Only 13% of the extra £3.6bn given to hospitals this year went towards improving their service, with 50% going on higher pay, according to research from independent health charity the King’s Fund.
That means that out of the total increase of £3.6bn given to hospital and community care in England in 2005-06, only £475m was available to fund service improvements.
The figures show why so many hospitals are in deficit, said the fund.
“While a lot of cash has flowed in to the NHS, a lot has also flowed out again – on pay and other cost pressures – leaving relatively little for hospitals to fund increases in activity to meet waiting time targets and other priorities.”
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An analysis by the King’s Fund revealed that spending half the extra money on pay was not in itself a bad thing. It could help to retain and attract staff.
“However, with consultant and nurse pay rates already near the top of the international league table, it raises questions about value for money,” it concluded.
