Magazine article Public Finance

Cash-Strapped NHS Manages to Underspend £500M

Magazine article Public Finance

Cash-Strapped NHS Manages to Underspend £500M

Article excerpt

Health professionals have reacted angrily to news that the NHS 'underspent' by around £500m last year as it attempted to recover its £547m deficit, claiming patients and staff have suffered as a result

Their claims came as official figures showed a 22% increase in the rate of patients being readmitted into hospital within a month of discharge - raising concerns that NHS reforms and financial cutbacks have led to inappropriately speedy discharge of some patients.

Sam Everington, acting chair of the British Medical Association, said: "We know that some trusts must have unnecessarily cut back on services to patients, such as reducing operating lists and clinics, closing wards, cutting education and fraining budgets, and making staff redundant'

Everington was responding to reports that the early 2006/07 financial returns from strategic health authorities suggested that the NHS had underspent its budget last financial year by a net £457m. But a senior source told Public Finance that figure was 'no surprise'.

In fact the figure almost precisely matches the sum estimated by the Department of Health in its third-quarter financial report published in March 2007, and in financial statements shortly after that

They explained that although the NHS was heading for a £437m overspend, that would be balanced out by a controversial £450m 'contingency fund', hewn in part from public health and training budgets.

The contingency fund was returned to strategic health authorities on March 28, nominally turning an anticipated £437m overspend into a £13m surplus.

On the same date, Health Secretary Patricia Hewitt announced that the practice of deducting 'resource accounting and budgeting adjustments' from overspending NHS trusts was being 'reversed'. This meant a further £178m was returned to 28 NHS trusts that suffered Rab deductions at the beginning of 2006/07, following their overspending in 2005/06.

That brought the NHS surplus nearer to £191m. But a further £300m was then also returned to primary care trusts by SHAs which had 'top-sliced' a total of £1,114m from PCT budgets at the beginning of the financial year to balance out overspending elsewhere. That brings the likely underspend to £491m - close to the net figure reported in recent SHA board meetings.

ADoH spokeswoman said: 'The NHS ended 2005/06 with a deficit of over £500m. …

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