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NHS financial performance a ‘major concern’

The financial management of the NHS is now a ‘major concern’ spending
watchdogs have warned, after it reported the first deficit for five years.

A joint report from the National Audit Office and the Audit Commission
expresses serious concerns about the level of financial stewardship among NHS
trusts, primary care trusts and strategic health authorities.

The number of bodies failing to achieve in-year financial balance rose from
12% in 2002/3 to 18% in 2003/4, with 12 NHS trusts reporting deficits of £5m or

For 2004/5, auditors have ‘concerns about the financial standing’ of nearly a
third of the 600 NHS bodies, and the Department of Health concedes there will be
an increase in the number reporting deficits and expects a total deficit of

The watchdogs said all bodies needed to reassess their financial management
in light of their report. They warn that bodies need to urgently improve the
role of boards and ensure members are appointed who have an understanding of
financial management.

They also need to improve their forecasting for the year-end position,
produce end of year accounts much earlier and increase the transparency of
financial reporting.

The commission and the NAO warn that NHS bodies face ‘unprecedented
challenges’ under the NHS new financial regime: payment by results and patient
choice, which bring increasing competition from independent providers into the

‘The NHS faces the considerable task of improving its financial management to
meet new challenges,’ said NAO head Sir John Bourn.

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