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Logo of bmjThis ArticleThe BMJ
BMJ. 2007 June 16; 334(7606): 1242–1243.
PMCID: PMC1892474

NHS ends the financial year £500m in surplus

The NHS in England has turned the corner on its financial problems, without reducing productivity or harming care, the government said last week.

Unaudited figures indicate that although the NHS finished the financial year 2005-6 in deficit, to the tune of £547m (€810m; $1.1bn), it had finished 2006-7 with a surplus of £500m.

The health secretary, Patricia Hewitt, claimed that the government's insistence on cost cutting measures had turned things around.

“If we had not taken decisive action then the deficit would have doubled again and would almost certainly have doubled again next year,” she said.

She added that the government had managed to “change the culture in a minority of NHS organisations that expected, year in, year out, to be bailed out” by other parts of the NHS.

“It now means that the NHS is in a very strong position to use the extra £8bn this year on the new drugs and better services that patients rightly expect to get on the NHS,” she said.

David Nicholson, chief executive of the NHS, claimed that services to patients had continued to improve as belts were tightened—despite the fact that hundred of clinical posts were axed in the past 12 months.

“We have done what we said we would do: we've delivered financial stability and improved services for patients,” he said.

Critics noted, however, that more than a fifth of NHS trusts in England were still in the red last year (down from a third in 2005-6) and that these trusts had accumulated a deficit of nearly £1bn that still had to be plugged.plugged.

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Niall Dickson, chief executive of the healthcare think tank the King's Fund, said, “Today's figures cannot disguise the fact that the gross financial deficit figure facing the service is £911m, although it is good news that this has improved from the 2005-6 figure of £1.3bn.

“It is still concerning that more than a fifth of organisations (22%) are responsible for the overall gross deficit now.”

And he added: “The truth is that turning around persistent and underlying deficits can take time and may involve significant changes in the way local services are delivered.”

The Liberal Democrats' health spokesman, Norman Lamb, said, “Over the past year trusts have made harsh cuts to staff and services and mental health budgets to meet the government's political deadline of breaking even this year.”

Gill Morgan, chief executive of the NHS Confederation, which represents most NHS trusts, was more upbeat. She said, “Today's figures show that because of the hard work and commitment of NHS staff the vast majority of NHS trusts are getting back on track financially.”

However, Universities UK, the vice chancellors' umbrella body, claimed that the surplus had in part been achieved by raiding education budgets (BMJ 2007;334:388-9 doi: 10.1136/bmj.39128.728264.DB).

Janet Finch, chairwoman of the body's health and social care policy committee, said, “On the face of it, today's announcement is good news. But take a closer look at the Strategic Health Authorities' “strategic reserves” and they seem to consist of funds from the education and training budgets.

“If things continue in this way it will be a disaster for patient care and health service morale. Cuts in education commissions now mean fewer qualified staff to care for patients in 2010.”


NHS Financial Performance Quarter Four 2006-07 is available at

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