NHS set for major underspend
pharmafile | November 22, 2007 | News story | |Â Â Â
Efforts to save money in the NHS have proved so successful that the health service is set to underspend its budget by £1.8 billion.
The government says any money not spent this year will be put back into the service, but the forecast of a huge cash surplus has prompted accusations of boom and bust in the NHS.
The situation is a rapid turnaround from two years ago, when the NHS recorded an overall overspend of £547 million, and has only been made possible by a number of swingeing financial measures.
Around £729 million of the predicted total was removed directly – 'top sliced' – by strategic health authorities from PCT budgets at the start of the year and kept in reserve to deal with financial problems later on.
The predicted £1.8 billion represents only about 2% of the total NHS budget, but the underspend has nevertheless attracted criticism.
John Appleby, chief economist at the King's Fund told the BBC the size of the surplus was not necessarily a healthy sign for the management of the service.
"If the NHS does end up with a significant underspend at the end of the financial year, that will be a real loss to patients," he said.
David Stout is the director of the NHS Confederation PCT Network, which represents England's PCTs (which control most of the money). He says the surplus is not a cause for concern.
"In the context of the overall NHS budget, this is not a huge surplus," he said. "We have been asked to make a prudent level of surplus in case of contingencies and unexpected costs."
He did, however, call on the government to clarify whether or not PCTs delivering a surplus would be allowed to keep the money for the following financial year.
But opposition parties have attacked the surplus, saying it pointed to continuing financial mismanagement.
Shadow health secretary Andrew Lansley said: "The government's approach to the NHS has been one of boom and bust. They lost financial control and spent two years clawing back on NHS budgets.
"Top-slicing PCTs and holding large surpluses at the centre is undermining health service planning across the country and creating inefficiencies.
"These figures suggest that the NHS still lacks the kind of financial control that is necessary for greatest efficiency and effectiveness."
Liberal Democrat health spokesman Norman Lamb said the figures showed the NHS was suffering from 'the economics of the madhouse', and blamed the fluctuation between debt and surplus on over-centralised power.
