'Boom and bust' criticism for NHS

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Health Secretary Patricia Hewitt, who staked her job on getting the NHS back into the black, announced the health service had generated a £510 million surplus in 2006/07.

But one in five (22%) NHS organisations are still in debt and unable to balance their books. The gross deficit of the NHS stood at £911 million, down from £1.3 billion in 2005/06.

Ms Hewitt said staff had worked hard to turn the NHS around while improving patient care. In 2005/06, final accounts showed the NHS ended the year £547 million in the red.

She added: "If we hadn't taken decisive action to deal with the overspending, the NHS deficit would have doubled again this year. Instead, the NHS has a fairer and more transparent financial system than ever before. The NHS is now in a strong position to make best use of the extra £8 billion it is getting this year."

However, Dr Jonathan Fielden, chairman of the British Medical Association's Consultants' Committee, said "excessive cuts" had been needed to achieve the surplus. He added: "While the NHS may be in credit ... the journey to balance the books has wreaked havoc on the NHS and is a return to boom and bust health economics.

"Consultants are desperate to lead change and introduce new treatments for patients but they are being hampered by cuts, targets and micro-management from Whitehall. Patients deserve the highest quality service and the Government needs to work with us to achieve this goal."

The Liberal Democrats said the figures hid cuts of almost 1,000 training places for medical professionals. Health spokesman Norman Lamb said: "The NHS has clawed its way out of overall debt, but at what cost? Tony Blair's true legacy on the NHS is one of boom and bust - two steps forward, one step back."

Dr Peter Carter, general secretary of the Royal College of Nursing, said the figures "expose the tragedy and farce of NHS finances". He also condemned the Government's refusal to give nurses their 2.5% pay award immediately instead of staged over the year.

But Ms Hewitt insisted nurses would not be getting the 2.5% award in one go. She said the decision to stage the pay award was based on the whole economy and not on how well the NHS was doing.