Financial forecasts 'not up to scratch in a third of trusts'

The association said that trusts face a worsening financial position this year. It called for all members of trust boards to take responsibility for forecasting, rather than make it the sole responsibility of finance directors.

The warning came as the association published an analysis of last year’s financial outturn showing that 30 per cent of trusts ended up in deficit at the end of 1996-97. The position was worse than expected since only 22 per cent of trusts had forecast a deficit.

ACCA’s health service spokesman, Tom Jones, said: ‘Our analysis shows that trusts are in a worse position now than a year ago. It will be a tightening regime this year. The trend is there to be arrested.’

Mr Jones said the analysis indicated that forecasting in some trusts was poor. But he added it was not all ‘doom and gloom’ since 70 per cent of trusts were in surplus at the end of last year, while some of the remainder had smaller deficits than expected.

The analysis shows that an overall surplus of pounds66.5m forecast by trusts fell to pounds53.5m by the end of the year. That represents a pounds13m fall on a turnover of pounds24bn.

June Mulroy, finance director of Chelsea and Westminster Healthcare trust, said that a drop of that scale was less than 0.5 per cent.

‘If it was your own personal bank account you were talking about, you would think you had died and gone to heaven,’ she said. ‘In industry, they would be very pleased with that sort of forecasting.’

Ms Mulroy said she was not belittling the figures, but it was a very small change over the period of a year.

‘It is right that we need to improve our forecasting,’ she added. ‘But forecasting is not predicting. It is very easy to blame the people out on the ground for things that are outside their control.’

Jaki Meekings, chair of the Healthcare Financial Management Association, said that overall the analysis gave a ‘pretty good picture’.

But she supported the message ‘that financial management is a corporate responsibility in which finance directors play a large and important, but not all embracing, part’.

Of 128 trusts that ended the year in deficit, 61 had slipped back from a surplus position, and 42 had improved their financial position compared with the first quarter of 1996-97. But most trusts that began the year in surplus were still in the black at the end of the year.

Mr Jones commented: ‘While it is hard to hang on to a surplus, it is harder to claw back from a deficit. This depends on better forecasting and on financial management which is based on financial realism rather than optimism.’

He added that the improvements achieved by many trusts were to be welcomed, but the overall position was tightening. The anxiety was that the extra money to be made available to the NHS in April might end up paying for deficits.