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Audit Commission warns CCGs over hospital deficits



CCGs must keep a ‘tight grip’ on NHS finances to avoid ‘significant’ increases in activity in the coming years, the Audit Commission has warned.

The commission’s annual report NHS financial year 2011/12, published today, reports a positive overall picture of PCT finance, with only three PCTs failing to achieve financial balance this April.

But it expressed concern at the number of NHS trusts and foundation trusts in deficit, which increased from 13 in 2010/11 to 31in 2011/12, and said there was ‘no room for complacency’ in keeping NHS finances under tight control.

Overall, PCTs, SHAs and NHS trusts reported a combined under-spend and surplus of £1.6 billion in 2011/12.

But the report said ‘the financial position of a minority of organisations deteriorated’, and said it is in these places that the DH and NHS Commissioning Board must focus their collective attention. 

The report shows that most PCTs made substantial inroads to paying back legacy debt to ensure that CCGs do not inherit it. At the start of 2011/12 there was £54 million of outstanding debt, but this had been reduced to £21 million at the end of the financial year, which rested entirely with Peterborough and Cambridge PCTs.

But it also highlighted ‘stark geographical differences’, citing figures from London which show that capital’s PCTs boast both the highest underspends and the highest overspends. It said: ‘There are significant differences between the relatively financially comfortable inner London NHS bodies and financially harder pressed outer London bodies.’

Andy McKeon, managing director of health at the Audit Commission, said: ‘While nationally the NHS appears to be managing well financially, and preparing itself for the changes and challenges ahead, a number of PCTs and trusts are facing severe financial problems.

‘The Department of Health and other relevant national authorities need to focus their attention on the minority of organisations whose financial position is deteriorating and on their geographical distribution and service standards.’

Mike Farrar, NHS Confederation chief executive, urged the NHS Commissioning Board to help providers by funding CCGs to make ‘big investment in community and primary care’.

He said: ‘This is the time for the NHS Commissioning Board to help providers, not with bail outs, but by releasing money to new CCGs so they can work with providers to help put them on a sustainable footing by changing the type and range of services they provide.

‘Now is the time for big investment in community and primary care. We need to do this to ensure hospitals can sustain local services in the long run. 

He added: ‘It is worrying that the number of trusts in deficit has more than doubled in the past year and a significant number of trusts are receiving financial support. This situation is likely get worse unless we take radical action.

‘Short term fixes for struggling trusts are no longer possible. NHS organisations cannot afford to stand still. Unless we take action the pressures will overcome us.’

Click here to download the Audit Commission’s annual report.