Health authorities in England collectively owe nearly £500 million in debt, according to new research.

The financial blackhole was revealed by a Health Service Journal survey which found a total reported deficit of £497 million.

Finance directors say that despite their best efforts to balance the books the NHS would still be £225 million in the red by the end of March.

Government Response: Department of Health

A Department of Health spokesman said: "We expect by year-end that the majority of NHS organisations and the NHS as a whole will achieve financial balance in 2004/05.

"It is not unusual for the NHS to be reporting deficits at this time in the financial year. Past experience has shown that the overall position has improved by year-end.

"As has been the case in the previous four years, we expect the NHS overall to achieve financial balance.

"Whilst we expect overall financial balance across the NHS, this is not to say that there are no health bodies facing financial pressures. There are always pressures to be managed in year and substantial monies have been allocated to the NHS to meet the increasing demands placed on it."

Party Response: Conservative

Andrew Lansley, shadow health secretary, said: "Taxpayers are not getting value for money in the NHS as hospitals spiral into debt.

"We must cut bureaucracy and waste. A Conservative government will reclaim £7 billion from bloated regulatory and administrative costs and direct it to frontline services."

Stakeholder Response: NHS Confederation

Nigel Edwards, policy director of the NHS Confederation, said: "It is a familiar pattern in the NHS for there to be mid-year financial pressures that are often resolved before year-end.

"However, there are signs this year that a combination of pressures is making this balancing act harder to achieve."