Nearly half of all acute trusts and primary care trusts suffer from financial planning that is either 'weak' or 'fairly weak' according to government watchdog the Audit Commission.

The report Achieving First-class Financial Management in the NHS concluded that the basics of financial management at most NHS bodies were sound, but that greater control and expertise could deliver better patient services.

The report noted: "The NHS spends £1 million every 10 minutes, and between now and 2008 expenditure on the NHS in England will increase by £40 billion.

"At the same time, the government has set ambitious service targets and has started major reform and modernisation programmes to improve NHS services and to devolve responsibility to individual NHS bodies."

The report added that this amounted to a challenge of unprecedented proportions for the health service. The Commission said the current financial management of most PCTs is inadequate to meet these challenges, and all board members, executives and non-executives needed to have greater knowledge and skills to discharge their responsibilities effectively.

Nigel Edwards, NHS Confederation policy director, said: "This report confirms difficulties we were already aware of. PCTs are especially stretched, and even without the added problem of a shortage of qualified staff for dealing with financial issues, they have been handed a massive financial agenda, so consideration needs to be given to the scale of the challenge facing them."

He added that better investment in training and greater sharing of resources between PCTs would help but that there were "no simple solutions to this complex problem facing the NHS".

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