Hospital Deficits (Hansard, 3 December 1996)

§ 2. Mr. Bayley
To ask the Secretary of State for Health if he will make a statement on NHS hospital deficits last year. [5610]

§ The Minister for Health (Mr. Gerald Malone)
Financial information for 1995–96 will be available later this month, following analysis and validation of the trust audited annual accounts by the national health service executive.

§ Mr. Bayley
Does the Minister recall that the most recently published NHS accounts listed 13 NHS trusts in non-technical deficit and said that the NHS executive would take action to remedy those deficits? Is he further aware that, of those 13 trusts, 11 were still in deficit the following year and that the aggregate deficit had gone up from £10 million to £20 million? Is that not an indication that the internal market is putting trusts into deficit? What action does he intend to take to stop the closure of more trusts such as the Anglia Harbours NHS trust?

§ Mr. Malone
I recognise from the question an article that appeared in a newspaper close to the hon. Gentleman's constituency setting out his concerns, which I do not regard as justified. His concern is that those trusts that have a deficit cannot manage their way out of it.
In 1994–95, 16 trusts recorded real retained deficits; 10 of them remained in real deficit in 1995–96 and five forecast deficits in 1996–97, so the point that the hon. Gentleman tries to make is wrong. He would do better to remember his own advice, which is that if he wants to do something about all that, he should encourage those on his Front Bench to increase spending in the health service in real terms, as the Government have done. The hon. Member for Islington, South and Finsbury (Mr. Smith) tried this morning, but palpably failed.

§ Mrs. Roe
Does my hon. Friend agree that the Secretary of State's announcement of £23 billion for health authorities last year may go some way to deal with a projected deficit slightly in excess of £100 million?

§ Mr. Malone
My hon. Friend is right. I repeat what my right hon. Friend the Secretary of State said when he was questioned in the health debate last week about first quarter returns for trusts: there is an estimated surplus this year of about £60 million. That proves, as my hon. Friend suggests, that this is a well-managed service with an increasing resource that has been given by the Government.

§ Rev. Martin Smyth
There has always been pressure on finance in the health service. In the past, a balance was 780 always achieved. What is the difficulty now? Is the fact that some health authorities are now recording deficits the result of bad management or of someone trying to get ahead of someone else?

§ Mr. Malone
The hon. Gentleman is right to point to the fact that, over time, trust accounts must be balanced. That is happening. Trusts are obliged to balance their accounts on a following year basis. Trusts that have difficulty have made enormous progress towards eliminating deficits over time. That is precisely what we expect health authorities, which are purchasers, and trusts, which are providers, to do—and it is made all the easier because, this year, every health authority has been given increased spending in real terms.