A colleague recently took me aside and said conspiratorially, “These NHS deficits—it’s not real money.” Is it true that the National Health Service (NHS) has a deficit of £800 million, and if so, what does this mean for children’s healthcare in the UK?

NHS FINANCES

In 1997, the NHS budget for England was £34 billion (US$63 billion and €50 billion). By 2008, this will have reached £92 billion following the Chancellor of the Exchequer’s pledge of 7.4% growth year on year in real terms for five consecutive years.¹ This has been possible thanks to a booming economy in the UK and low unemployment. Despite this, NHS Trusts are now having to institute draconian measures to balance the books, resorting to job losses and financial turn-around teams. With all this investment, how can the NHS be broke?

Of course, some of this new money has been swallowed up by added costs. The new consultant contract may have added £140 million to NHS costs, and the new General Medical Services contract for general practitioners a further £250 million but against a backdrop of a £58 billion increase, this is not the whole story. More than 190 000 new staff were recruited, of whom managers accounted for only a small fraction, to start to rectify the historical short fall in the NHS workforce. These new staff have to be paid. The expansion of medical student training to almost double what it was a decade ago is already improving the ratio of doctors to patients in the UK to something closer to the western European average. New innovations and new drugs also cost more, and the experience with herceptin, for example, shows that …