Patricia Hewitt was accused yesterday of aggravating regional inequalities in NHS care to meet her promise to stem health service deficits in the last financial year.

The Health Secretary faced a barrage of criticism from economists and health professionals over her stewardship of the NHS after disclosing that it had underspent its budget by £510 million last year. The figure fulfilled a government pledge to avoid a third year in the red, but provoked outrage over “excessive” cuts and their impact on waiting lists.

The latest unaudited data show that more than one in five NHS bodies in England are still in debt, with about one in ten classed as facing long-term financial challenges.

Jonathan Fielden, of the British Medical Association, described the cost-cutting strategy as “wreaking havoc on the NHS and return[ing] it to boom and bust health economics”.

The combined debt of the 22 per cent of NHS organisations who failed to break even in 2006-07 was £911 million. In the previous financial year the NHS ran up an overall deficit of more than £500 million, and the gross deficit – the total of all those organisations which ran up debts – was £1.3 billion.

However, the NHS, which had a budget of over £70 billion for 2006-7, has only managed to balance the books by taking money from elsewhere.

A leaked e-mail, reported yesterday by The Times, suggested that in addition to lost jobs and raids on training budgets, the climate of cost-cutting has stalled progress on the flagship policy to ensure no patient waits longer than 18 weeks for hospital treatment.

Both Ms Hewitt and Andy Burnham, the Health Minister, yesterday issued strong denials that the target, due to be met by the end of 2008, was being affected. They said that analysis of waiting times was now more transparent than ever before, and showed a dramatic improvement.

However health economists said that the budgetary crack-down was likely to continue this year and would have a “knock-on effect” to stall waiting times.

The e-mail, sent out to trusts with advice on how best to deflect media interest, showed that just 48 per cent of patients are currently being treated within 18 weeks from GP referral. The memo states that waiting times still vary widely around the country, with some patients having faced waits “in excess of one year” for operations such as knee and hip replacements.

Full details of the situation will be published by Ms Hewitt today, and are expected to show that those areas suffering from the greatest financial pressures have some of the longest waits. NHS Trusts in Yorkshire, Norfolk and Surrey have delayed appointments and denied patients basic operations, including treatments for varicose veins, wisdom teeth and bad backs, in an attempt to address their debts before the end of March.

Alan Maynard, Professor of Health Economics at the University of York, said that hospitals were being told to “pedal lightly” by local health authorities in order to achieve savings.

“If your financial situation goes into disarray, you look at ways to correct it, and for NHS trusts, cutting elective surgery has been one of those ways.

“Meeting the 18 week target will continue to be made difficult by a climate of cost-cutting. Under the payment-by-re-sults system, hospitals would like nothing more than to rev up the number of operations they are doing because that is the way they bring money in.

John Appleby, chief economist at the health think-tank the King’s Fund, said that the Government’s new waiting time figures would show the time from referral to treatment for the first time and cut out “hidden waits” that sullied previous estimates.

“But while having half of patients being seen within 18 weeks may seem encouraging, the targets become harder to meet the closer we get.”

Peter Carter, general secretary of the Royal College of Nursing, said that yesterday’s budget figures “expose the tragedy and farce of NHS finances”. He condemned the Government’s refusal to give nurses their 2.5 per cent pay award immediately instead of staged over the year.

“With a NHS surplus of more than half a billion pounds and the threat of industrial action on the horizon, it is surely time for ministers to do the decent thing and give nurses the fair pay deal they deserve,” he said. “Stop-go economics is no way to run the NHS.” NHS Trusts have been spending more than £1 billion a year on agency nurses due to poor planning, a group of MPs said. The Public Accounts Committee said that the bill grew by 40 per cent in the five years to 2005 – despite the number of permanent nurses in the health service rising by one fifth over the same period.

The numbers

£510m The amount by which the NHS underspent its budget in the past financial year. The Treasury’s annual funding to the health service is more than £70 billion, but the balance was only achieved thanks to surpluses in other trusts and a £450 million contingency fund built up at regional levels

£911m The gross deficit – or the total debts run up by the 22 per cent of trusts who ended the year in the red

£547m The amount by which the NHS had overspent its budget in 2005-06, the second year it had done so. The gross deficit for that year was £1.3 billion

17,000 The number of jobs shed at hospitals to recover from this deficit and break even. NHS trusts were also delaying operations to erase them from the balance sheet in the final months up to March

£1.8bn Extra funding that the NHS was due in 2006-07, but which was held back to pay off previous deficits and create a safety net for this financial year. Regional health bosses working for the ten strategic health authorities, which oversee NHS trusts, were told to make savings on central budgets

17 NHS trusts were categorised as “financially challenged”, with the worst long-term debts.

The five worst were:

Hillingdon PCT (London) £52.1 million (21% of turnover)

Hinchingbrooke (Cambs) £13.3 million (18%)

Royal Cornwall NHS Trust £36.5 million (17%)

Kingston PCT (London) £21.1 million (12%)

Weston Area NHS Trust (North Somerset) £6.7 million (10%)

Source: Department of Health, NHS Information Centre.

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