Some of Britain's leading hospitals are labouring under multi-million pound deficits because of soaring demand for drugs and the need to employ thousands of agency nurses at rates three times those paid to health service staff.
With concern growing that huge increases in health budgets announced by the Chancellor are being swallowed up by wage bills and drugs costs, an analysis of annual reports from health authorities reveals that the NHS is struggling to keep up with demand.
The total deficit for the financial year that ends next week is likely to be £405.5 million across the NHS. Much of the deficit will be hidden by short-term borrowing and the sale of health service property. In the last six months, 19 of the 28 health authorities in England have reported a deficit.
Critics say that the Government has overloaded the NHS with new targets on heart disease and cancer without the necessary funding. Members of the public are also much more knowledgeable about health care and demand many more prescriptions from their GPs than a decade ago.
In January The Observer revealed new government figures which showed that a record 587 million drug prescriptions were handed out in 2001, a rise of nearly a fifth since 1997. The total cost of prescriptions was £6.1 billion last year - a tenth of all NHS spending. The figure has increased by more than 10 per cent since 2001.
The deficit figures, published this weekend by the Liberal Democrats, cover each of the 28 health authorities. In its six-monthly report Avon, Gloucestershire and Wiltshire health authority predicted a deficit of £65.7m for the end of the tax year in two weeks.
Hampshire and the Isle of Wight is facing a deficit of £30.6m while the area covering Devon and Cornwall is facing a £43.5m shortfall. Surrey and Sussex health authority and Thames Valley health authority are facing bills of between £35m and £40m.
The figures show that although a number of authorities, particularly in London, are not recording a deficit, there is nowhere in the country with a surplus.
New and highly expensive drugs to treat chronic heart disease are one of the major causes of the rapidly increasing drugs bill. One group of drugs, called statins, lower cholesterol and are at the forefront of the Government's campaign to reduce the number of heart attacks in Britain.
Heart disease kills more than 110,000 people in England every year, one of the highest rates in Europe. Over 270,000 people suffer a heart attack every year and more than 1.4 million people suffer from angina with many being unable to work for long periods.
Lowering cholesterol is one of the best ways of reducing the risk of heart disease. In the last year the prescriptions for statins rose by a third and they now cost the NHS more than any other class of drug at over £400m a year.
'The debts are a sign that the "must-dos" in the NHS have exceeded the funding,' said Dr Evan Harris, the Liberal Democrat health spokesman. 'The Government must accept that there are significant debts and stop piling on expectations.
'Deficits are mounting and other necessary drug prescribing has been cut back. 'The worry, in today's target based culture, is that hospitals will have to choose between paying off debts or providing more doctors, nurses and beds.'
The cost of agency nurses, at about £500m a year, is also putting a burden on the system. The bill to the NHS has more than doubled since Labour came to power in 1997.
The Department of Health disputed the figures, saying that there would not be a clear picture until the end of year accounts for each health authority had been audited.
'In the unlikely event that the NHS has a £400m deficit, that figure would represent less than 1 per cent of the total budget,' a spokesman said.
