NHS spending is 'over-optimistic'

By Branwen Jeffreys BBC News health correspondent

Foundation trusts have greater freedom over the services they fund

NHS managers in England have been warned about over-optimistic financial plans at a time when public finances are likely to squeeze health budgets.

The regulator of foundation trusts, Monitor, has given chief executives until the end of September to draw up more realistic financial plans.

In all, 115 trusts forecast a growth in their income of 4.2% in 2009-10, 2.1% in 2010-11 and 1.6% in 2011-12.

The Department of Health said the NHS would always be an investment priority.

NHS organisations in England given foundation trust status have greater financial freedom, allowing them to borrow more freely and retain surpluses. The majority of foundation trusts are hospitals.

Investment in the NHS will increase this year and next A Department of Health spokesman

Stephen Hay, from Monitor, said they were particularly concerned about over optimistic forecasts for the years from 2011.

"That's why we've required all foundation trusts to submit a downside forecast for 2011/12 to us by the end of September," he said.

Recalculate

The regulator wants trusts to take a more realistic view as financial weaknesses may appear in some trusts as funding begins to tighten.

Other experts have warned that in order to cope with rising demand and restricted finances the NHS needs to begin making changes to increase productivity.

Last month a joint report from the Kings Fund and Institute for Fiscal Studies said the window of opportunity in which funding for the health service remains relatively generous is likely to be no more than one or two years.

A Department of Health spokesman said: "Investment in the NHS will increase this year and next.

"The Treasury have not set departmental allocations beyond 2011 but health is a key government priority - as it always has been. The NHS would always be a priority for increasing investment."

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