The NHS has rarely managed to balance its books exactly; in many years it has overspent, and in some it has carried a surplus. According to the latest figures (unaudited accounts for the financial year 2005/6), it is likely to record a substantial overspend – in gross terms, around £1.3 billion, equivalent to around £512 million net overspend after taking account of surpluses made by some NHS organisations, particularly strategic health authorities (SHAs).
While the net overspend represents slightly less than 1 per cent of the total NHS spend and affects a minority of organisations, it does represent a deterioration over time.
Many people are wondering how the NHS could overspend even by this much given the unprecedented increases in funding it has received – an average of around 9 per cent cash increase each year since 1999 and even higher levels in the last few years.
This briefing analyses what is known about the causes of current deficits.