Hospitals pledge put at risk by debts

One of Labour's key election pledges to cut waiting lists has been put at risk by the discovery that health authorities and hospital trusts are pounds 300m in the red and facing cuts in services to break even.

Ministers are furious that the losses are worse than expected and blamed the outgoing Conservative government for allowing the deficits to mount before the election.

One Whitehall insider said: "They are worried about all those blue posters that went up in the election saying they would cut waiting lists. It will now be more difficult to fulfil that pledge."

The Treasury was also alarmed at the losses and has warned ministers not to use the figures to plead for more money for the National Health Service. The Chancellor, Gordon Brown, has ordered the Cabinet, including the Secretary of State for Health, Frank Dobson, to live within his existing budget.

However, the extent of the deficits is so large that it may force Mr Brown to allow Mr Dobson an emergency injection of cash. The figures placed in the House of Commons library show health authorities had deficits totalling pounds 185.8m by the end of 1996-97, about pounds 30m more than expected and a steep rise on the previous figures. In addition, trusts were pounds 123m in the red, in breach of a statutory requirement to break even.

"More and more health authorities, not just in the urban areas but across the country, are not able to balance their books and the only way they can deal with the deficit is to reduce services for patients, reducing services for the mentally ill, reducing cover for Aids and HIV patients, cutting day-care services in the community and even closing clinics," said Simon Hughes, the Liberal Democrats' health spokesman.

The Minister for Health, Alan Milburn, said: "In the light of these figures, no one should be in any doubt about the challenges facing the new government in rescuing and renewing the NHS. We are under no illusions about the legacy we have inherited. That is why we have taken action to sort out the tangle of the internal market."

He said the figures showed the need for further measures to shift more resources from bureaucracy to front-line patient services. The Government has already cut pounds 100m in administrative costs to spend on patient services, including reducing cancer waiting lists, but the deficit is three times that amount.

Those in the red include Anglian Harbours (pounds 3.2m deficit) which was threatened with going broke; Dartford and Gravesham (pounds 408,000) where a big privately- financed scheme is planned; Harrow and Hillingdon (pounds 1m) where cuts in treatment for over-75s were dropped after a row; and Salford mental health services (pounds 2m). They range from inner cities to middle England, including Bart's in London (pounds 4.7m), Jimmy's in Leeds (pounds 4.8m) and North East Lincolnshire (pounds 4.3m).

Health experts said it would increase the pressure for mergers of trusts. The merger of some NHS trusts could bring benefits to doctors and patients but would be unlikely to save money, the British Medical Association said.