NHS ‘coped well with cuts but faces challenge’

A study by the Audit Commission states the vast majority of NHS trusts successfully balanced their books last year, while saving a total of £4.3bn through measures such as increased productivity, limits on pay and cuts to staffing.

But many savings were one-off measures which cannot be repeated, it concluded, meaning NHS organisations now face a challenging 12 months to keep finances under control while further cutting back spending.

The Government has said the NHS must save a total £20bn by 2015 – an average of £5bn per year, five per cent of its annual budget.

One local Primary Care Trust (PCT), covering North Yorkshire and York, was singled out for criticism for its “unrealistic and inadequate” savings plan. It was among 12 per cent of PCTs nationwide whose value-for-money conclusions were qualified by auditors.

Last week a report revealed the same PCT received £30m in financial assistance over the past two years to help to balance its books.

The trust’s finance director, Adrian Snarr, insisted finances are now back on track, saying: “The Audit Commission identified that we have put in place proper arrangements to secure economy, efficiency and effectiveness in our use of resources for the year ending March 2011.

“However, the commission felt the PCT’s initial 2010/11 budget and savings plans were unrealistic and inadequate to deliver financial balance.

“The PCT met financial targets in 2010/11, but only with significant non-recurrent savings. This resulted in our value for money conclusion being qualified.

“We are now working to try and build a more sustainable financial future for the NHS in North Yorkshire and York.”

Another local NHS body, the Mid-Yorkshire Hospitals Trust – which runs hospitals in Dewsbury, Wakefield and Pontefract – was also given a qualified audit.

A spokesman said this was due to a “savings gap” identified for the current year and the trust is now in “discussions with healthcare partners to resolve this.”

No localised breakdown of the savings made was available.

But the study showed PCTs in Yorkshire as a whole delivered fewer savings than anywhere else in England – £87.9m, or 0.9 per cent of their gross operating costs.

This represent less than half the nationwide average, which was 1.9 per cent of running costs.

However, NHS Yorkshire and the Humber, the strategic health authority which oversees healthcare across the region, said savings nonetheless remain on target.

Director of finance Alan Wittrick said: “PCTs in the region have consistently delivered against their efficiency target, as well as achieving financial break-even or surplus. In 2010/11 the PCTs in the region all finished the year in a strong financial position, with a collective surplus of £65.8m and with no deficits.

“Robust systems are in place to identify, implement and monitor efficiency schemes.”

The report suggested the relatively rude financial health of trusts in the North means many did not need to find such large savings as those in the South.

Of the 276 NHS organisations in England audited, only nine ended the year in actual deficit – six of them in the South East. Sixteen trusts needed bail-outs, totalling £90m, to help them stay on track.

Andy McKeon of the Audit Commission said: “It is impressive that the NHS overall performed so well financially last year, even if some organisations struggled.

“But there is no room for complacency. Tighter funding, and the need to continue to improve services and implement reforms, will make the next three years much tougher.”