NHS deficits - Liberal Democrat Campaign Briefing

The issue

Despite record investment in the NHS since Labour came to power, the NHS has a final audited deficit for 2005-6 of £547 million.

The number of organisations in deep debt has more than trebled in the last year. The knock on effect on the local health economy is severe - with hospitals being pitted against each other in a struggle to survive the onset of cuts.

The Government repeatedly claims that heavy debt will not affect patient care. Yet just this year, there have been thousands of posts cut and many ward closures reported. In June 2006, acting Chief Executive of the NHS, Sir Ian Carruthers, said that he could not rule out the closure of whole hospitals[1].

Latest deficit figures by Trust -

http://www.dh.gov.uk/assetRoot/04/13/95/51/04139551.pdf

Impact on Central Sussex

The losses in the South East Coast SHA (Strategic Health Authority) Economy which includes Sussex total over £94 million. These are shown in total by Health Trust and PCT on page 8 of the above report. A review of the detail shows that nearly the whole of this deficit arises in Sussex. The impact on our area is therefore potentially very severe.

What the Government is doing

There is no national overview/framework of the difficulties which hospitals are under

Our research showed that three regions have particular problems with Trusts under pressure - London, the South East and the East of England. The Government blames deficits entirely on local management, yet they have unleashed powerful market-based forces onto the NHS without indicating an overall plan for their changes. The majority of Strategic Health Authorities across England were visited by Do "turnaround teams" to look at their financial management.

There is no clarity about the extent of the difficulties hospitals are in

We lack a full picture of the extent of the deficits.

This year's figures include planned borrowing from the NHS Bank and estimates of cash savings. The former must be repaid at some point and the latter may not materialise. The number of organisations with an underlying financial issue is therefore higher than is now apparent.

Some hospital Trusts currently reporting no deficit are situated in a local health economy reporting deficits at PCT level, which would have a knock on effect on them.

In effect, deficit figures cannot be taken on face value until they include the bigger picture.

Endless government reforms threaten the stability of hospitals

The hectic pace of NHS reform, means that hospital trusts and managers do not have the time and stability to effectively plan their services. The financial framework for 2006/07 was radically changed by "top-slicing" of Trust budgets just weeks before the start of the financial year, whilst the "tariffs" payable were still being negotiated after the financial year had begun.

Market-based reforms, forcing hospitals to compete with each other, have been introduced at a fast pace with little preparation or warning. Specialist services such as children's hospitals have been suffering under the system of payment by results - a fact the government has now recognised by delaying its expansion.

Pressure from the Government to prioritise targets has led to hospital trusts overspending to meet them, and then being condemned for poor financial management

Local communities have no real say in their health services

People have protested about cuts to no avail and feel disconnected from their own health services as a result. There is no meaningful debate about the future of local services, as all too often changes are imposed from above, regardless of the strength of local feeling.

The Government refuses to take responsibility for the problems in the NHS

The Health Secretary continually denies that there is a problem in the NHS - despite continuing evidence of cuts and job losses. NAO reports in 2005 and 2006 have attributed hospital financial difficulties in some part to Government policy. Yet the Government blames all deficits on local management and efficiency.

Ministers should be honest enough to admit that they have underestimated the cost of their plans and the consequences for NHS services.

What Liberal Democrats would do

Give local people a real say over their health services

One of the biggest barriers to making the NHS better is the sheer distance between the people with power (government ministers) and the patients. The democratic deficit in health means that if local people are not happy about how local health priorities are set, there is no local person who they elect who is accountable for those priorities.

We believe that local people should have a stronger voice in their local NHS. The key to this is involving local people in the planning of their health services. We would progressively decentralise decision-making to democratically accountable local bodies. Consultation with local people and clinicians must directly influence local health services and do so at an early stage of the process.

This would give local communities a real say and sense of ownership over the difficult decisions to be made in dealing with their local hospital's financial problems. By ensuring that local communities are part of long term NHS planning in their area, any changes in the location of service provision would truly reflect the needs of the area.

Provide a clear national picture of the state of the NHS

Our research this summer provides, for the first time, a detailed national overview of the relative position of Trusts in different parts of the country. It combines data at acute trust level, PCT level and SHA level and takes account of local factors such as proximity to other NHS and private sector treatment providers. If the role of the DoH is to provide a strategic overview and plan for the NHS, it is hard to see how it can do this when it knows so little about the overall pattern of pressures in the NHS.

Scale back the number and pace of highly disruptive centrally mandated reforms and end the Government's target obsession

The NHS is suffering from too much reform, too fast, with little clear long-term direction and an emphasis on meeting targets over anything else. Reforms and restructuring pile up one after another with little time for NHS trusts to plan their services around them. Too much of their resources are being channelled into dealing with change in the system, rather than ensuring for their own best management and patient care.