Warning over NHS finances as austerity fears grow

The National Audit Office (NAO) says there is a large gap between the strongest and weakest NHS trusts, with growing numbers needing extra help to balance their books.

The findings contrast with a strongly positive view of the NHS by the Health Secretary Andrew Lansley yesterday in an annual report which claimed there had been major improvements in performance in 2011-12.

The NAO said there was a surplus across the NHS of £2.1bn in 2011-12. But it said 34 organisations were in deficit and it estimated another 22 would have been in the red without extra help. It calculated NHS trusts would need further bail-out funding of £300m in 2012-13.

In Yorkshire, the Wakefield-based Mid Yorkshire trust declared a deficit of £19m in 2011-12 which will rise to £26m this year. North Yorkshire and York primary care trust (PCT) officially broke even but only after extra funding totalling £19m and could run up debts of more than double that this year. The Scarborough trust, which merged with neighbouring York on Sunday, also received extra funding worth £8m.

The NAO said half of PCTs were concerned about the financial state of local NHS providers of care.

Previously these have been subsidised but it said it remained unclear if they would continue to receive funding following the Government’s NHS reforms. It said it was “hard to see” how continuing to support them would be sustainable in the long run.

Amyas Morse, head of the NAO, said: “So far the NHS is meeting the challenge of maintaining strong finances in a period of austerity. It is clear, however, that parts of the service are under strain.

“For value for money to be delivered in future, two things are required – firstly, careful management of the risks created by transition to a new commissioning model and, secondly a coherent and transparent financial support mechanism which outlines when trusts should be supported, or allowed to fail.”

The South London Healthcare NHS Trust last week became the first to be placed under the control of a special administrator. It has so far required more than £350m in extra support.