NHS chiefs face budget cuts

22 Apr 99
Ministers have rejected NHS finance leaders' calls for financial targets to be relaxed and have ordered health authorities and trusts in England back to the drawing board to eliminate a projected £150m deficit in 1999/2000.

23 April 1999

The Board of the NHS Executive met last week to discuss mounting concerns over the financial pressures in the NHS, highlighted in a recent survey by the Healthcare Financial Management Association. The association estimated the

in-year deficit for 1999/2000 could be as high as £150m, in spite of government demands that the service break even.

After examining the third draft of agreements between health authorities and trusts, the NHS Executive last week confirmed the HFMA estimate. But it said there was still room for improvement. Following the first round of cuts this year, the deficit had been an estimated £200m, and in some years there had been as many as six cuts.

Speaking exclusively to Public Finance, Colin Reeves, the NHS Executive's director of finance and performance, said the breakeven target would not be relaxed. 'The Executive is very keen to ensure that the major objectives around waiting lists, winter pressures and financial stability are fulfilled in 1999/2000,' he said. 'In terms of this last objective, the NHS has done a marvellous job in reducing its deficit from £460m down to £80m over the past two years.

'As part of the normal process of preparing service and financial frameworks for the year, we have asked regional offices to discuss possible improvements to health bodies' plans so as to achieve financial balance.'

The problems are not countrywide, but are believed to be focused in so-called 'hot spots'. Twenty local health economies account for 70% of the deficit. One trust finance director said: 'The situation on the ground is a lot worse than they seem to think it is at the centre. Without extra resources, there will be a political disaster over the next 12 months.'

Eric Morton, the HFMA chairman, called for the government to release its modernisation fund.


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