Leading article: An unhealthy approach

We were told that yesterday's gathering of senior managers from NHS primary care trusts in Downing Street was not a crisis meeting. But that is very much what it looked like from the outside. The Health Secretary, Patricia Hewitt, tried to play down concerns about the situation and distract attention with the announcement of a reorganisation of Strategic Health Authorities in England. Yet her argument that the NHS budget deficit is not all that serious - and that only a small number of NHS trusts are affected - simply does not wash.

There is quite clearly a serious problem. Non-emergency operations are being cancelled around the country. Wards have been closed. Some 7,000 NHS jobs have been lost in recent weeks. Any objective observer would conclude that the NHS's financial crisis is disrupting its ability to deliver health care in some parts of the country. If the situation is so benign, why did the chief executive of the NHS, Sir Nigel Crisp, feel it necessary to step down last month? The truth is that the £623m deficit is not going to be brought under control by the end of next year, despite the optimism of the acting NHS chief executive, Sir Ian Carruthers, yesterday.

It is no surprise that the Government is trying to play down the crisis. A colossal amount of taxpayers' money has been spent on the health service in the past six years. Spending has almost doubled since Labour came to power. That has unquestionably led to some improvements. Waiting times and waiting lists have fallen. But this spiralling budget deficit suggests that this new money has not all been well spent. If the public cottons on to this fact, they may begin to ask why they are getting such poor value for money.

The Government only has itself to blame for the situation in which it now finds itself. The Department of Health was naive in negotiating payment contracts with consultants and GPs. It ended up paying well over the odds for their services. The cost of buying new drugs was also grossly underestimated. Bulk orders from drug companies are now responsible for an NHS bill of some £8bn a year. The Government's obsession with meeting targets - at all costs, and sometimes to meet a crude political deadlines - has also distorted clinical priorities. Most indefensibly of all, the Government has consistently balked at root and branch reform of the health service. These are the underlying causes of the financial crisis. And it is unlikely to be resolved any time soon.

Yet some good thing can still come out of this situation. Perhaps the Government will now finally begin to realise that attempting to run the NHS from the centre is more trouble than it is worth.