Members of Parliament will this quiz senior National Health Service officials - including chief executive David Nicholson - this Thursday (December 11), on findings that the net NHS surplus for England in 2007-8 stands at just under £2.1 billion, approximately four times the level of 2006-7’s surplus.

This was revealed in yesterday’s publication of the annual NHS Public Expenditure Questionnaire (PEQ), which covers the Department of Health’s response to questions submitted by the House of Commons Health Select Committee on a wide range of areas in which the Department is responsible for spending public money.

The PEQ reveals that, while the Department had initially expected a level of surplus for the NHS in England of no less than £916 million for 2007-8, by the end of the second quarter of the year the Service was predicting a surplus of £1.8 billion.

In their response to MPs' questions, Department officials point out that the Operating Framework for 2007-8 required the NHS to deliver a net surplus of at least £250 million and, in addition, the Department had asked NHS organisations to generate at least 0.5% contingency – equal to at least £526 million. Moreover, changes made to the financial regime at the end of the previous financial year had required to the NHS to plan for a further £140 million surplus for this year. On these measures alone, the Department tells the MPs that it “would have expected to predict a level of surplus of no less than £916 million.”

Savings from lower reimbursement prices for generic drugs

However, three key factors contributing to the increase in the forecast surplus became apparent during the second quarter of 2007-8. These were: – contingencies over and above the required 0.5% were released for 2007-8 because many NHS organisations were either on target or ahead of their cost improvement plans; - when the funding of community pharmacy for 2007-8 was agreed) after the year’s first-quarter position was released) this produced a reduction in the reimbursement prices of generic drugs charged to Primary Care Trusts (PCTs), which was reflected in the second quarter’s financial forecasts; - and some NHS organisations began forecasting a surplus or break-even at quarter 2, having previously forecast deficits at quarter 1.

The emergence of all these factors meant that, at the end of quarter 2, the NHS was predicting a surplus of £1.8 billion, and delivering this was essential for repaying Trust deficits from previous years, the Department tells the PEQ. Moreover, it adds, “the NHS needs to continue planning for surpluses so that it has the necessary flexibility to respond to fluctuations in demand, activity and cost whilst maintaining sufficient funds for investment in new service developments and making further progress against our promises to patients and the wider public.”

This year’s PEQ also reveals that: - the NHS National Programme for Information Technology (IT) is now expected to cost £12.7 billion across the lifetime of the programme; - the number of administrators (full-time equivalent) employed by the NHS in England rose from 131,859 in 1997 to 184,888 in 2007; and - total UK health spending, both public and private, stood at 8.5% of Gross Domestic Product (GDP) for 2007-8, compared to 6.8% in 1997-8.

- This Thursday’s Health Select Committee evidence session is expected to focus on: the state of NHS finances; whether value for money is being achieved for the £96 billion annual budget for the NHS in England; and future expenditure commitments.