Correction

The health service is set to record a surplus of nearly £1 billion this year after desperate measures turned its finances around.

David Nicholson, the chief executive of the NHS, has predicted a surplus of £983 million in 2007-08, up from £510 million in 2006-07. It is a rapid turnaround from the £54 million deficit recorded in 2005-06 that blighted Patricia Hewitt’s term as Health Secretary.

The number of NHS organisations in deficit has fallen sharply, with only 22 of 341 expecting not to show a surplus by the end of the year. However, some of these 22 organisations have seen their deficits grow. Leicestershire County and Rutland Primary Care Trust, for example, is expecting a £22.7 million deficit at the end of 2007-08, up from £17.8 million the previous year.

A few organisations, including the University Hospitals Coventry and Warwickshire NHS Trust and the East of England Strategic Health Authority, are expected to slip into the red for the first time.

The forecast £983 million surplus would be ploughed back into patient care, Mr Nicholson said.

The NHS gross deficit - the total deficit of individual organisations - is expected to be £204 million this financial year, down from £911 million in 2006-07.

The Prime Minister said that the turnaround meant that the Government could now put money into other areas of the NHS. Gordon Brown said: “We are talking about more access, more money to tackle hospital infections and measures to ensure people get the best personal care.

“People know that the health service has 80,000 more nurses and 20,000 more doctors and we are building more hospitals. Some have already been completed. People do understand the health service is getting better but it is going to get even better.”

Alan Johnson, the Health Secretary, said: “We have to stay within budgets. This means we have got a surplus of 1.3 per cent of the total budget, which is just about where it should be. We can spend that money on additional services. That money belongs to the NHS.”

But critics said that the Government should also count the cost of getting back into balance. Peter Carter, general secretary of the Royal College of Nursing, said: “In our view, freezing and deleting health workers’ posts, cutting services to patients and raiding training budgets is not the right way to balance the books.

“We now have a curious situation where the NHS is forecasting a surplus of nearly £1 billion but is unable to find jobs for thousands of newly qualified nurses desperate to put their skills and commitment to work.

“At the same time, nurses already working on hospital wards and in the community have seen their workloads increase as they are expected to do ever more with even fewer resources.

“If there is taxpayers’ money lying idle in NHS banks accounts, let us put it to good use by investing it in front-line staff and getting thousands of newly qualified nurses into work.”

Stephen O’Brien, the Shadow Health Minister, said: “How can it be right for strategic health authorities to hold back money from local hospitals when they are fighting to keep services open?”

Hamish Meldrum, chairman of the British Medical Association, said: “The question now is, what is going to be done with the surplus? We would like crucial budgets to be restored, and longer-term, cost-effective policies to be adopted. In future, it’s important that we don’t go through a further turmoil of boom and bust.”

Explore Health

• Expert Advice

• Health Features

• Mental Health

• Alternative Medicine

• Child Health

• Health Club