THE NHS deficit more than doubled last year to £512 million, the Government announced yesterday.

This is more than twice the target of £200 million set at the start of the year and makes it the second successive year in which the NHS has failed in its statutory duty to break even. At least 15,000 jobs are to go in the attempt to cut costs.

However, such was the expectation of an even bigger deficit that Patricia Hewitt, the Health Secretary, was able to announce the figure with a sense of relief. It is less than the £620 million predicted at the half-year and hundreds of millions less than some expected.

Ms Hewitt said that the deficit was concentrated in a relatively small number of organisations, was not the fault of reforms and that she would be “held accountable” if the NHS did not return to overall financial balance by next April.

Sir Ian Carruthers, acting chief executive of the NHS, said that patient care was improving, in some cases dramatically, but admitted the deficits were a “blot on the landscape”. Andrew Lansley, the Shadow Health Secretary, said that the figures would deepen “the crisis of confidence in the Government’s stewardship of the NHS”. He added: “The gross deficit — the figure for NHS trusts and primary care trusts — is £1.27 billion. It is this vast sum that directly gives rise to the serious consequences in cuts in services and frontline posts.

“The Health Secretary is living in a parallel universe, in which everything gets better and nothing is wrong. Hard-working NHS staff are in the real world, where they deliver in spite of the Government’s policy failures.”

A breakdown of figures shows that in 2005-06, primary care trusts (303 organisations) were in deficit by £476 million, compared with £272 million in 2004-05. Acute trusts had a deficit of £545 million (£246 million), while teaching trusts’ deficit was £62 million (£78 million). The overall figures would have been much worse if strategic health authorities (SHAs) had not managed to save money, underspending by £524 million. That surplus, set against the overall NHS deficit, halved the total overspend.

Overall, 31 per cent of the 566 NHS organisations failed to break even in the year 2005-06, compared with 28 per cent the year before.

Niall Dickson, chief executive of the King’s Fund think-tank, said that the figures masked the true scale of the financial problems. “The gross deficit has increased throughout the NHS to £1.27 billion and has been reduced to a net of £512 million only by using increased surpluses from other parts of the service” he said.

“In fact, more NHS organisations are in deficit than predicted, while the net deficits for primary care trusts and hospitals are worse than last year.”

Sir Ian also released his annual report on the NHS yesterday, which highlighted how waiting times have fallen to the lowest level recorded.

The NHS was on target for a 20 per cent drop in cancer deaths in under-75s by 2010, and a 40 per cent reduction in heart and stroke deaths.

“Contrary to what our critics claim, reform is not the reason for the overspend or the job losses, it is the solution,” he said. “The reforms are introducing greater financial transparency — in some cases uncovering problems hidden for years — and providing incentives to ensure that the NHS can return to financial balance.”

Ms Hewitt told the House of Commons that there would have to be “workforce reductions” in some primary care trusts. “But there will not be the wholescale redundancies across the NHS that some commentators have forecast.”

Steve Webb, the Liberal Democrats’ health spokesman, said: “It takes a special sort of mismanagement to spend record billions on the NHS and still have hospitals cutting frontline staff in rescue packages. . . The NHS needs time to put its house in order and a period of stability.”

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