One in three hospitals is likely to face the year-end in debt.  The NHS is running out of money. 

The Guardian reported a DH apparatchik saying; "The NHS is in good financial health and is performing well for patients. We know it faces increasing pressures but it is on track to make �20bn of efficiency savings by 2015.  It has already saved �10.8bn of the �20bn in the years 2010-11 and 2011-12". 

This, patently, is rubbish.  The NHS is not in good financial health. 

Firstly 'savings'.  The NHS has not saved any money, not in the sense of the money rattling in the tin - what shall we spend it on?  It has stopped doing things and in consequence not spent money on the things it has stopped doing because it can't afford them... if you see what I mean! 

What is it not doing?  Mainly, employing people.  Forty thousand managers and probably 7 or 8, some say 10,000 nurses and clinicians are gone.  There is now a scramble to get the nurses back and managers are being recycled into the system.  One in five has been rehired.  The redundancy bill is about �450m.

Second; 'the NHS is in good financial health'.  No; if a third of M&S stores were losing money I think we know what head office would say and do!  The TDA are stuck with around 100 Trusts who, without bungs, will never become an FT.  They can't make the books balance.  They are stuck in places where the local health economy is melting, have damaged reputations and no one wants to work there, or they are in out of the way places and no one wants to work there.

FTs are in no better position.  I bet half of their FDs cry themselves to sleep at night.  Monitor, to protect the FT brand and their own backside, will allow some of them to 'run at a loss'.  That means pushing a bow-wave of debt into the next election.

It is facile and utterly stupid to say that the NHS is 'in good financial health'.  It is unhelpful, short-sighted, and untrue.

What the DH should be saying is; 'The NHS has been hit with the double whammy of unprecedented and unpredicted demand and the need, like all public services, following the credit crunch, to live within its means.  The NHS is making its money work at least as hard as the staff on the front line.  We are watching the situation closely.  We know how tough it is'.

We need to have a serious conversation about the money.  It seems clear the need for austerity will continue on after 2015 and all the talk is of another round of 'savings' pushing the total required, between 2010 and 2020, close on �50m.  If that is correct, it is undoable. 

If you reduce the number of EDs to, say 50, designate 180 Trusts 'major units' and downscale the rest to 'elective boutiques' and close half the rest, you still don't balance the books.  Sell GP franchises, merge them and deal with all LTC by telemed you make money, you make savings and you make the mother-of-all messes.  The upheaval would be too huge to contemplate.  Introducing compulsory insurance top-ups would mean the total GDP spent on health remaining the same, so doesn't help.

There is a solution; Speaking at a conference of doctors the Prime Minister insisted that if people wanted to see better quality healthcare they had to be prepared to pay for it.  "It is important to realise that whatever system of finance we use, if we need to increase the levels of funding in the healthcare system we are going to have to pay for it."  Don't get excited, Cameron hasn't had a freak-out, it was Tony Blair in 2002.

Raising the basic rate of income tax by 1p raises, roughly, �4bn. Blair did 2p.

A penny for peace of mind, 2p to be sure.  The NHS squandered the increase last time.  This time it might save it from extinction.