Published: 06/01/2005, Volume II5, No. 5937 Page 15

HSJ columnist Noel Plumridge, a former trust finance director, is sceptical about SHAs that claim they will be able to break even despite massive overspends.

'There is an apparent inconsistency between the total current deficits and the break-even projections, ' he says. 'It would be interesting to know how this will be achieved.

'Are there some big reserves at the centre that people are relying on? They can't use capital, which is the traditional route; partly because the rules have changed, but also because the national programme for IT has spent much of the capital money already.

'Either some of these SHAs are going to do something heroic in the next four months, or they have a huge amount of money in their back pocket. And perhaps a further possibility is that some are just saying they are going to break even for form's sake.' Service cuts will be needed in many trusts if they are going to break even. 'What are they foregoing along the way?

Using a reserve to plug the gap carries an opportunity cost: they could have done something with that money.

'At trust level there are some budgets that can be held back: building maintenance or training, for instance.' Mr Plumridge points out that there is much more national consistency to the financial problems than last year.

'Southern English authorities have always caused trouble, but now the same pressures are emerging in East Anglia and across the Midlands, ' he says.

'Everyone is saying that the consultant contract is costing much more than planned. The new general medical services contract is also costing more than we planned. There is serious pay inflation right across the scene.' 'There is an emerging pattern of acute trusts, and especially firstwave foundation trusts, reporting more activity than in the past because they expect to get paid for it.

'In previous years, most of southern England was in financial trouble. Now the pressure is popping up here, there and everywhere.'