The Audit Commission has referred the George Eliot Hospital to the Secretary of State because of concerns about its finances. The hospital has a £12 million deficit.

Government financial restraint in the NHS in this financial year has seen a three-fold increase in the number of NHS trusts being referred by the Audit Commission to the Health Secretary as having financial problems compared with the previous year.

Marcine Waterman, Controller of Audit at the Audit Commission said (on Thursday 24 July2014):

“This year auditors are reporting concerns about the financial resilience of a third of NHS trusts compared with a quarter last year. This level of reporting is worrying and reflects the increasing risks to the financial sustainability of individual NHS trusts, as they continue to face sizeable financial pressures due to a rising demand for services and the necessary focus on quality of care, whilst balancing the need for continued cost savings.”

Audited accounts are the principal means by which NHS bodies discharge their accountability for the stewardship of public money. Ten hospitals had adverse conclusions for 2013/14 issued including George Eliot Hospital NHS Trust.  There are concerns about arrangements to secure economy, efficiency and effectiveness in its use of resources for the year ended 31 March 2013, as significant weaknesses were identified.  In addition there were 19 referrals of NHS trusts for 2013/14 relating to the failure of NHS trusts to meet their statutory break-even duty, again including George Eliot Hospital.

The former labour Health Minister Mike O’Brien said,

“The £12 million deficit needs to be addressed by the Health Secretary by finding funding from within the existing NHS budget.  From my own knowledge of the NHS budget, it is possible to do that.”

Financial problems at the hospital began to arise in early 2011 when the hospital was told to slow down operations and lengthen waiting years because of national financial constraints. The hospital had gained by doing operations for people from around the county and from Coventry. This income was reduced. 

 In late 2011 managers were also surprised by the increased Standard mortality ratio and this resulted in the Keogh Report in July 2013 putting the hospital into “special measures”.  One of the issues was understaffing. The hospital had to spend money employing more staff and managed to get out of special measures a week ago. That came at a price because a £10 million deficit last year was increased to £12 million deficit this year.

The hospital briefly had financial problems in 2007 but these were dealt with quickly and efficiently by an NHS loan of £6 million and by 2009 the hospital looked in good shape.

Mike said, “David Cameron cannot expect to tighten the NHS budget, impose an expensive NHS reorganisation and expect that there will be no consequences.  NHS inflation rates run at about 4% above the national inflation rate because of the demands of new medication, new treatments and the cost of maintaining high-quality facilities. The government has increased costs and restricted NHS budgets to inflation. This has taken its toll on the George Eliot hospital and the whole NHS.

“Not only that but in the last eighteen months this hospital was distracted by an attempted privatisation by Ministers. 

“Actually, given what the government has thrown at the hospital in the last four years, it has done remarkably well to survive.

“This government got the hospital into this financial mess and it is the responsibility of the government to find the resources to deal with this deficit and put the hospital on an even footing.”

The announcement by the audit commission came the day after the Conservative MP for Nuneaton claimed in an advert in a local newspaper that the government has supported the hospital.


Mike commented, “Marcus Jones knows in his heart that his government has let down the George Eliot Hospital over the last four years. Ministers now have the opportunity to bail out the finances of the hospital. They created the problem and they must find the solution. They can afford to do it; but will they do it?”

A Department of Health spokesman said, “It is essential that trust chief executives have a tight financial grip and ensure they live within their means.”

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