Overspent health authority in chaos

A health authority which ended the financial year with the largest deficit in the country was run in an "environment of confusion," auditors have said.

The West Surrey Health Authority, which overspent its pounds 330m budget by more than pounds 14m, had no basic processes for controlling its expenditure, their report found.

The findings have angered local campaigners who were accused of "scaremongering" by Virginia Bottomley, the MP for Surrey South-West, when details of the crisis first emerged.

Three community health councils, which represent patients in the area, have now passed motions of no confidence in the authority.

They have called a public meeting today to keep up pressure. Spokesman Tony Mallard said: "If this was the Ridings School, the department of education would be in here crawling all over it. It isn't and nothing is happening."

The investigation by the accountants KPMG found the budget-setting and contracting process last year "lacked a coherent framework".

Different staff had different approaches to contracts and their roles were not always clear.

"This created an environment of confusion and frustration and tension developed between the finance and the commissioning directorates," the report found.

There was "no clear mechanism for communication" which increased the chance of errors and omissions in the budgets.

The report concluded: "Poor budgetary procedures and an excess of optimism at the start of the year resulted in a budget being set which was far too low, given the authority's known and likely commitments."

The authority has been forced to delay signing this year's contracts for services because of the problems and will have to absorb cuts of pounds 10m to balance the books.

Despite reassurances that measures have been taken, Mr Mallard said the three councils were not satisfied.

"It's a catalogue of confusion, mal-administration and lack of control. The organisation is in chaos according to the report."

They had written to Stephen Dorrell, the Health Secretary, asking him to send in a team of advisors. "We want to know whether the authority is fit to go into the future," Mr Mallard said.

Neil Sherlock, the Liberal Democrat candidate in Surrey South-West, said action after the election would be too late as contracts for the coming year would be set by then.

"Given how the authority have behaved in the last year how can you have confidence in them?" Mr Sherlock said.

An authority spokesman said the same problems would not happen again. He stressed that no money was lost, unaccounted for or wasted.

The difficulties arose at a time when there were changes in senior finance personnel and as the authority was merging with the former Surrey Family Services Health Authority.

Simon Strachan, chief executive, said: "This year we're confident we've got the budgets right and we're expecting to strike a balanced budget."

Although earlier identification of the scale of the deficit would have led to a quicker recovery, the auditors said this would not have prevented the need for action of the kind the authority was taking.