Press Release - NHS (England) Summarised Accounts 2006-07:
Achieving financial balance in the NHS
11 December 2007
The NHS as a whole achieved a net surplus of £515 million in
2006-07, compared with a net deficit of £547 million in 2005-06,
according to a report out today by the National Audit Office.
The NHS Summarised Accounts show that in 2006-07 287 NHS
organisations reported a gross surplus of £1,431 million (2005-06:
357 organisations reported a gross surplus of £765 million); offset
by 82 NHS organisations reporting a gross deficit of £917 million
(2005-06: 179 organisations reported a deficit of £1,312 million).
The NHS is currently forecasting a net surplus of £1,790 million
for 2007-08.
The gross deficit is concentrated in a relatively small number
of NHS organisations; some 80 per cent of the gross deficit of £917
million arises from just 10 per cent of organisations. The NAO
found that for a small but significant number of Primary Care and
NHS Trusts, restoring financial balance remains a significant
challenge.
In total, Strategic Health Authorities reported a net surplus of
£962 million for 2006-07 (2005-06: £526 million surplus), Primary
Care Trusts a net deficit of £370 million (2005-06: £492 million
deficit and NHS Trusts a net deficit of £77 million (2005-06: £581
million deficit).
For Primary Care Trusts (PCTs), 28 per cent reported a deficit,
totaling £636 million (2005-06: 36 per cent reporting a deficit
totaling £616 million). Although the proportion of PCTs reporting
balance or a surplus increased in 2006-07, the overall net deficit
is due to the financial performance of a minority of organisations.
And the size of the deficits in those organisations with the
poorest financial standing is increasing year on year.
There is a variation in performance between types of NHS Trusts.
Acute trusts reported a deficit of £133 million compared to mental
health and learning disability trusts which reported a surplus of
£47 million. The number of NHS Trusts reporting a surplus is
increased in 2006-07 and there has been a significant reduction in
the number and size of deficits reported between 2005-06 and
2006-07.
In order to achieve financial balance in 2006-07 the Department
of Health and the NHS introduced a number of initiatives. Risk
reserves were established at Strategic Health Authority level by
reducing allocations to Primary Care Trusts ("top slicing") and by
identifying savings from central NHS programme funds. Underlying
financial problems were identified and support provided to those
organisations with the most significant financial problems. And
tighter performance management and more transparent financial
reporting were instigated.
The report concluded that those organisations that perform best
financially also tend to provide a higher quality of care for
patients.
There are a number of challenges ahead for the Department and
the NHS if they are to achieve longer-term financial stability.
- The Department and Strategic Health Authorities need to assist
those NHS organisations that remain in deficit. Improving the
financial performance of those organisations with significant
deficits is essential for embedding good financial management
across the NHS as a whole. These organisations also need to
replicate the improvements in quality already achieved by the rest
of the NHS.
- Complexities within the NHS present future financial
challenges. Payment by Results and Practice Based Commissioning
reduce certainty around income for NHS Trusts and challenge PCTs to
secure the services needed while managing within budget. Ongoing
restructuring will bring further costs in 2007-08.
- The Department has identified the opportunity for significant
savings through increased productivity. NHS organisations must
focus on releasing these savings while continuing to improve
services for patients.
Sir John Bourn said today:
"The NHS achieved a surplus in 2006-07 after a period of
rising deficits. But this is not a time to be complacent; both the
Department and the NHS accept that a number of challenges
remain.
"The national picture is one of financial balance, but
there remains a relatively small core of NHS organisations that
continue to report significant deficits. There is no doubt that
good financial management is linked to good patient care in the
long term. A failure to keep a tight grip on financial performance
will undermine service quality, an area in which the NHS must not
let patients down."
Notes for Editors
- Press notices and reports are available from the date of
publication on the NAO website, which is at www.nao.org.uk. Hard
copies can be obtained from The Stationery Office on 0845 702
3474.
- The Comptroller and Auditor General, Sir John Bourn, 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.
- The figures quoted as comparisons for numbers of organisations
in surplus in 2006-07 and 2005-06 exclude those organisations
breaking even: 2006-07 three organisations; 2005-06 13
organisations. Please see paragraph 3 and figure 6 of the
report.
Press Notice 60/07
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