Magazine article Public Finance

NHS Deficits Rise but 'Still on Track to Break Even'

Magazine article Public Finance

NHS Deficits Rise but 'Still on Track to Break Even'

Article excerpt

NHS finances deteriorated by £ 112m between July and September this year, the latest financial performance report reveals.

With six months to go, the NHS is now forecasting a net deficit of £94m by the end of this financial year - compared with a forecast net surplus of £18m at the end of June and an actual net deficit of £540m at the end of 2005/06.

But in a November 9 report. Department of Health finance director Richard Douglas said that the NHS was still on track' to break even by the end of the year, as additional savings of £180m had not yet been factored in.

He went on to say that the NHSs financial objective was for 'as many NHS organisations as possible' to live within their monthly budgets by the end of March 2007.

But Janet Perry, head of NHS financial management at the DoH, told Public Finance that 'although we're expecting most NHS organisations to break even, "most" could mean 51%'. Even if 49% of the 175 organisations currently forecasting deficits did not recover, she was still confident that surpluses elsewhere would balance the NHS as a whole.

Perry had been speaking at the Chartered Institute of Management Accountants' conference on the NHS in transition, where she warned delegates that the DoH s long-awaited response to the Audit Commission's critical report on the NHS's accounting regime - expected before Christmas - would not give indebted trusts any quick fixes'.

Under the current resource accounting and budgeting rules, organisations that overspend one year suffer a 'Rab deduction" equivalent to their overspend the next. …

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