Hewitt to tackle NHS debt ‘head on’
Health Secretary Patricia Hewitt today pledged to tackle “head-on” the minority of NHS organisations where leadership and financial management were weak.
The NHS ran up a £140 million deficit in 2004/05, unaudited accounts show.
This is only 0.2 per cent of the NHS budget, but Ms Hewitt said taxpayers had a right to expect value for money.
And a report by public spending watchdogs predicts that more than 18 per cent of NHS bodies will have failed to balance the books in 2004/05 when audited figures are published.
The National Audit Office and the Audit Commission say that NHS bodies are facing “major financial challenges” as a result of the reforms within the NHS.
And critics are blaming the Government, with the Liberal Democrats attacking “market-based reforms” and the Conservatives citing bureaucracy and waste as the problem.
Sir John Bourn, head of the National Audit Office, said: “The major developments taking place in 2004-05 and beyond will pose unprecedented challenges with which all bodies in the NHS will have to deal.
“The NHS faces the considerable task of improving its financial management to meet the new challenges.”
But Ms Hewitt said the report, Financial Management in the NHS, underlined the case for reform.
“I know that some NHS bodies are experiencing financial pressures this year, despite record increases in their budgets. But I believe that the reforms we are putting in place such as new staff contracts, new financial flows and new IT are the solution, not the problem. The reforms themselves are designed to stimulate contestability and consequently encourage good financial discipline.”
The NHS had a budget of £69.7 billion in 2004-05, an increase of £6.7 billion on last year and double the budget in 1997.
She added: “Today’s study shows that the vast majority of NHS bodies are managing the extra resources well but it also very clearly indicates
that in a minority of organisations, leadership and financial disciple are weak. This needs to be tackled head-on and with a sense of urgency.”
NHS chief executive Sir Nigel Crisp will be writing to the leaders of the most financially challenged NHS trusts to check on their progress in implementing reforms.
Liberal Democrat health spokesman Steve Webb urged the Government not to destabilise the NHS with “unnecessary or rushed reforms”.
“In any market you get winners and losers, and we are already starting to see trusts in financial difficulties because of the Government’s market-based reforms,” he said.
“Letting hospitals go bust is no way to run the NHS. Ministers are rushing through reforms based on scant evidence and little consultation. This obsession with market forces and balance sheets risks distracting hospitals from their primary responsibility, delivering quality patient care.”
Conservative Shadow Health Secretary Andrew Lansley said: “The Government claims to be spending record amounts on the NHS, but the money is not getting through to services. Hospitals and health trusts are experiencing even worse deficits than in previous years.
“Extra costs, bureaucracy and waste are eating up the additional resources while deficits affecting the frontline are causing cutbacks to patient services. The Labour Government have been utterly complacent over this.”
