NHS Executive drops break-even target

1 Jul 99
The National Health Service Executive has relaxed financial rules compelling NHS trusts and health authorities collectively to break even this year.

02 July 1999

Following discussions between the Executive and the Treasury, an overall deficit of £93m has now been approved, despite earlier instructions for the service as a whole to balance its books.

The concession marks acceptance by ministers and the Executive of the extreme financial pressures facing the NHS in 1999/2000, including the soaring costs of pay and blood products.

'My preference would have been for the NHS to have planned to break even in 1999/2000,' said Colin Reeves, the NHS director of finance and performance. 'However, one also has to take account of other important health care issues, such as waiting lists, winter pressures and important service developments. Overall, I believe the plans of health bodies for 1999/2000 represent a sensible way forward.'

But the agreement to waive the break-even requirement is far from a victory for health bodies. Some £140m has been cut from initial spending plans since negotiations began earlier in the year.

With the planned deficit down to around £110m at the end of May, managers warned that no further cuts could be made without seriously jeopardising services. But another round of negotiations, which Public Finance understands were concentrated in the Trent and West Midlands regions and dealt largely with 'technical' deficits, has resulted in the further reduction.

Eric Morton, chair of the Healthcare Financial Management Association, said if the new target was to be reached, 'the plans need to be underpinned with real management action'.


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