Pay rises for NHS staff are driving hospitals into debt

Big pay increases for consultants, GPs and other NHS staff are driving hospital trusts into debt, increasing the risk that they may have to cancel operations and close wards to balance their books.

Almost one in four NHS trusts overspent their budgets in 2004-05, including one in three acute hospital trusts, despite record increases in their budgets, the Healthcare Commission, the Government's NHS watchdog said.

Publishing the annual star ratings for all NHS trusts yesterday, the commission said failure to meet financial targets was a key reason for the poor performance of some trusts. For the first time in four years the number of acute hospitals achieving the maximum three stars fell.

Anna Walker, the chief executive of the commission, said that overall the NHS was improving against tougher targets. Four years ago the maximum in-patient waiting time was 18 months compared with today's target of nine months and the maximum out-patient wait was 26 weeks compared with 17 today.

"The overall improvement this year should not be underestimated. Today the targets are a lot tougher but despite this many trusts are rising to the challenge," she said.

"The fly in the ointment is financial performance. Quality of care is inextricably linked to good financial management."

There are 590 NHS trusts in England covering hospitals, primary care, mental health and ambulance services who overspent by a total of £500m, the commission said.

The NHS budget for England has been growing by 7.2 per cent a year in real terms since 2003, the largest sustained rise in its history, and reached £69.4bn for England in 2004-05.

Under new contracts which took effect in April 2003, GPs won pay rises worth an average of 33 per cent over three years, giving many earnings of over £100,000 a year. Consultants won pay rises worth 15 per cent over two years, bringing their basic pay to almost £70,000 a year.

* Scores of women who suffered botched operations at the hands of two surgeons, which resulted in the death of their babies and left them with scars received an apology yesterday. The women were treated by gynaecologists Peter Silverstone and Janusz Wszeborowski at Queen Elizabeth Hospital, in Gateshead.