NHS Crisis - special report

We're spending £94bn on the health service this year, compared with £52bn six years ago... so why are wards shut down, operations cancelled and trusts in turmoil?

Doctors: Half the extra cash has gone on staff pay

Since 1997, NHS spending in the UK has doubled to £94bn this year. Consultants and GPs have had salary increases worth up to 50 per cent over three years, taking the average GP through the £100,000 barrier for the first time, making them the highest-paid doctors in the world outside the US. Nurses have had smaller but still substantial rises.

More than 190,000 extra frontline staff have joined the NHS since 1997. Health is a labour-intensive activity and well over half the extra billions invested - 56 per cent - has been spent on pay and pensions for staff. When the NHS Plan was launched six years ago there was plenty of money but a shortage of staff and capacity. Today, the capacity is there but there is a shortage of cash. Too much has been spent to deliver too little - NHS productivity has not risen in line with the resources. In the end, the NHS has ended up costing more but delivering less value for money.

Hospitals: Big debts left by pre-election spree

Funding increases have averaged more than 7 per cent a year in real terms for the past five years, double the long-term trend. Yet wards are closing, operations are being delayed until the new financial year and outpatient appointments are being deferred or cancelled.

In the run-up to the last election, ministers ordered NHS managers to hit the Government's targets to cut waiting times and increase treatments at all costs. No expense was spared as NHS trusts hired temporary staff and sent patients to the private sector to clear lists. There were "no Brownie points for balancing your books".

Since the election, as the bills have come in, ministers have ordered trusts to curb spending and cut deficits - with inevitable pain. One in four trusts forecasts a deficit by the end of the year, a combined total of £948m. Hospitals built under the private finance initiative have faced hefty repayments on their 30-year leases, adding to the deficit.

Waiting lists: Huge sums spent on hitting targets

Waiting lists, which stand at just under 800,000, are at a record low - 500,000 below their peak in 1998. Hardly anyone now waits longer than six months for surgery, compared with more than 250,000 who had to do so five years ago.

From the start, ministers have seen waiting lists as the litmus test of the Government's success on the NHS. At the 1997 election, Tony Blair pledged to cut the waiting list by 100,000 over the first term of parliament. Within a year, the pledge had become a millstone round many of his ministers' necks, cost hundreds of millions to deliver, and remains as problematic as ever, as the new pledge to cut waiting times to a maximum of 18 weeks from the time of GP referral is due to be met by 2008.

Ministers insist the focus on shorter waits reflects what patients want but safety and quality matter to patients too. The effort to cut waiting times risks bankrupting the service.

Drugs: UK pays over the odds for pharmaceuticals

The NHS spends £176 per head of population on drugs, amounting to £10.5bn, almost double the figure in 1997. That amounts to 12.2 per cent of the NHS budget.

Despite cuts worth more than £1bn in the cost of drugs negotiated by the health department, the UK is paying more for branded pharmaceuticals than most other European countries. France, Italy, the Netherlands, Austria and Belgium all pay up to 20 per cent less.

The UK Government controls the cost of drugs under an agreement with the manufacturers designed to give the companies a sufficient return on their investment while charging the NHS a reasonable price. Balancing the needs of the industry and its contribution to the economy against the needs of the NHS means the NHS loses out. There are further pressures in the pipeline from the cost of new "wonder" drugs, such as Herceptin, coming on stream.