It is hard not to admire the directness of Ken Walton. At least the chairman of the professional executive committee of Harrow Primary Care Trust (PCT) does not believe in wrapping bad news in impenetrable jargon. The Harrow PCT is in a “dire financial position”. It must therefore “do the minimum required to meet national targets”. Patients scheduled for knee surgery will now wait at least five months, even if they are at the head of the queue after two. Elsewhere, patients are being removed from waiting lists and told they are no longer eligible for surgery. Their conditions have been reclassified as insufficiently serious. Both developments are to do with money, which is extraordinary given the billions of extra pounds poured into the National Health Service over the past five years.

To understand, digest the following: NHS spending has increased by £20 billion since 2000, a 40 per cent rise; and the NHS is this year heading for a deficit of more than £600 million. How could one follow from the other? On face value it seems extraordinary that both could be true. Yet they are. Where have all the extra billions gone? What did the NHS, and the patient, get for all that money?

Tracking the money is not easy, and herein lies a problem. For instance, it took the Department of Health several weeks to compile such figures for the BBC TV programme Newsnight. This suggests that accounting at the department is not as advanced as it should be. There is a deeper shortcoming: 22 per cent of the new money has been dedicated to hiring staff. Almost a quarter has boosted pay for existing staff. These are understandable outcomes given that manpower is the NHS ’s biggest expense and that the Government sensibly wanted to raise both recruitment and retention. But the figures suggest that much of the cache may not have been spent wisely.

Money that voters expected to go to the sharp end has instead been spent on administration. Since 1998, the number of NHS managers in England has risen three times as fast as the number of clinical staff, doctors and nurses. At the same time, despite the injection of billions, NHS productivity has fallen 1 per cent a year since 1997, which itself is an indictment of those managers. What will happen in 2008, when the extraordinary budget increases cease, is already a pressing concern.

This is not a problem afflicting just the NHS. Like patients waiting for or being refused operations, parents can be forgiven for wondering when the billions of extra pounds in education spending will be evident in their children’s classroom. Like the NHS, the hiring of education administrators has outstripped that of teachers. The same is true in the police and the Prison Service. Productivity, which is rising, albeit slowly, in the private sector has been falling across the public sector.

This is a serious challenge for Gordon Brown. The Chancellor has been lionised by supporters for his generous allocation of public funds to schools and hospitals. But the money is meaningless unless patients are receiving better treatment and pupils an improved schooling. The gloss is threatening to come off Mr Brown’s economic miracle. The £20 billion surplus he inherited in 1997 is now a £30 billion deficit. Unless he can extract more bang for the public’s buck, his fate may be similar to that of the knee and groin parents in Harrow.