NHS trusts show sustained financial improvement, auditors find

13 Oct 10
There has been a sustained improvement in the financial management of NHS trusts in the past five years, the Audit Commission said today
By Jaimie Kaffash

14 October 2010

There has been a sustained improvement in the financial management of NHS trusts in the past five years, the Audit Commission said today.

Its final report of Auditors’ Local Evaluation scores and Use of Resources scores showed that 94% of trusts exceeded minimum standards, compared with 63% in 2005/06, the first year financial management was scored. A further 74% of NHS trusts were performing well or strongly, compared with 16% in 2005/06.

Andy McKeon, managing director for health at the Audit Commission, told Public Finance that the financial performance of trusts was even more encouraging than the figures show. This is because today’s figures do not include foundation trusts, most of which were among the highest performing standard trusts when the reports were first introduced.

He added that strong financial management ‘will be more important than ever’ at a time when savings of £15bn–£20bn will be required. He said: ‘Improving services with less money and during a period of change will be a tough challenge, but the auditors’ assessments show clear signs of sustained improvement in financial management in most NHS trusts and primary care trusts. And it’s a real achievement that there was no difference overall between draft and final accounts.’ 

David Stout, chair of the NHS Confederation’s PCT Network, said: ‘This report shows that the majority of PCTs have worked hard over the past year to prepare themselves for the financial difficulties facing the NHS in the years ahead. There is a clear trend of financial management in the NHS improving alongside the improved quality of commissioning more generally.’

The report showed that the NHS overall had a revenue surplus of £1.5bn in 2009/10 compared with a surplus of £1.74bn in 2008/09. 

Ten NHS bodies overspent. South London Healthcare NHS Trust had the biggest loss at £42m – 9.2% of its turnover.

A spokeswoman for the trust told PF: 'SLHT was recently formed through the merger of three of the most financially challenged trusts in the country. This figure represents our first year of operations, including the inevitable costs of a merger, but we have a credible plan to improve our position and are confident that we are on the way to a sustainable financial recovery.'

The commission had decided earlier this year to end Auditors’ Local Evaluation and Use of Resources assessments. It took the view that although the assessments did help to improve financial performance, they did not provide value for money. The decision was made before the announcement of the abolition of the Audit Commission in August.

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