Leading article: The need for radical surgery

After the sudden departure of the head of the NHS, Sir Nigel Crisp, one question is left hanging in the air. What can his successors do to bring the spiralling NHS deficit under control that he had not already tried?

For the best part of four years following his appointment to the top job in November 2000, Sir Nigel presided over an NHS that was growing at a record rate and hit all its targets, including cutting waiting lists to a historic low and reducing heart and cancer deaths.

Tony Blair, the Health Secretary, Patricia Hewitt, and leaders of NHS organisations paid tribute to his achievement yesterday. But when things started to go wrong in the middle of 2005, the writing was on the wall. Having lost the confidence of ministers and of senior managers in the health service, Sir Nigel knew there was no option but to fall on his sword.

Despite all efforts to curb the overspending, the overall NHS deficit was heading in the wrong direction at the start of this year when it was projected at £790m, up from £620m last October, by the end of this month. That leaves Sir Nigel's successors - his job has been split between an experienced NHS manager, Sir Ian Carruthers, and a senior civil servant, Hugh Taylor, while the Health Department searches for a permanent replacement - between a rock and a hard place. They must deliver on the Government's pledges, notably to cut waiting times to 18 weeks by 2008, while balancing the books.

A sign of the tougher financial regime that is now in prospect comes in the memo from John Bacon, head of NHS finance, telling London primary care trusts that 3 per cent of their cash allocation for next year will be held back to fund any future deficits. Hospitals are warned that if they progress too fast in cutting waiting lists they will not be paid. And the £1.1bn redevelopment of Bart's and the London, the NHS's biggest privately financed project, given the go-ahead by Patricia Hewitt yesterday, is to have three wards mothballed, saving £20m year, pending proof that they are needed.

But stricter financial discipline is only part of the answer. In many of the trusts facing the biggest deficits, there are long-standing structural problems that have for too long been avoided - hospitals or departments in the wrong places that call for mergers and closures to improve efficiency.

Surrey and Sussex, West London, Hertfordshire, Avon and Gloucestershire, Kent, Lancashire and Yorkshire are among the areas where radical surgery is needed. The Prime Minister urged local managers to "grasp the nettle" in reshaping services in a recent speech. Until they do, a long-term answer to NHS overspending will evade them.