The NHS is set to break even this year, redeeming the promise made by Patricia Hewitt, the Health Secretary.

But figures released yesterday covering the third quarter of the 2006-07 financial year paint a mixed picture.

The most deficit-ridden of the NHS organisations appear to have got even further into trouble, but their deficits should be balanced by surpluses made elsewhere to create a small overall surplus of £13 million.

Last year, the gross deficit (the figure resulting from adding up the deficits of all NHS organisations that were in deficit) was £1,312 million. This year it is forecast to be £1,318 million.

There are also more organisations forecasting a deficit (35 per cent) this year than there were last (33 per cent).

But the figures are misleading because the income of these organisations was “top-sliced” to create a reserve at the beginning of the year. This reduced their income, plunging more into deficit. The top-slicing removed £1.14 billion from primary care trust [PCT] budgets, and another £450 million was saved from training and public health budgets. An official said yesterday that up to £300 million might be restored to the trusts before the end of the financial year, which would enable many to present a better picture.

The economies have been made by delaying operations, not replacing staff and by deferring orders for supplies wherever possible until the next financial year. There will also be 1,446 compulsory redundancies in 2006-07, compared with 200-300 in a typical year.

Niall Dickson, chief executive of the King’s Fund health think-tank, said what had been done smacked of “a short-term fix for a long-standing problem”. He said: “The goal this year has been to ensure that the NHS as a whole makes a net surplus — turning around last year’s net deficit of £547 million. By holding back around £1.6 billion from PCT and other budgets this year the NHS will achieve this goal.

“But financial performance across NHS organisations remains variable; in part as a result of these tactics, nearly half of all PCTs and a third of trusts forecast a deficit by the end of this year — an increase on last year.

“Today’s figures once again highlight that if the NHS is going to survive and prosper it will need to get to grips with the underlying causes of the financial deficits.

“There is a need now to tackle low productivity, and deal with the widespread and often unexplained variations in performance. For some organisations this will demand a very different approach to delivery.”

The report said that the NHS budget grew to £75 billion in 2006/07, an increase of £5.4 billion. But almost £700 million of that cash was used to pay off deficits from previous years.

Norman Lamb, the Liberal Democrat health spoksman, said: “The Government is employing all sorts of tricks by shifting debts from one organisation to another. These accounting rules would make Del Boy proud but won’t make the problem disappear.”

Andrew Lansley, the Shadow Health Secretary, said: “Labour are able to claim that the NHS will finish this year in surplus, but the surplus they have generated is a sham.

“There are more NHS organisations, saddled with worse deficits, than there were last year.

“Patricia Hewitt’s skin is being saved only by savage cuts to centrally held budgets, which will all need to be restored in the years to come.”

Peter Carter, general secretary of the Royal College of Nursing, said: “Ministers today might try to claim a small NHS surplus but this figure has only been achieved by raiding essential NHS training budgets, freezing posts, shedding jobs and cutting patient services.”

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