NHS £1.7bn Surplus v. Treatment Charges
posted: 21/05/2009
NHS bosses were urged to pump more money into frontline services after it was revealed that the NHS has amassed a record cash surplus of £1.7bn. The underspend, confirmed by the Commons public accounts committee yesterday, represents a rapid turnaround in health finances: three years ago, the organisation recorded a £500m deficit.
The exceptional figures delivered under the current health secretary, Alan Johnson, are in contrast to the experience of his predecessor, Patricia Hewitt, who was slow handclapped at a nurses' conference during a debate about NHS debt.
Large reserves, however, constitute a different form of political embarrassment. "It's not the case that the bigger a surplus the better," said Edward Leigh, chairman of the PAC. "Patients lose out if too much NHS funding is sitting unspent in bank accounts.
"The needs here and now of patients in parts of the country for drugs and better quality care must not be forgotten. [The surplus is] almost twice the amount planned and over £1bn more than the surplus generated in the previous year."
Janet Davies, of the Royal College of Nursing, said: "A £1.7bn surplus is £1.7bn which must be spent on improving patient care and the government must make clear how it plans to use this money. While we are encouraged that the NHS is on a firm financial footing, it is absolutely vital that this surplus goes straight to frontline services."
The £1.7bn represents almost 2% of annual NHS expenditure, the PAC report says. The cash came from a number of sources, including a fall in the price of generic medicines and the underuse of contingency funds. Savings were also made by changing the habit of trusts spending all of their budget at the end of each year "regardless of whether it [was] in the most appropriate fashion".
HIV treatment charges for migrants
Aside from using the money to help meet the costs of providing HIV treatment for all, following the minister's recent announcement of a review of the rules in the House Of Lords, more investment is sorely needed in HIV prevention.
Even more surplus expected this year
The NHS is forecasting that it will return a similar surplus in the year 2008-09. The Department of Health will return part of the unspent funds to the NHS at an annual rate of £400m for the next two years, providing cushioning for the economic downturn. The NHS is receiving above-average annual budget increases of 5.5% up to and including 2010–11.
One immediate threat looming over balance sheets is a change in accounting procedures which will add in £10.9bn of liabilities from the government's public finance initiatives (PFI). These were deliberately kept off government and NHS accounts, but cannot be hidden any longer.
"The Treasury has given a commitment that this will not adversely affect NHS funding in the period up to 31 March 2011," the PAC said. "There are, however, no guarantees beyond that point."
The NHS chief executive, David Nicholson, yesterday said the organisation would have to prepare for leaner times in the future.
The organisation is expected to deliver efficiency savings in the order of £15bn over the three years after 2011.
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