Steve Richards: Soon spending on the NHS will cease to grow. That's when we'll see the real crisis

The bad news is that parts of the NHS are in financial crisis. The good news is that we know about the bad news. As a supporter of the NHS, I am delighted the localised fragilities are being exposed. Under such intense scrutiny, the poorly performing trusts will have no choice but to improve.

In the past, the incompetent managers had an alternative to getting their act together. They could keep their heads down and wait to be rescued. Now the more intense scrutiny means they will not survive for very long unless they change their ways. Presumably that is why Sir Nigel Crisp has vacated his over-mighty position as chief executive of the NHS and permanent secretary of the Department of Health.

This must be the longest job title in the history of Whitehall. The length reflected the impossibly complex nature of the task. Even so, Sir Nigel could hardly claim that his stretched leadership had been a triumph. Under the newly bright glare, he has gone.

Some have interpreted his departure as a neat way for the Health Secretary, Patricia Hewitt, to pass the buck, giving her the opportunity if she so wished to utter the words in that discordantly soothing tone of hers: "The NHS is falling apart, and therefore Sir Nigel has resigned." The opposite is closer to the truth. Sir Nigel's departure leaves her more exposed. She cannot blame him as bad headlines whirl around her head. If she had wanted to make life easier for herself, she would have kept him there as a convenient shield.

The bad headlines are inevitable. Getting damaging headlines out of stories relating to the NHS is as easy as doing so from a press conference conducted by Chelsea's manager, Jose Mourinho. It does not take much before all hell is breaking loose. Even the lacklustre Iain Duncan Smith managed to make waves for days by citing the case of a single, neglected elderly woman in Archway. When it comes to the NHS, a human drama can become a misleading symbol for the entire service.

Now the more transparent financial problems of some hospitals form the distorting backdrop to the potentially damning question: Where did all that additional funding go? The question is posed as if we were in the midst of a mystery that demands the services of Sherlock Holmes. Yet if this were a detective story, the answer would be on page one. It would not go very far. We know where the money went.

Quite a lot of the additional cash has gone on pay increases. This is cited as if in all cases there has been a dreadful error. Yet some of the awards were justified and necessary. In the late 1990s, several right-wing newspapers campaigned for rises in nurses' pay. Now that the nurses have got a decent income, the same newspapers protest about the waste of money.

Yet other awards were reckless in their generosity. GPs are pinching themselves still between their lavish luxury holidays. They have become the most highly paid doctors in Europe for doing less than they used to. In addition, conflicting government reforms have caused chaos. For example, some hospitals face the fixed cost of paying cash raised from the Private Finance Initiative while at the same time their annual budgets are no longer predictable or reliable.

On the whole, though, there is a simple explanation for the localised crises. Some hospitals are poorly run. The erratic patterns of financial chaos highlight the need for the centre to retain some control. The Government takes the political flak by raising the taxes to pay for the NHS. When some hospitals spend recklessly, it is the Government that gets the blame. Yet in between these two highly charged procedures, the fashion is for government to step aside and let the hospitals get on with it. Finding the balance between the centre and the local is the key, the source of much tension within the Government during the second term and to some extent in this third term, too.

Mostly, though, the additional money is making a difference. It has not disappeared. There is no detective story to solve, even on page one. The investment has made significant improvements to the NHS. This should be a statement of the obvious, but needs constant reiteration. For some reason, it is widely accepted that in order to improve homes it is necessary to spend money on them.

At weekends, DIY stores are crammed with people willing to spend a small fortune in order to make a difference to their kitchens. Yet some of the same people question whether additional investment is required in public services, as if doctors, nurses and teachers will descend from the skies by magic.

Recently I met someone who had made use of a new NHS walk-in centre on Christmas Eve. This person could hardly believe his good fortune, being able to walk in and see a doctor without complicated prior arrangements. I told him that this was the result of increased spending by the Government. He looked at me knowingly as if I was deranged. Presumably, he was one of those who thought that the improved facilities had descended from the skies.

Increasingly, though, the fantasists are in a minority. One of the Government's achievements has been to increase spending significantly without too many voters squealing with horror. The achievement is measured by the Conservatives' determination to match NHS spending levels. The Conservatives claim that they would spend the money more efficiently, but their unproven protestations will not purge memories of the floundering NHS before 1997, the waits that lasted years, the strain on the system when anyone caught 'flu.

The challenge for the Government will not come from the Conservatives or from the Liberal Democrats with their fetish for even more iniquitous "localism". The political and practical problems will come from the Government's own future spending plans.

The rate of increase is set to fall substantially. Shortly we will climb to the peak, the heights that other countries in the EU have been experiencing for decades, at which point we will tamely start to climb down to a more lowly position. Apparently the fourth strongest economy in the world cannot cope with such giddy heights.

Over the next year, there will be eruptions of localised problems. But they will come and go in a context of massive increases in spending, and reforms that will expose weakness and, in some cases, address them. The problems will start for real when the spending diminishes. Health experts ranging from the Labour peer Lord Winston to leading representatives of the surgeons tell me the gulf between demand and the level of resources will get much bigger again towards the end of the decade. The hidden political question of the moment is not whether the Government is spending too much, but whether in the future it is prepared to spend enough.

s.richards@independent.co.uk