NHS figures show £510m surplus

The NHS made a small surplus in 2006/07, figures unveiled by Health Secretary Patricia Hewitt showed today.

The NHS recorded a surplus of £510 million, the data showed.

However, 22% of NHS organisations are still in debt and unable to balance their books.

The gross deficit of the NHS stood at £911 million, down from £1.3 billion in 2005/06.

To offset the deficit and create the surplus, regional health bosses have been building up cash reserves.

They took millions of pounds from primary care trust (PCT) budgets and held back £450 million from training and public health budgets.

The unaudited figures, which exclude NHS foundation trusts, show that PCTs now account for 69% of the gross deficit, compared with 47% in the year before.

A total of 73% of PCTs broke even or achieved a surplus, with debts found mostly in the east of England, the Government report showed.

The net revenue surplus of £510 million is as a result of gross surpluses being created to the tune of £1.42 billion, set off against total gross debts of £911 million.

In 2005/06, the NHS ended the year £547 million in the red.

Ms Hewitt said: "I want to thank NHS staff who have worked incredibly hard to turn the NHS around while minimising the impact on patients and cutting waiting lists to their lowest level ever.

"If we hadn't taken decisive action to deal with the overspending, the NHS deficit would have doubled again this year.

"Instead, the NHS has a fairer and more transparent financial system than ever before.

"The minority of over-spenders know they have to put their own house in order instead of expecting strategic health authority trusts to bail them out.

"The NHS is now in a strong position to make best use of the extra £8 billion it is getting this year."

Mike Jackson, senior national officer for Unison, said: "We welcome the fact that the NHS is in a stronger financial position, but the £510 million under-spend shows that staff and patients have been put through an unnecessary year of pain, job losses and cuts.

"The Government's knee-jerk reaction to the deficits last year has led to 20,000 job losses and damaged morale and patient services.

"Now is the time to give nurses and health staff the full 2.5% pay award recommended by the Pay Review Body.

"It would cost £200 million and would be a small step towards raising staff morale and recognising the enormous efforts that they have made in delivering high quality patient care despite the squeeze on NHS finances."

Ms Hewitt said nurses would not be getting the 2.5% award in one go.

She said the decision to stage the pay award was based on the whole economy and not on how well the NHS was doing.

Dr Jonathan Fielden, chairman of the British Medical Association's Consultants' Committee, said: "While the NHS may be in credit today, the journey to balance the books has wreaked havoc on the NHS and is a return to boom and bust health economics.

"There have been excessive cuts in service and it will take years to rebuild the trust and collaboration that has been destroyed in the past year.

"Consultants are desperate to lead change and introduce new treatments for patients but they are being hampered by cuts, target and micro-management from Whitehall.

"Patients deserve the highest quality service and the Government needs to work with us to achieve this goal."

University bosses - speaking as part of the Universities UK umbrella body of vice chancellors - condemned the cuts to education budgets which were needed to balance the books.

Professor Janet Finch, chair of the Universities UK health and social care policy committee, said: "On the face of it, today's announcement is good news.

"But take a closer look at the Strategic Health Authorities' 'strategic reserves' and they seem to consist of funds from the education and training budgets.

"If things continue in this way, it will be a disaster for patient care and health service morale.

"Cuts in education commissions now mean fewer qualified staff to care for patients in 2010.

"SHAs are subject to short-term pressures which mean that education and training will always be susceptible to cuts unless the funding is ring- fenced.

"This has been successfully implemented in the case of research and development funding, for instance."

The Liberal Democrats said the figures hid cuts of almost 1,000 training places for medical professionals.

The party said health authorities cut £135 million from training budgets for doctors, nurses and other health workers in order to balance the books.

Health spokesman Norman Lamb said: "The NHS has clawed its way out of overall debt, but at what cost?

"Tony Blair's true legacy on the NHS is one of boom and bust - two steps forward, one step back.

"Over the past year, trusts have made harsh cuts to staff and services and raided training and mental health budgets to meet the Government's political deadline of breaking even this year.

"This problem is far from over. There is still a gross deficit of over £900 million, with a fifth of organisations in the red.

"The Government has also now admitted that 17 trusts are in such heavy debt that they could not afford to repay Government loans.

"With the extra health spending set to end next year, what further cuts will be made? How much more will patients have to suffer?"