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“Trusts have been successful at reducing expenditure on agency nursing staff but there is scope to obtain greater value for money by improving the procurement and management of all temporary nursing staff. It is very important that trusts further develop their understanding of their demand for all nursing staff as the ability to be able to manage the workforce effectively will play a major part in determining whether trusts remain in financial balance under Payment by Results.”

‘There is no single cause of the deficits at NHS bodies and no single answer either. There are some systemic issues that have contributed to the deterioration in financial performance, but there are also local failings. The Commission is exploring this in more depth in two forthcoming reports – the review of the NHS financial management and accounting regime requested by the Secretary of State and Learning the Lessons from Financial Failure. Both of these reports will make recommendations to help put the NHS back onto a firmer financial footing.

‘One thing is clearer than ever: financial balance can only be achieved with commitment from finance staff, managers, clinicians and Board members. However the requirement for high quality, timely accounts must not be overlooked. There have been acknowledged weaknesses in the accounts of the NHS bodies and in 2004-05 there was evidence of inappropriate adjustments or omissions in more than a fifth of the accounts submitted for audit by NHS bodies. We have worked with NHS bodies, the Department of Health and NAO to address the weaknesses and hope to see an improvement in the quality of the 2005-06 accounts.’

Sir John Bourn, head of the NAO, said:

‘Many NHS bodies are managing their finances well, but it is worrying that a significant number are in deficit. All parts of the NHS and staff throughout the organisation must act together and take responsibility for improving financial management.

‘It is especially vital that financial control is not weakened as NHS bodies prepare for the impact of mergers and restructuring, as well as implementing Payment by Results and other national initiatives. It is also imperative that NHS bodies improve the quality of information underpinning both management and annual accounts. As well as supporting NHS Boards in informed decision-making, this will also allow local and national NHS accounts to be prepared, audited and published sooner.’

“The Department of Health is now on track towards providing high-quality out-of-hours services. I am glad to see signs that Primary Care Trusts are getting better at managing their providers.

“However, it is disappointing that there were so many problems in starting the new arrangements and I am concerned that so few providers are meeting their targets for the time it takes respond to patients. And the continuing confusion over whether out-of-hours is supposed to be an urgent or unscheduled care service should be dispelled without delay.”

“I have qualified the accounts of NHS Direct because of a lack of evidence that correct payments have been made to staff.

“NHS Direct has taken steps in year to centralize its accounting and payroll systems. It is vital that it continues to strengthen internal controls and ensures that proper accounting records are maintained in the future.”