the NHS had failed to invest additional investment wisely were wide of the mark. The service had become more productive and, despite the underinvestment of the previous 20 years, had reduced both waiting lists and waiting times since 2002.
'Much of the new money being invested in the NHS is being spent on buildings, increased costs of drugs and technology and more and better paid staff, which will, over time, allow the health service to deliver improvements to patient care,' she said.
Between 1999 and 2004, the NHS employed an additional 89,000 frontline clinical staff, including almost 68,000 extra nurses.
Each of the trusts reporting deficits at the end of March have received a letter from Sir Nigel Crisp, the NHS chief executive, reminding them of the importance of achieving financial balance.
'Poor financial management in a few organisations can erode public confidence in the management of the NHS as a whole. It is not acceptable for any NHS organisation to spend more resources than it has been allocated or received in income,' the letter said.
Surrey and Sussex Healthcare trust had the biggest deficit, overspending by £30.6m, or 19.9% of its turnover.
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