Public sector – NHS deficits increase

More than one in three NHS trusts failed to meet 1996/1997 financial duties, helping to drive up deficits across the service by an alarming #288m in 12 months, according to the latest picture of financial management in the NHS.

Trusts are required to break even, earn a 6% rate of return and stay within external financing limits. But 148 of the 429 trusts failed on at least one of these targets in 1996/1997, National Audit Office chief Sir John Bourn revealed this week.

As a result, trusts reported a #50m deficit for 1996/1997, though their accumulated surplus over previous years was #307m. Health authorities recorded a #238m deficit, with #791m accumulated.

The Healthcare Financial Management Association put the blame on underfunding.

An NHS spokeswoman said problems may have arisen from a combination of funding and weak financial management.

She stressed, though, that the position had improved, with combined deficits cut from #459m in 1996/1997 to #171m last year, while the NHS Executive issued ‘firm guidance’ on meeting financial targets.

Bourn qualified one account – #1.5bn in funds held in trust – but said: ‘Auditors did not identify any actual losses.’

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