Health authorities and trusts could see in the new year with a £200m deficit, according to a survey by the Healthcare Financial Management Association.

A survey of 50 per cent of trusts and 60 per cent of HAs released yesterday reveals 'alarming overheating' in the NHS and signs that contingency plans to close the financial gap are not working.

Launching the survey, HFMA chair Eric Morton said the 179 trusts and 58 HAs that responded forecast a deficit of£111m this year -£5m short of the total annual deficit projected for all trusts and HAs by the NHS Executive at the end of the first quarter. 'Extrapolating these figures further, the£116m ceiling will be broken through and the total year-end deficit will be between£180m and£200m, ' Mr Morton told HSJ .

Mr Morton said trusts had faced 'unforeseen' millennium costs, with extra staffing costs in addition to the cost of software upgrades. But he said the working-time directive had been the 'wild card'.

'Many HAs and trusts expected the directive to kick in next year and did not plan for extra costs this year.'

Brown's hospital boost Money raised from an increase in cigarette tax will go 'straight to hospitals', chancellor Gordon Brown has pledged.

In his pre-budget statement, he said a 5 per cent 'real terms rise' in the tax could raise£300m for the health service next year. He said there was a 'strong public health case' for a year on year rise in the tax.