Managers' and doctors' leaders have split over the need for a fundamental re-think of NHS funding in the face of a £200m-plus deficit.

A Healthcare Financial Management Association survey showed the NHS Executive's target figure of a£116m year-end deficit is almost certain to be exceeded, while trusts and health authorities are facing severe financial pressures next year (see news, page 2, 11 November).

Health secretary Alan Milburn has been sticking to a public 'no crisis' line and said in a radio interview that the£300m likely to be raised by chancellor Gordon Brown's increase in tobacco tax would ease any pressures.

But NHS Executive officials privately admit that the HFMA survey paints an accurate picture and worry that government initiatives such as waiting list reduction will be delivered at the expense of underlying financial stability.

The British Medical Association this week called for an immediate injection of new cash to stave off a winter crisis, followed by a 'root and branch' review of what the NHS should provide and how it should be financed.

The Institute of Healthcare Management also said the time was right for an 'honest and adult' look at how healthcare is financed.

Chief executive Stuart Marples said the debate should be led by the National Institute for Clinical Excellence, whose remit already includes affordability as well as efficacy.

'Recent reports that people are having to resort to self-funding for NHS treatment only add to the concerns. It is time for a very serious discussion led by NICE about what the NHS could and should be providing, ' he said.

King's Fund director of health systems John Appleby said NICE, in its present form, was only 'part of the solution' as it could not 'set the core values of the NHS' or 'make inevitable tradeoffs between different groups of people'.

But he added that since 'decisions about how the NHS should spend its money are as much political as they are medical', ministers should acknowledge this and 'create a new national framework for setting the NHS's priorities in a fair and open manner'.

But the NHS Confederation and Unison said the financial problem could be tackled if Mr Brown spent some of his projected£9.5bn surplus.

Confederation chief executive Stephen Thornton said: 'There are real concerns about NHS finances, but they are not an excuse for this call for a review of how the NHS is funded. We strongly support the future of the NHS as funded by taxation, free at the point of use for all who need it.'

BMA policy says the government should fund the NHS 'unambiguously and explicitly by public funds'.

But chair Dr Ian Bogle said: 'I believe the time has come for a thorough review of the services the public expects to be available under the NHS, the level of resources required for these and how to make these resources available. This needs an urgent review in which the BMA would expect to play a leading role.'

See news focus, pages 11-13; comment, page 17 .