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NHS heading for £750m deficit

11th March 2006

With the departure of Sir Nigel Crisp, there is speculation that the deficit in the NHS has beaten all records. Newsnight set out to discover the size of that deficit. Caroline Flint, Minister for Public Health; David Nicholson, Chief Executive of West Midland SHAs; and Dame Gill Morgan, Chief Executive of the NHS Confederation, joined the debate in the Studio.

The government's target had been £200m, the half-year forecast in December was £6.5m; Newsnight audit showed that the NHS would be £750m in the red this year.

Newsnight surveyed all the SHA's and all 32 Foundation Trusts. 21 out of the 28 SHAs had a deficit, which totalled £799m; 7 broke even or had a surplus, showing £49m in the black, giving a net deficit of £750m.

Some of the largest health authority deficits are;

  • North West London - £106m
  • Surrey and Sussex - £102m
  • Norfolk, Suffolk and Cambridgeshire - £89m
  • Bedfordshire and Hertfordshire - £85m
  • >Shropshire - £49m
  • Hampshire and the Isle of Wight - £44m
  • South East London - £40m

Foundation hospitals show a £10m deficit, giving a total NHS deficit of £760m; this is £137m more that the Christmas target, and £50m over the original target.

Professor John Appleby, Kings Fund Chief Economist, suggested that one of the key reasons was the cost of the new pay awards, which were proving more expensive than predicted.

Sir Ian Carruthers, interim replacement for Sir Nigel Crisp, is currently in charge of two health authorities, one (Hampshire and the Isle of Wight) predicting a deficit of £44m, whilst the other (Dorset and Somerset) is predicting a small surplus of £6.5m.

Caroline Flint, Public Health Minister, said that 50% of the deficit came from 6% of the organisations. She pointed out that the deficits are incurred by individual organisations. Sometimes it is the poorer areas, with some of the most difficult health challenges, that are managing their finances well and producing the best results for patients. It is important, she said, to identify why some manage better than others.

Dame Gill Morgan, Chief Executive of the NHS Confederation, agreed that many of the organisations had debt that had been accumulating for some time. The important thing, she said, was to work with these organisations, for example with the turnaround teams sent in by the Department of Health, to enable them to regain control and implement the systems changes that may be necessary.

There are some organisations which faced special challenges, and Dame Gill Morgan pointed out that it was important to understand why they had these problems, but also to identify what was good in organisations and to share good practice.

David Nicholson, Chief Executive of the West Midlands SHA's agreed that moving to deliver care for the 21st Century was not just a case of closing hospitals; Proper financial management needed to be restored to some organisations, some managers indeed had already been moved on. He agreed that some organisations needed help as they were 'grappling with quite serious problems'.

Newsnight put it to Caroline Flint that Manchester was underspent by £30m - should the public be aggrieved? There are some Trusts which have been managing their finances better, she replied. Some have been meeting targets by changing the way services are delivered, for example cutting down on referrals to emergency services by better care in the community, or being able to discharge patients more quickly by developing good relationships with social care services.

There are more doctors and nurses than ever, the Minister concluded; there are the lowest waiting times on record and people are getting seen quicker.The deficit figures may have exposed problems that were already there, enabling organisations to get to grips with the problems.The needs of patients must come first, and the focus should be to produce an NHS which is good value to the tax payer and good service for patients.

 

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