Press Release - Financial Management in the NHS: Report
on the NHS Summarised Accounts 2007-08
16 December 2008
The NHS reported a surplus of £1.67 billion in
2007-08. According to a report jointly prepared by the Audit
Commission and the National Audit Office and published today, the
surplus achieved reflected good use of resources rather than a
failure to deliver healthcare. The Department of Health (DH) has
given a commitment that the NHS will be able to spend the surplus
in future years.
However, the surplus was significantly higher
than the original forecast of £916 million and more than three
times that recorded in 2006-07 (£515 million).
According to today’s report in 2007-08 only 11
out of 340 NHS organisations, or 3 per cent, reported a deficit,
compared with 22 per cent in 2006-07. In 2007-08, strategic health
authorities (SHAs) delivered a surplus of £903 million, primary
care trusts (PCTs) a surplus of £391 million and NHS trusts a
surplus of £380 million. This is a key change from 2006-07, which
saw the PCT and NHS trust sectors still in deficit overall. NHS
foundation trusts delivered a further surplus of £395 million.
There were cash balances in the NHS totalling
£0.9 billion at the financial year-end. NHS foundation trusts held
an additional £2.3 billion. Auditors found that the capital
underspend (see notes for editors) in 2007-08 was 22 per cent (£521
million) compared to a 43 per cent underspend in 2005-06, and a 40
per cent underspend in 2006-07.
Auditors’ findings show that the quality of
financial management in the NHS improved overall during the year
and performance has improved across all NHS sectors. NHS
organisations made good progress in meeting national healthcare
targets and the quality of healthcare, as rated by the Healthcare
Commission, improved.
In 2006-07 the DH designated 17 NHS trusts as
financially challenged. Seven trusts continued to be so classified
at 31 March 2008. More work will need to be done by these
organisations, in conjunction with their SHAs and the DH, to
achieve sustainable financial operating performance.
The DH and NHS are facing a number of
challenges for 2008-09: including changes to the financial strategy
for the NHS, changes to the financial reporting framework and
timetable, and further system reforms under which a quality element
will be introduced into how NHS organisations are funded. The
surplus generated and better financial management should, if
maintained, help with the financial implications of meeting these
challenges.
Steve Bundred, Chief Executive of the
Audit Commission, said:
"The surplus of £1.67 billion is equivalent to
about one week’s funding for the whole NHS. The organisations in
the NHS are performing better financially and this surplus has
created an element of certainty for financial planning that has not
existed in recent years. This is especially reassuring given
current financial pressures throughout the economy.
"Auditors have found matters to be addressed,
such as localised accounting issues, and there are long-standing
financial problems affecting a minority of trusts. The significant
challenges for the NHS next year are in meeting new International
Financial Reporting Standards and tougher deadlines on closure of
accounts, but it looks as though most NHS bodies are well placed to
cope."
Tim Burr, the head of the National
Audit Office, said:
"Good financial management is not just about
achieving a surplus. It is also about meeting delivery targets
within the resources available. The surplus was generated through
good financial management: NHS bodies delivered more cost savings
than expected while still delivering against targets and improving
the quality of healthcare. But better forecasting of the outcome
could enable resources to be deployed more flexibly in-year."
Notes for Editors:
- The NHS surplus, as reported in the Summarised Accounts,
reflects the aggregate financial performance of SHAs, PCTs and NHS
trusts. Paragraphs 2.27 to 2.30 of the report provide further
detail on the financial performance of NHS foundation trusts.
- The Audit Commission’s Auditors’ Local Evaluation, published in
October 2008, details the performance of NHS bodies against the
Audit Commission’s minimum standards for both financial management
and financial reporting. This shows that 96 per cent of NHS bodies
met or exceeded these standards.
- In 2007-08 the NHS had resources of £4.6 billion available for
capital expenditure, comprised of allocations from the DH of £4.2
billion and planned asset sales of £0.4 billion. In the NHS,
capital and revenue budgets are kept separate and transfers of
unspent resources between the two are not permitted.
- The NHS accounts for its income and expenditure on an accruals
basis. The overall surplus reported is the difference between the
income recorded and the expenditure incurred by the NHS, regardless
of whether cash has been received or a payment made. The cash
surplus is the total of cash held by NHS bodies. £0.9 billion is
held by SHAs, PCTs and NHS trusts and £2.3 billion is held by NHS
foundation trusts. Most of this cash is held in the government’s
Office of the Paymaster General account.
- The Audit Commission is an independent watchdog, driving
economy, efficiency and effectiveness in local public services to
deliver better outcomes for everyone. The Commission’s work across
local government, health, housing, community safety and fire and
rescue services means that it has a unique perspective. It promotes
value for money for taxpayers, auditing the £200 billion spent by
11,000 local public bodies. As a force for improvement, the
Commission works in partnership to assess local public services and
make practical recommendations for promoting a better quality of
life for local people.
- The Comptroller and Auditor General, Tim Burr CB, is the head
of the National Audit Office which employs some 850 staff. He and
the NAO are totally independent of government. He certifies the
accounts of all government departments and a wide range of other
public sector bodies; and he has statutory authority to report to
Parliament on the economy, efficiency and effectiveness with which
departments and other bodies have used their resources.
National Audit Office media
enquiries
Barry Lester: 020 7798 7937 or 07748
181 692
Audit Commission media
enquiries
Nigel Watts: 020 7166 2129 or 07813
315538