The NHS is set to finish this financial year with a £1.75bn surplus. The projection, based on estimates from the three months since April, is equivalent to just over 2 per cent of NHS revenue funding this year.

Wolverhampton City primary care trust is expecting the largest surplus at 6.6 per cent of its expected income.

The figures were published in the Department of Health's quarter 1 performance review. Director general of NHS finance, performance and operations David Flory said: "This is an excellent start to the year for the NHS. A strong financial position backed by good progress on delivery will continue to ensure high quality services for patients."

Mr Flory said he was pleased the audited NHS accounts for 2007-08 were only£9m more in surplus than the pre-audited accounts.

Auditors had queried NHS organisations' attempts to minimise their reported surpluses using unusual accountancy policies and provisions.

Facts and figures

Some under-reported surpluses were offset by over-reported surpluses elsewhere. In at least seven organisations auditors found surpluses were under-reported by at least half a million pounds and collectively by more than£15m.

These included Hull teaching PCT where the auditors increased the reported surplus by an extra£6.5m. At Barts and the London trust auditors found an extra£3.9m, and at Great Yarmouth and Waveney PCT they found another£1.5m. Auditors added£1.2m to the surplus reported by Royal Brompton and Harefield trust.

Great Yarmouth and Waveney PCT finance director David Matthew said its auditors disagreed with the amount the PCT had put aside to fund NHS continuing care services. The PCT had hoped it could set aside£4.3m for that, but the auditors said there was only evidence to justify£2.5m.

Undeclared income

The increased surplus in Hull was because of funds the PCT held on behalf of a local hospital trust. The trust had not declared this as income for 2007-08, which meant the PCT had to carry it in its own accounts.

A Royal Brompton and Harefield trust spokeswoman said its surplus increase was related to the auditor's disagreement with certain items that the trust had written down during a review of its assets. Asset write-downs involve a charge on trust accounts to reflect the need to eventually replace the item, but the auditor did not agree with all of them.

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