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.