Labour's mismanagement has led to NHS deficits

Mismanagement at all levels of the NHS in England has led to the current multimillion pound deficit, a committee of MPs has found. The Commons health select committee said existing deficits were made worse by the cost of new staff pay deals and the expense of meeting NHS targets. Last year's NHS deficit was £547m.

The committee said historic deficits, long hidden, were revealed when the government changed the rules so trusts could not underspend their capital budget to subsidise current spending.

But it said the government fuelled the problem by agreeing to new pay deals for doctors and nurses using estimates of the cost which were "hopelessly unrealistic".

In addition, meeting national targets such as the requirement that no patient should wait more than four hours in A&E had been costly.

Changing targets at short notice also placed unnecessary financial costs on trusts, the report said.

It attacked short-term measures being used by the government to address deficits.

And it said raiding staff training budgets was "unacceptable", and warned such cuts were affecting staff morale and could damage the quality of the workforce.

MPs also warned other "soft targets" such as mental and public health service budgets should not be raided to ease trusts' deficits.

And they said the creation of a new contingency fund to help out failing trusts and top-slicing primary care trusts' (PCTs) budgets should only be temporary measures.

The report said: "The most basic errors have been made; there are too many examples of poor financial information, inadequate monitoring and an absence of financial control."

It said the NHS may well be in balance as a whole by the end of this financial year, but warned trusts with the highest deficits were unlikely to be in the black within the next five years.

The MPs say the government should change the NHS's accounting system, which both reduces a trust's income by the amount of its deficit while also asking it to repay the sum owed. (Please see the Health Direct blog on Thu 14 Dec 06- Labour's unsustainable NHS resource account and budgeting (RAB) rules to stay for further explanation.)

Kevin Barron, chairman of the committee, said: "I hope the rush for balancing all NHS budgets does not mean further top-slicing next year, particularly in areas of high health inequalities."

Both the British Medical Association and the Royal College of Nursing condemned the decision to raid training budgets.

And Professor Stephen West, who is on the Council of Deans and Heads of UK Health and Nursing Professions, said: "The universities and statutory bodies were advised that this was a one-year blip where they needed to make some significant reductions.

"Unfortunately it would appear that this was not, and that in order to balance the books there is going to have to be a two or three-year period of reductions in education and training."

Shadow health secretary Andrew Lansley warned financial problems were leading to cutbacks when reform should have led to service improvements.

Sandra Gidley, Liberal Democrat health spokeswoman, said targeting "soft targets" such as staff training and mental health services was a "false economy", the effects of which would be felt for years to come.

Taken from:
http://news.bbc.co.uk/1/hi/health/6172423.stm

On Jan 24, 2006 Health Direct warned that even NHS chiefs admit patient care is suffering because of cost-cutting when the financial crisis gripping the NHS is deepening and hitting patient services, with operations cancelled, appointments deferred and wards closed, according to two reports. NHS managers are struggling to reduce ballooning deficits that have swelled to £1.2bn. Managers have been freezing jobs, cancelling training and cutting up to 4,000 posts, the Royal College of Nursing says. A separate survey of NHS chief executives found three-quarters believe patient care is suffering as a result of cuts that are imposed to balance the books.

Almost two-thirds said they had been forced to close wards to bring their finances under control and nearly half said they had postponed building work.

Barbara Tassa, chair of the RCN public policy committee, said: "Patients are suffering and nursing posts are being lost because of the deficits crisis in the NHS and this is unacceptable. "The Government has repeatedly said that action taken by trusts to balance their books would not affect patient services. This is now clearly not the case.

"We are seeing a situation which is deteriorating. We have real concerns about the stability of NHS finances, especially in view of the roll-out of reforms such as patient choice and payment by results."

NHS chief executives blamed the Government for the high level of debt, saying inflexible targets on cutting waiting times, costly pay awards for consultants and GPs and the growing use of the private sector had put the NHS in jeopardy.

The NHS Confederation, which represents trusts and health authorities, said deficits were falling as measures taken to cut costs, such as shutting wards, began to take effect. Gill Morgan, chief executive, said: "It is worse at the moment because of the Government's highly ambitious programme [to cut waiting lists and modernise services].

"In many places, the NHS tried to run faster but you can only run faster for so long. There was pressure on pay and higher activity. Now people are taking action to bring the deficits down. What you are seeing in terms of shut wards are the symptoms of efforts to achieve financial balance.

"It will get better financially towards the end of the financial year but it will get worse for patients."

Andrew Lansley, the shadow Health Secretary, said: "Patricia Hewitt has been in denial over the consequences of NHS financial deficits, any problems she has blamed on local decision-making. It is time for her to take responsibility for the consequence of the Government's polices."