Hewitt admits NHS debts of £512m

NHS trusts overspent by £1.28 billion last year, but savings in some areas meant the total deficit across the health service was £512 million, Patricia Hewitt has announced.

The unaudited figure is less than the £620 million predicted in December last year, but almost double the £216 million deficit last year – despite record investment in the NHS.

But as she presented the annual NHS report to MPs today, the health secretary was keen to point out that 70 per cent of the debts were in just 11 per cent of trusts, and that seven out of ten trusts were operating within their budgets.

Ms Hewitt insisted that patient care was “improving everywhere”, thanks in part to more and better paid staff, and cited improved cancer survival rates and reduced waiting times as proof the investment was having an effect.

However, shadow health secretary Andrew Lansley insisted the deficits were caused by government targets, which distorted the way resources were spent, overspending on staff pay and a mismanaged IT programme which was already two years late.

“This is a government that has let the NHS down. Policy failures and mismanagement have left healthcare in serious deficit. Staff are offering improved patient care, but they complain that it’s not because of the government, but in spite of the government”, he said.

Mr Lansley’s comments come after the chairman of the British Medical Association’s consultants committee today warned that the government’s NHS reforms were not working. Ministers must stop interfering and let clinicians get on with their jobs, he said.

Dozens of NHS trusts have announced job cuts in recent months as they struggle to improve their finances, leading to warnings that the pace of reform has left the health service struggling to cope.

Ms Hewitt said she understood “difficult decisions have to be made”, but insisted today’s annual report showed the health service was treating more patients and saving more lives than ever before, adding: “It shows the NHS is on the right track.”

She stressed that action was being taken to help those struggling to balance their books get back into the black, in the form of financial hit squads, and promised that by the end of the next financial year, the NHS as a whole would not be in deficit.

But Mr Lansley condemned Ms Hewitt’s speech to the Commons as an “excursion into a parallel universe”, and urged her to “come back down to earth” and realise the NHS was in financial trouble for the fourth year in a row.

He noted that today’s figures are yet to be verified by auditors, and said that last year, the draft figures varied from the audited ones by 80 per cent – or £112 million.

Mr Lansley also warned that much of £765 million surpluses, which offset the £1.28 billion gross deficit, were from cuts to training budgets, which meant fewer posts for trainee doctors and nurses, and key services such as mental health.

The Liberal Democrats also condemned today’s announcement, with health spokesman Steve Webb noting: “It takes incredible mismanagement to spend huge investment on the NHS and come back to the House and admit the worst deficits in years.

“What is happening is breakneck NHS reform because the prime minister has said he won’t go until the NHS is sorted out.

“This is not measured organised change, or long-term planning, but emergency cuts packages to deal with an emergency financial crisis. That is no way to run the NHS.”