In this article produced by The King's Fund, it is suggested that the deficit exists due to overspending caused by poor management, inefficient services, and waste. In 2006, nearly half of the extra funds in the NHS went to pay the increase in salaries for consultants, physicians, nurses, and other staff. Hospitals, according to the article, are in deep trouble because they have to decided between balancing the books or meeting patient waiting time expectations; under pressure, they choose to meet patient demands, which means they sink deeper and deeper into the red.
However, the solution probably isn't as simple as increasing patient waiting times (increasing rationing of services). Doing so would significantly decrease quality of health. As the article suggests, it may help to focus on budget management for a while, because administrators have pretty much been neglecting to control spending. I suppose increasing taxes is also an option? The British seem to overall be opposed to privatization, so using market competition to increase revenue wouldn't exactly work.
Though, I imagine the deficit will only get worse year after year now that London is gearing up to host the 2012 Olympic Games, which in and of itself is extremely costly.
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