NHS Budget problems resolved

The Guardian reports today that their investigations show that the NHS is no longer in deficit, and has a modest surplus instead.

The surplus of half a billion pounds made by the NHS in England during the last financial year was almost as big as the deficit for 2005-06 that caused so much political anguish for Patricia Hewitt 12 months ago. When the results are published next month, they will show all but two of the 10 strategic health authorities substantially underspent their allocations.

This was not a deliberate move to pay back the Treasury the money borrowed during previous excesses. That account had already been squared and the NHS was trying its best to break even.

The Government refused to comment on the size of the surplus ahead of the official figures next month:

"Any surplus will not be wasted," a spokesman said. "It will be invested in future services for patients. Trying to balance the books perfectly is like landing a jumbo jet on a postage stamp. It's hard to come in bang on zero. Two years ago the health secretary asked NHS organisations to eliminate the deficits. They all responded, but a minority of trusts will take a bit longer to turn around. It was a tremendous effort."

..........Gill Morgan, the chief executive of the NHS Confederation which represents managers and trusts, said a half-billion pound surplus amounted to less than 1% of the health service's £75bn turnover. "This shows how hard everyone worked for the collective good of the NHS. We need a debate about whether the service should be allowed a variation of plus or minus 1% as long as we achieve balance over three years, " she said.


I would say that all-in-all the public will be pleased with this. The deficits arose because for the first time in about 40 years, each hospital was obliged to run to budget, rather than blithely spending and expecting central government to bail them out if they over-ran. Predictably some NHS staff claimed it was impossible to run to budget (why? every single other organisation in the land manages, whether public or private, as well as households). Tories tried to make capital by claiming that they themselves would never ask the NHS to run to budget but would find extra money instead (from where? tax rises?).

It turns out that hospitals can run to budget, they just needed to learn how. Doing something for the first time is always hard. And now they've learnt, they can keep doing it, indeed it should get easier and easier. This is very important as demographic changes coming up in the next decade will mean more elderly (who are big consumers of health care) being supported by fewer workers. Money will get tight, and it's better that key budget disciplines are learnt now in times of plenty, rather than in the teeth of a possible future crunch. As for the Tories - would you put into power a bunch of numpties who don't believe in holding organisations to their (very generous) budgets? Next thing they'll be telling us that money grows on trees and that you can have more spending than New Labour at the same time as lower taxes. And that pigs will fly.