News / Nicholson hails headoom created by £1.7bn surplus
A compilation of strategic health authority figures by Healthcare Finance, based largely on unaudited month 12 figures, shows the service will return an aggregate surplus of £1.7bn, around £70m less than forecast at month nine.
This was confirmed by NHS chief executive David Nicholson in his annual report. He said the projected £1.7bn surplus gave the service ‘the flexibility and headroom to be more responsive’.
But he warned the reserve must not be squandered. ‘It gives us a fantastic opportunity to work with patients and communities to tackle those issues that are of local importance.’
The figures do not include foundation trusts, figures for which will be published in June. The biggest movement between quarter three and year-end was in NHS North West (see box), where the outturn fell from a forecast £350m to £317m.
The SHA said the movement was due to primary care trusts accelerating investment plans.
A number of factors have created the surplus, according to the Department. The NHS was required to make a minimum surplus of £250m in the 2007/08 financial year and all organisations were asked to create a further 0.5% contingency fund (equivalent to £526m) in their financial plans.
The end of resource accounting and budgeting meant the NHS was required to plan for a further £140m surplus – on this basis the service should have made a surplus of £916m.
But many organisations were able to release contingencies over and above 0.5% during the year because they were on target or ahead on cost improvement plans. Others moved from forecast deficit to break-even or surplus, while a new deal on generic medicines saved £200m.
HFMA chairman Chris Calkin said the surplus represented good financial management and was only around 2% of the total budget. But he added PCTs had understandably exercised a degree of caution because of uncertainties over allocations from 2009/10, the prospect of a new allocation formula and the need to achieve targets, such as the 18 weeks referral to treatment target.
‘They are being prudent in terms of making recurrent commitments but the money will be released over the next year,’ he said.
‘However, we also need to recognise the need to improve forecasting, planning and budgeting to ensure resources are being used effectively’.
Year-end figures
SHA Latest figures £m Q3 £m
North West 317 350
North East 129 140
Yorkshire and the Humber 280* 280
West Midlands 157* 170
East Midlands 140** 140
London 300** 300
South East Coast 85 90
South Central 75 80
East of England 86 90
South West 149 149
Total 1718 1789
Source: SHA month 12 figures (*month 11, ** month 10)
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