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“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.”

“The human and financial costs of clinical negligence are enormous. At the end of March 2000, some 23,000 claims for clinical negligence were outstanding. The net present value of known and anticipated claims at that date was £3.9 billion. Many claims have been outstanding for a long time, and the present system is a slow and inefficient way of resolving small and many medium size claims.

“The Litigation Authority and the Legal Services Commission are making improvements to the way they handle claims. Implementation of our recommendations should provide patients with improved access to remedies, speed up settlements and cut legal costs.”