Record funding but big pressures - a wake up call for the NHS and government, says The King's Fund

The widespread financial deficits in the NHS revealed today are a wake up call for both the health service and the government, according to The King's Fund. Urgent action must be taken now if the financial outlook is not to deteriorate further, it warned.

Speaking in response to the joint National Audit Office and Audit Commission report into financial management in the NHS, The King's Fund chief executive Niall Dickson said:

'These figures reveal a service that just about squeezed in on budget, during a period of record funding. It also shows that a significant number of hospitals and other services are under considerable pressure with around one in six NHS Trusts in deficit - that's simply too many.

'And that was in 2003/4 - we know that the pressures were even greater in 2004/05 and this year, again in spite of record funding, many parts of the service will struggle to meet the demands made upon them. Waiting time targets are tougher than ever, pay levels are increasing and other cost pressures are considerable.

'The government is also introducing a raft of reforms, such as more autonomous foundation trusts, payment by results and more patient choice - all these are welcome but could add to financial instability if not well managed. And we shouldn't forget from 2008 the financial settlement for the NHS will almost certainly be far less generous, with much slower rates of annual growth.

'All this makes it imperative that NHS organisations have the necessary financial expertise on their boards, are willing to adapt services and begin to sort out their deficits now - in a few years' time the financial climate will get a whole lot colder.'

A King's Fund audit of the NHS under Labour, published in March 2005, praised the government for ploughing unprecedented levels of funding in to the NHS but warned that much of the extra money has already been committed by pay deals and other cost pressures, such as pensions, new medical technologies, clinical negligence and rising demand.

Notes to editors: 

1. For further information or interviews, please contact the King’s Fund media and public relations office on 020 7307 2585. The King’s Fund’s chief economist John Appleby is available for further interviews and analysis. An ISDN line is available for interviews on 020 7637 0185.

2. The King’s Fund is an independent charitable foundation working for better health, especially in London. We carry out research, policy analysis and development activities, working on our own, in partnerships, and through funding. We are a major resource to people working in health, offering leadership development programmes; seminars and workshops; publications; information and library services; and conference and meeting facilities.

3. The King’s Fund published An Independent Audit of the NHS under Labour (1997–2005) on Sunday, 20 March 2005. It found the government has made huge strides in reforming the health service since coming to power in 1997, but warned there are still important problems to be solved and that as yet there is no firm evidence to show the reforms have produced a marked improvement in the nation’s health.