19 December 2008
By Paul Dicken The National Health Service finished the past financial year with an above-target budget surplus of £1.67bn, despite an increase in demand for services, an auditors’ report has said. The £1.67bn figure applies to strategic health authorities, primary care trusts and NHS trusts. It excludes foundation trusts, which ended the year with a £395m surplus, according to the report, published on December 16 by the Audit Commission and the National Audit Office. The report, Financial management in the NHS: report on the NHS summarised accounts 2007/08, said: ‘The NHS planned for a level of surplus to provide financial stability, ensuring that the system could absorb cost pressures that may emerge during the year.’ Andy McKeon, the commission’s managing director of health, told Public Finance that NHS financial management was much improved. ‘It gives a good basis for moving forward implementation of the Darzi report and the changes required there and looking a lot further forward, the undoubted pressure that there will be on public expenditure in the next Comprehensive Spending Review.’ McKeon said the surplus was remaining in the NHS, and PCTs would be able to draw down £800m over 2009/10 and 2010/11, as set out in the Operating Framework for patient care. Only 3% of trusts were in deficit, compared with 22% in 2006/07. Increased demand on services was in non-emergency procedures and GP consultations. Public Accounts Committee chair Edward Leigh criticised the surplus, saying it represented ‘a large amount of money that could have been spent on NHS patients and wasn’t. It is good to build in contingency, but it is a lot of contingency when, in certain parts of the country, patients are still being denied access to drugs and receiving low quality care’. The report also predicted that changes introduced by International Financial Reporting Standards would mean current Private Finance Initiative projects and those in construction would add up to £9bn on to balance sheets. ‘The Treasury has confirmed that budgets will be adjusted as necessary to allow the continuation of agreed PFI and public capital programmes.’
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