All national health service bodies must live within their means and there can be no question of us simply writing off deficits when particular trusts have failed to operate within their budgets.
We recognise that it may be challenging for NHS trusts to pay back a large deficit that has built up over a number of years. However, the Department, and, consequently, the NHS, have to live within an agreed level of resources in each financial year. This level is set by HM Treasury and voted by Parliament. In order for the system as a whole to balance, a deficit in one organisation has to be matched by a surplus elsewhere.
In circumstances where a surplus cannot be generated in the following year, for example in the case of the small number of organisations with particularly large deficits, strategic health authorities can agree to a recovery plan which phases the recovery of those deficits over a number of years. This would require other NHS organisations within the health economy to underspend over the same period. Any such arrangements would have to be subject to the agreement of local providers, commissioners and the managing SHA.