£1.8 billion surplus no cause for alarm but savings must be reinvested in new services for patients, says The King's Fund

Commenting on the latest NHS quarterly financial performance report that reveals a projected £1.8 billion surplus for the health service by the end of the 2007/8 financial year, The King's Fund Chief Executive Niall Dickson said:

'Delivering a £1.8 billion underspend in a £100 billion service is far from ideal but we should remember that only two years ago the NHS was in serious financial trouble – the fact that has been turned around should be a cause for some satisfaction. Overall the finances of the service are in better shape than they have been for many years

'We do need health organisations that can plan for an increasingly uncertain future – increasingly they will be expected to provide value for money and to deliver effective and responsive services. From next year they will also have to cope with much smaller increases in funding–- to that extent keeping a tight rein on spending does make sense

'What is more, the outlook may change over the next six months. Around 40 per cent of the projected surplus is being held back by the centre and is likely to be handed back to primary care trusts. On the other hand, today's projection does not include surpluses accumulated by foundation trusts – last year that amounted to almost £1 billion. Nor does it reflect capital underspending – the NHS has undershot its capital budget by more than £3 billion in the last four years.

'While the NHS is right to aim for a net surplus, this does look like a large sum and it is vital that it is not lost to the health system. These gains should not be clawed back by the Treasury or used on short-term measures. NHS trusts must be allowed to use the surpluses to deliver new services and models of care that benefit patients. In particular, we must use this opportunity to continue the drive to improve efficiency in hospitals and, where appropriate, develop new services in the community.'

Notes to editors: 

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