THE National Health Service is not “unravelling”, its chief executive insisted yesterday.

Despite staff layoffs, mounting deficits and an official policy of delaying operations to save money, Sir Nigel Crisp presented an upbeat report on NHS performance. But, acknowledging the financial squall that the service was facing despite six years of unprecedented cash increases, Sir Nigel admitted that deficits could get bigger if action were not taken now to control them.

“When you are introducing change you will inevitably have some degree of turbulence,” he said. “The underlying picture here is that 70 per cent of the NHS has got its finances under control. Certain areas need to control finances better.”

Last year the NHS finished with a deficit of £250 million, and this year is heading for a £620 million shortfall. But by the end of the financial year Sir Nigel expected it to be nearer £200 million. “The most important thing we need to do in the short term is to get to grips with [the deficit] because it could get bigger,” he said.

His remarks came after Patricia Hewitt, the Health Secretary, defended the policy adopted by some trusts of delaying treatments until the last minute to reduce spending.

Sir Nigel said that this merely meant that there would be a slowing in the rate at which the NHS was getting better. “It is not unravelling at all,” he said.

However, there are some signs of a loss of nerve. Three strategic health authorities — those covering Hampshire, Surrey, Oxfordshire, Berkshire and Buckinghamshire — have partially suspended “payment by results”, a central plank in the current reform platform.

They fear that paying hospitals for how many patients they treat will cause further instability. Hampshire and Isle of Wight Strategic Health Authority projects a £24 million deficit, Surrey and Sussex £41 million. Payment by results is due to apply to 80 per cent of hospital procedures by next April.

On January 1, another potentially destabilising policy, patient choice, will be introduced across the NHS.

“Waiting lists are continuing to fall, absolutely on target,” Sir Nigel said. “More patients are being treated, and 190,000 more frontline staff. It is a turning-point.”

Sir Nigel also claimed to have improved quality and value for money, reduced overheads and encouraged innovative ways of offering treatment. So why, in the seventh year of aboveinflation increases, was it necessary to make cuts to balance the books? His explanation was that in some areas increasing capacity had got ahead of the capacity to pay for it.

The opposition parties saw the situation differently. Andrew Lansley, the Shadow Health Secretary, said: “The reality on the ground is very different. Across the country, frontline services are being cut and waiting times extended because of deficits. Yet the chief executive’s report fails to acknowledge this.

“People across the NHS are delivering to the best of their ability, but hampered by targets, bureaucracy and deficits.”

Steve Webb, the Liberal Democrat spokesman on health, said: “These cuts are a direct consequence of the Government’s market reforms causing financial instability.”

Niall Dickson, chief executive of The King’s Fund, said that the NHS faced real financial problems and that patient services would suffer unless the Government dealt with hospital failures better.

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