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Budgets cut to achieve NHS surplus, MPs say

05/06/2008

Money was held back from medical training and primary care budgets to achieve the surplus the NHS held at the end of 2007, MPs claim today.

The Public Accounts Committee (PAC) says its report into the 2006-2007 £515 million surplus uncovered "some unwelcome evidence that the NHS is not yet travelling along the road to long-term financial health".

The study found that in some cases balance was achieved through tighter central control and service reductions rather than sustainable, long-term strategies.

As a result, the PAC says, some primary care trusts were unable to deliver all of the health care they might have, with some delivery against local priorities being reduced or delayed through limits on health care activity.

Overall, however, the quality of service improved during the year, as rated by the Healthcare Commission.

The PAC report also warns that while there was an overall surplus, more than a fifth of NHS organisations are still in deficit.

This number collectively ran a deficit of £917 million during 2006-07.

PAC chairman Edward Leigh said there are still "large variations" in the financial performance of difference types of NHS organisation.

"Bad financial management at local level can have significant consequences for patients: there is a clear link between the financial performance of a body and the quality of its clinical services. This is a lesson which must be driven home across the NHS, to both financial and clinical staff," he commented.

"Another lesson is that local bodies must be able to demonstrate that they have provided a level of healthcare that meets local needs.

"Large surpluses will prompt the question why this money could not have been used to deliver a higher level of healthcare."

In response to the report, the British Medical Association (BMA) said the surplus demonstrates the hard work of NHS staff.

But Dr Ian Wilson, deputy chairman of the BMA's consultants committee, added: "While the hard work of NHS staff in turning huge deficits into a surplus should be recognised, we also need to acknowledge what has been lost.

"The government's insistence on making trusts deliver balanced spreadsheets at all costs has often eaten into training budgets, and limited improvements to patient care.

"In future, funding for training should be protected against further raids by cash-strapped trusts."

Commenting on today's report, a spokesperson for the Department of Health said the surplus was achieved "in the context of the NHS delivering all major national targets and significantly improved patient satisfaction".

They added that "a great deal has been achieved" since the last financial year.

A financial performance report to be published at the end of this week is expected to show that the NHS achieved a revenue surplus of just under £1.7 billion for 2007-08 financial year.

"Equally important is the improvement in the level of variation in financial performance, as, at the end of 2007-08, every sector of the NHS and each and every Strategic Health Authority area has recorded a surplus, with only ten organisations recording a deficit," the spokesperson said.

"This surplus, all of which sits within NHS organisations, gives the flexibility to respond to fluctuations in demand, activity and cost, and more importantly, allows investment in improved services for patients."