Shropshire’s debt-ridden NHS trust has turned its fortunes around according to the latest deficits and financial balances unveiled by the Government today.

Shrewsbury and Telford Hospitals NHS Trust, which also treats patients from Powys, still remains in the red, however the trust has now slashed its deficit from a massive £12.1 million, recorded this time last year, to £2.8 million.

Nationally, Health Secretary Patricia Hewitt announced the NHS has wiped out its £547 million deficit and has made a surplus of more than £500 million in the past financial year after an aggressive nationwide drive to cut spending by health trusts.

But the news has inflamed a bitter row between doctors and ministers who today fell out over the budget, with medics accusing the Government of mishandling the NHS and bringing it “to its knees”.

Dr Jonathan Fielden, chairman of the British Medical’s Association’s consultants’ committee, said drastic cost-cutting and the excessive use of private firms to provide NHS services had been “costly, disruptive and has fragmented care” and damaged staff morale, which he claimed was now at an all time low.

And a separate controversy erupted over leaked reports that cost-cutting has derailed the Government’s flagship policy to ensure all patients are treated within 18 weeks by the end of next year.

Ms Hewitt confirmed data to be released later this week would show that more than half of patients were currently waiting longer. She insisted “patients are happier with the care they are getting than ever before” and the Government was on course to hit its target and all patients would be treated within this time by the end of 2008.

Defending the Government’s cost-cutting drive, she said: “If we hadn’t taken decisive action to deal with overspending, the NHS deficit would have doubled again this year.”

Shadow health secretary Andrew Lansley said: “No other business would be run on boom and bust and neither should the health service.”

By Sunita Patel