The process of budgeting is important in providing a business with a realistic financial plan that it can fulfil.  At Zurich, the leading global provider of insurance services, departmental and senior management contribute data to build a budget that is stretching but achievable in order to meet the organisation’s short and long-term financial and strategic objectives.  Regular reviews of the budget help to identify potential problems.

The NHS in North Yorkshire is facing this sort of difficulty.  NHS North Yorkshire and York Primary Care Trust had originally forecast a £19m deficit for the current financial year, but had already overspent by £16.1m by July. (BBC, 21st September 2012)

In a report to members, the PCT board chairman Christopher Long says: ‘Immediate and extraordinary measures [are needed] to ensure we do not exceed that (£19m) figure.  If the risk of overspend is not managed there is a significant threat that the organisation will not be able to make payments to trusts, GPs and other contractors for services and products such as drugs.’

Mr Long acknowledges that these measures will not be popular: delays to a number of development schemes, including the expansion of health visiting services have already been agreed.

Mr Long continued, ‘It is fully acknowledged that the local population and our stakeholders will be uncomfortable with the short-term actions we need to take to ensure the deficit does not exceed £19m.  We have 100 practices in North Yorkshire and if we simply take away a chunk of funding that supports them providing services with their doctors and nurses, there is a real risk some of them will not survive.’

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