NHS organisations predicting large underspends have defended themselves following Alan Johnson’s suggestion that large surpluses are ‘unreasonable’.
Last week the Department of Health’s latest quarterly performance report confirmed that the NHS was heading for a£1.8bn surplus by the end of this financial year, as exclusively revealed by HSJ (for more background, click here).
Giving evidence to the Commons health select committee, the health secretary said: ‘A surplus of around 2 per cent is reasonable. If you ask me if a surplus of 5 per cent or 10 per cent was reasonable it would be a completely different argument, that wouldn’t be reasonable.’
But last week’s figures showed six organisations projecting surpluses of 5 per cent or more: North Cumbria Mental Health and Learning Disability trust (5.2 per cent), Telford and Wrekin primary care trust (5.2 per cent), East London and the City Mental Health trust (6.6 per cent), Redbridge PCT (5.6 per cent), Gloucester Partnership foundation trust (6.7 per cent) and Northern Devon Healthcare trust (6.4 per cent).
Terry Huff, finance director at Redbridge PCT, said its£18.2m surplus was largely made up of a£10m surplus carried forward from last year. That was created because the PCT had been asked by its strategic health authority to hold back on spending plans.
‘We managed to get into surplus last year and wanted to spend but we were encouraged not to because the rest of the health economy was in deficit, so we reported a surplus of£10m.’
But he admitted the SHA-enforced ‘austerity measures’ did mean that new services that could have been set up this year had been delayed.
Telford and Wrekin PCT finance director Peter Price said that since projecting its£11.4m surplus, the PCT had agreed to accelerate its spending plans to bring the surplus down to around£7m, or 3 per cent. That would involve hospital deep cleans, extra hospice beds, refurbishment of GP premises and extending access to orthodontics services.
‘But we still need to be cautious as the funding allocations haven’t been made for 2009-10, so we will keep some reserves for next year. Three per cent or a bit lower would be a comfortable surplus,’ he said.
North Cumbria finance director Sarah Senior said its apparently large surplus was misleading. The figures related to just half a year as the trust had since become a foundation trust, she said.
A Northern Devon spokesman said its surplus was needed to meet its statutory break even duty, which demands that any overspends are balanced with an underspend. That must normally occur over a two-year period for PCTs but had been extended to five years for the trust.