NHS financial failure regime 'made up on the hoof'

A number of trusts are facing financial problems

The way financially-troubled parts of the NHS are being dealt with appears to be done "on the hoof", MPs say.

The Public Accounts Committee also expressed concern that ministers could not offer adequate assurances that access to good quality care would be maintained when trusts had problems.

And the MPs also suggested the reforms being introduced next year could make the situation worse.

It comes as a number of NHS bodies in England are struggling with debt.

The cross-party group of MPs said that while overall the NHS finished last year with a £2bn surplus, the figure masked the problems developing in a number of trusts.

A total of 34 organisations - nearly one in 12 - failed to balance their books in 2011-12.

It represents a significant rise on the year before and would have been even higher if local health chiefs and the Department of Health had not provided bailouts

'Short-term decisions'

But despite this growing problem the MPs said the government was unable to explain what would trigger action in a trust with serious financial problems and how essential services would be maintained while this happened.

One trust - South London Healthcare - has already been put into administration. A report published on Monday recommended the trust be dissolved, paving the way for a radical reorganisation of services across the area.

But the committee said there were no clear rules or thresholds that trigger such steps.

Committe chairman Margaret Hodge said: "It very much looks like the department [of health] is inventing the rules and processes on the hoof rather than anticipating problems and establishing risk protocols."

The committee said keeping control of finances was only going to get more difficult as the NHS was in the middle of a £20bn savings drive.

And it said the introduction of clinical commissioning groups - the GP-led organisations that will take charge of the NHS budget next year - could lead to short-term decisions being taken that could make the problems worse.

The MPs also criticised the impact of the private finance initiative (PFI).

Under the programme, private money was used to fund building schemes which NHS trusts then paid back over time - similar to a mortgage on a house.

But the committee said there was a number of trusts where those repayments were so high that they were struggling to break even and priorities were being "distorted".

Mike Farrar, chief executive of the NHS Confederation, which represents trusts, said he agreed there needed to be greater clarity for dealing with financial failure.

"We need the government to accept that financial pressures are the biggest facing the NHS at the moment. We cannot deal with these issues on a piecemeal basis. We need a frank conversation with the public about how we deal with these problems.

"Propping up struggling trusts with short term solutions is not the answer. We need to take action before we reach crisis point."

But Health Minister Lord Howe denied there were problems on the scale being described, adding: "This NHS is in robust financial health."

He said the government was working with NHS trusts and regulators to ensure where financial problems developed they were dealt with properly.

"To be clear - we are not 'making these rules' up," he added.

Shadow health minister Andrew said: "Ministers must get a grip on the turmoil and put staff and patients first."