DoH confirms the NHS is back in the black by £500m

7 Jun 07
The NHS will report an official net surplus of around £510m for 2006/07, the Department of Health confirmed on June 6. But the apparent turnaround was created by withholding £1.28bn until balance sheets were drawn up at the end of March.

08 June 2007

The NHS will report an official net surplus of around £510m for 2006/07, the Department of Health confirmed on June 6. But the apparent turnaround was created by withholding £1.28bn until balance sheets were drawn up at the end of March.

Health Secretary Patricia Hewitt said that without the imposition of such a restricted regime, 'the deficit would almost certainly have doubled again this year'. She added: 'This is not a one-off fix. The NHS is now in a very strong position to use the extra money to spend on drugs and reducing waiting times.'

In fact, a report by the DoH's director general for finance and investment, Richard Douglas, revealed that the NHS was planning to underspend by a similar amount in the current year, fuelling concerns that financial prudence came at the expense of patient care.

Niall Dickson, chief executive of the King's Fund, said: 'It's unclear what impact last year's cuts could have in the long term. In the future, the NHS must move away from boom and bust financial management of this kind.'

Douglas's report suggested that the majority of the underspending had been on behalf of primary care trusts.

Without a new £450m 'contingency fund' created when the DoH devolved responsibilities and funds for training and public health to strategic health authorities, the final unaudited net surplus would have been £60m — a swing of £607m in the NHS's fortunes from last year's net deficit of £547m.

That swing is echoed in primary care trusts' in-year reports, which show that while they overspent their allocations by £326m in 2005/06, they underspent by £348m in 2006/07.

That £674m swing might not be clear in their formal accounts, however, as £825m of PCT allocations were 'top-sliced' by strategic health authorities to help balance the books NHS-wide.

Steve Bundred, chief executive of the Audit Commission, said: 'A modest level of underspending is both essential and inevitable — no organisation can operate prudently without reserves. However, there remains a need for much better medium-term financial planning to make best use of the resources available.'

PFjun2007

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