HEALTH unions yesterday welcomed a forced government retreat on the notorious ‘double whammy’ NHS accounting system whereby trusts have their funding cut twice if they get into deficit.
Responding to a parliamentary written statement by health secretary Hewitt yesterday morning, James Johnson, chairman of the British Medical Association said: ‘This artificial accounting measure imperilled many NHS trusts unnecessarily and forced short term cuts directly impacting on patient care.
‘Scrapping the unjust accounting rule is long overdue but the BMA is pleased that the government has finally listened to the many calls for it to end.’
Royal College of Nursing General Secretary Dr Peter Carter welcomed the removal of ‘this highly damaging accounting system.
‘We know that this year has been tough for the NHS and the climate remains challenging.
‘Yes, the NHS will probably achieve overall balance by the end of the financial year, but at what cost to patients, services and staff?’
In her statement Hewitt said: ‘NHS trusts will no longer have their income reduced for overspends in the previous year.
‘This does not mean we are writing off the deficits of overspending NHS trusts, which will still need to generate surpluses to meet their statutory duty.
‘What has been eliminated is the double effect of having both an income reduction and then having to generate a surplus.’
Hewitt added: ‘In line with these changes we are reversing income deductions imposed on NHS trusts in 2006/07 under the old RAB regime as a consequence of overspends in 2005/06. This totals £178m and benefits 28 NHS trusts.
‘In support of this change, I am also pleased to announce that we can now allocate the £450m contingency to the NHS. This is being allocated to strategic health authorities (SHAs) . . . The first call on this funding is to reverse the £178m RAB deductions made to NHS trusts in 2006/07. The balance is available to begin to reverse the funding top-sliced from PCT allocations to create SHA level reserves.’
Karen Jennings, UNISON Head of Health said: ‘Patricia Hewitt has left it right up to the wire before introducing these long overdue changes to the NHS accounting system.
‘We made it very clear that the system, which punished trusts twice over accumulated debts, should never have been introduced in the first place.
‘Trusts have had to endure a year or two of unnecessary pain before their arguments about the unfairness of the system were heard.
‘Good riddance to a system that was never appropriate for the NHS and imposed artificially punitive financial measures on trusts that were already struggling and therefore put staff jobs at risk.’