NHS set for £1.8 billion surplus... as consultants' pay soars by 25 per cent

Massive cuts were made in hospitals and community clinics last year as managers fought to plug a £547 million deficit.

But only months later, research has revealed that they have saved too much money - with cash sitting in the bank instead of being spent on wards.

Shadow health secretary Andrew Lansley said: "The Government's approach to the NHS has been one of boom and bust. They lost financial control and spent two years clawing back on NHS budgets."

Meanwhile, MPs have found that hospital consultants' pay has risen by a quarter - even though they are working fewer hours a week.

Senior doctors saw their average salary rise from £86,746 to £109,974 in the two years after the introduction of a lucrative new contract.

But over the same time the average consultant's NHS work fell by more than an hour a week.

In a highly critical report, the Commons public accounts committee found that the productivity of senior doctors fell since the contracts were introduced in 2004.

Despite ministers' expectations that the change would result in a 1.5 per cent annual gain in productivity, the Department of Health's own figures suggested productivity fell by 0.5 per cent in the first year of the contract.

While numbers of consultants went up by 13 per cent, total consultant activity increased by just 9 per cent and the number of patients treated per consultant fell year-on-year until 2005/06.

And there was "little evidence" that hoped-for changes to work practices - such as the provision of weekend and evening clinics - had materialised.

The average consultant's NHS work fell from 51.6 to 50.2 hours a week between 2003 and 2005, the report found.

Ministers underestimated the cost of the consultants' contract by £150million, contributing to the NHS financial crisis which has forced hospitals to sack staff and cut services.

The pay increases mirror those of GPs, who have seen their salaries increase to an average of £110,000.

Edward Leigh, the Conservative chairman of the crossparty-committee, said: "Anyone who is puzzled how large quantities of money can be poured into the NHS to so little effect should examine the example of the new contract for consultants.

"The plain fact is that the Department of Health greatly increased consultants' salaries - on average by over a quarter - without securing any extra productivity from them.

"Worse than that, their productivity has actually decreased."

The new contracts were implemented in 2004 following two-andahalf years of wrangling between ministers and consultants' representatives in the British Medical Association.

The Department budgeted an extra £565million for the first three years of the contract, but in the event it had to pay out £715million as consultant salaries increased by an average 27 per cent, rather than the predicted 15 per cent, sending the total bill for pay and pension contributions up from £2.4billion to £3.8billion.

Much of the additional cost was due to higher than expected payments for being on-call outside regular hours, said the report.

And it said that the "rushed" implementation of the new arrangements meant NHS managers did not take advantage of the intended opportunity to introduce modernised working practices.

Many managers negotiated more hours with consultants than their trusts could afford.

The rising trend in NHS consultants' private work has been halted, and patients are now more likely to be seen by a consultant than they were a decade ago.

Dr Jonathan Fielden, chairman of the BMA's consultants committee, said: "Under the old contract, consultants worked well above what they were paid to do and the Government accepted this needed to change.

"The contract recognises how hard consultants are working and allows their pay to be linked to the care they deliver to NHS patients.

"Our consultants are worth every penny."

Conservative health spokesman Andrew Lansley said: "This report reveals massive financial incompetence and mismanagement at the Department of Health."

Health Minister Ben Bradshaw said: "Hospital doctors save lives every day.

"It is right and proper they are adequately rewarded.

"The contract has helped NHS consultants increase the proportion of the time they spend on direct clinical care while ensuring they don't have to work unreasonable or unsafe hours."