14 April 2006
As Prime Minister Tony Blair called in health chiefs for a summit on deficits on April 12, new evidence of serious problems emerged with a damning report on the NHS in Wales.
The auditor general for Wales, Jeremy Colman, reported that short-term financial difficulties were preventing underlying deficits being tackled. 'While the exercise of financial control has improved, there is a worrying downward trend in the financial position,' he said.
'Recovery plans must be realistic, with effective reporting procedures. Most of all, the underlying reasons for the deficit must be addressed.'
Welsh NHS organisations predicted an aggregate deficit of £32m for 2005/06. The principality's health service met its financial targets in 2004/05 only after receiving an additional £82m to cover historical deficits – £55m of this extra funding is due to be repaid by 2009 and some of the repayments are due to begin this year.
This pressure will be compounded by inflationary demands. Finance directors claim that the 4.5% increase in funding will not cover all their costs.
Colman's report, Is the NHS in Wales managing within its available resources?, said that the reasons for the failure to produce efficiency gains needed to be analysed before new plans were put in place. He called for an inquiry into NHS performance and financial management.
News of the problems emerged as a report by centre-Right think-tank Reform predicted that NHS reforms would lead to 100,000 job losses – around 10% of the total staff – and that national pay bargaining would end.
Nick Bosanquet, professor of health policy at Imperial College London, the report's author, said: 'The right change in strategy will be achieved by the government's highly welcome reform programme. The result will be a smaller NHS workforce with higher professionalism, morale and job satisfaction.'
Blair dismissed talk of crisis after meeting heads of trusts in financial difficulties, along with Health Secretary Patricia Hewitt and Sir Ian Carruthers, the acting chief executive of the NHS.
Blair said that over half of the predicted NHS deficit had been run up by 7% of trusts. 'In many circumstances what is being exposed are problems that have built up over a considerable period of time, and frankly it is time we dealt with them.'
Labour had overseen many improvements in the health service, he said. 'Despite all of that, there is a real challenge for certain of the trusts, and for the system as a whole.'
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