PAC calls on ministers to allow NHS to use surplus

8 Jun 09
Patients might lose out if the latest NHS surplus is not reinvested in health care, the Public Accounts Committee has warned

22 May 2009

By Alex Klaushofer

Patients might lose out if the latest NHS surplus is not reinvested in health care, the Public Accounts Committee has warned.

A PAC report on the financial management of the health service showed a surplus of £1.7bn for 2007/08, almost twice the amount planned. The report welcomed the decision by the Department of Health to allow NHS bodies to spend £800m of the 2007/08 surplus, together with the surplus envisaged for 2008/09.

But PAC chair Edward Leigh emphasised the need to spend the full surplus. ‘Patients lose out if too much NHS funding is sitting unspent in bank accounts,’ he said.

‘This kind of financial planning over the longer term is good, but the needs here and now of patients in parts of the country for drugs and better quality care must not be forgotten,’ he added.

Health care think-tank the King’s Fund agreed. ‘The PAC is right that the quality of care patients receive should not suffer as a result of local NHS trusts building up large surpluses,’ said chief executive Niall Dickson.

It was unclear what would happen to the remaining surplus, he said. Setting aside extra money for lower public spending from 2011 onwards was essential, he added.

‘The finances of the health service are now in much better shape and this will be crucial given the NHS will have to prepare at best for very low or zero growth in funding from 2011 onwards. The financial prospects for the health service after 2011 look very serious.’

The PAC report, published on May 21, also found that, despite improvements in financial transparency, some NHS bodies were also ‘moving cash around the system in an inappropriate manner’.

It stated that David Flory, director general of NHS finance, gave evidence that two primary care trusts – Norfolk and Great Yarmouth & Waveney – had been criticised by auditors for making unnecessary advanced payments for goods and services.

David Stonehouse, finance director and deputy chief executive at NHS Norfolk, said the trust had made three such pre-payments in 2007/08. These were ‘in good faith’ and ‘have not resulted in any financial loss or failure to achieve value for money’, he said.

‘However, it is recognised that such payments do not conform with DoH regulations and were therefore noted as irregular,’ he added.

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