The NHS deficit has soared to £512 million, more than double the amount last year, according to the latest figures.

The figures announced by Health Secretary Patricia Hewitt showed that NHS debts had more than doubled from the previous year's figures of £221 million.

However, the figure was more than a £100 million less than the £620 million deficit which was predicted in mid-year forecasts published last December and the government said that this showed that NHS finances were starting to stabilise.

However, the figure showed that the almost a third of over 550 NHS organisations failed to break even, with 70% of the deficit lying with 11% of NHS organisations. This was despite strategic health authorities, which are management organisations which also handle NHS training and education, managing to underspend by £524 million.

The government stressed that the deficit represented less than one per cent (0.8%) of the annual NHS budget, but NHS funding has doubled since Labour came to power in 1997.

However, the report, compiled by acting NHS chief executive Sir Ian Carruthers, also said that maximum waiting times for inpatient admissions had been reduced to six months, while the waiting time for outpatient appointments has fallen to 13 weeks.

The report also showed that 98% of A&E patients were now seen within four hours and cancer patients were being treated faster, with nine out of ten patients treated within two months of a urgent GP referral.

Sir Ian said: "Financial problems are being addressed. Reform is not the reason for the overspend or the reported job losses, it is the solution. The reforms are uncovering problems hidden for years and provide incentives to ensure the NHS can return to financial balance. They also provide more benefits to patients, through greater choice, more personalised services, and new ways of working.

"It's imperative we now focus on returning the NHS to balance and help those organisations facing the biggest financial challenges."

Sir Ian also challenged reports that the NHS is suffering from widespread redundancies. Over 12,000 jobs have been cut across the NHS in recent months, but Sir Ian argued that the NHS was keeping compulsory cuts to a minimum by redeploying staff, redesigning roles and reducing the use of expensive agency staff.

Commenting on the report, Health Secretary Patricia Hewitt said: "I'm grateful to Sir Ian for his report. It shows that, despite the criticisms levelled at the NHS over the last few months, there have been record improvements in terms of faster access to treatment and quality of care.

"I know there are financial challenges in a minority of organisations but it is encouraging that the provisional end-of-year figures show that the minority of trusts that are overspending are now focusing on their problems and putting plans in place to tackle the issue."

Liberal Democrat health spokesperson Steve Webb said: "It takes a special sort of mismanagement to spend record billions on the NHS and still have hospitals cutting front-line staff in financial rescue packages.

"The government sets NHS pay centrally, sets NHS targets centrally and sets the cost of an operation centrally. Then, when the sums don't add up, they say it is the fault of local management.

"Most changes currently taking place in the NHS are not about rational reform and long-term planning, they are emergency responses to a financial crisis.

"What is needed is not endless reform in a desperate attempt to deliver the Prime Minister an empty legacy. Instead, the NHS needs time to put its house in order and a period of stability."

(KMcA)