London's NHS is £50m in debt

London's crumbling health service is an estimated £50 million in the red, it was claimed today.

A shocking picture of the true extent of the crisis in the capital, which has been at the focus of a furious political row over the state of emergency care, is painted in an analysis of NHS finances.

The study claims that budgets are being overspent on prescribing medicines and on payments to outside bodies, such as agencies who provide temporary nursing staff.

They are swallowing up vital cash that could be used to improving standards of care.

Nine of the capital's 16 health authorities have a combined overspend of almost £35 million, according to research carried out by the Liberal Democrats. It is estimated that across London's NHS the deficit is nearer £50 million.

Paul Burstow, Lib-Dem health spokesman for London, said: "What these figures show is that London has serious funding problems. The way that health authorities report issues makes it difficult to get a totally clear picture. What is clear is that prescribing budgets are overspent and the NHS is massively over budget on agency staff."

The shortfall exists despite millions of pounds of extra funding being pumped into the health service.

Health authorities and trusts have been ordered to balance the books by 1 April. But the Evening Standard has found evidence of capital revenue - which should be spent on buildings and equipment - being used to cover overspends. Other health authorities have brokered deals for loans with the regional office of the NHS Executive, which is in overall charge of the service in London. The drawback is that they have to repay the money, further adding to their financial woes.

Campaigners have warned that the situation will inevitably lead to cuts in services.

Mr Burstow added: "While the problems are likely to be managed away for this year, with one part of the NHS bailing out another, the legacy of the deficits won't go away.

"We have gone on for years robbing Peter to pay Paul in the NHS in London. Ultimately this money has to be found from somewhere, so cuts to services are inevitable."

London hospitals spend about £500 million a year on agency nurses alone - needed to fill the gap left by more than 4,000 empty posts - according to figures from the Audit Office.

A survey of hospitals carried out three months ago found that some of the biggest spending trusts are forking out more than £10 million a year on agency nurses. The total annual bill for the top 10 trusts was around £90 million, including one trust that refused to be identified.

Mr Burstow said: "Over half the entire NHS spend on agency staff is in London. Many trusts are underspending their nursing budgets and spending a fortune on agency staff."

The amount of money GPs spend on prescribing drugs has also rocketed. Primary care trusts, which run GP services, in Bexley, Bromley and Greenwich are facing an overspend of up to £3 million.

A Department of Health spokesman said: "The NHS goes through this process every year as they get to the year end. There are ways of balancing things either through the regional office, the Department of Health or from capital expenditure.

"We are putting billions of pounds into the health service and the Department of Health will be working hard to ensure that no patient services are affected."