Manx Care is currently forecasting a £16.8m overspend this year.

This is despite it receiving an extra £43.8m in the Budget - paid for in part by a 2p in the pound increase in the higher rate of tax.

The situation will come as a major concern to government which resorted this year to bringing in that first rise in personal income tax in well over a decade in order to balance the books.

Details of the overspend emerged at Manx Care’s latest board meeting which was held on Tuesday morning.

Manx Care’s budget increased this year from £302,974,648 to £346,822,564. But spending for the year is currently forecast to be £363,640,000 - that’s 5% over-budget. In July it was forecasting an overspend of £18.6m.

Finance director Jackie Lawless told the board meeting that it was hoped that the deficit could be cut by £11m.

She said: ‘The forecast position has improved by £1m so we are currently predicting a £16.8m deficit to the end of the year.

‘As you would expect in response to that the executive board initiated a number of measures to try to address that.

‘We’ve discussed these in detail and we anticipate that we can address the gap by approximately £11m which leaves us a remaining gap of about £6m to get back to balance.’

She said that the board was now looking at other initiatives in the cost improvement programme and other area that had previously been discounted, given the ‘severity of our position’.

The opportunity for further savings without significantly impacting service delivery are becoming more of a risk, she added.

The meeting heard that some of the savings are in process but would take a number of years.

‘This is our challenging year,’ said chairman Wendy Reid.

‘This is a really serious time for us. We are in a better position than we have ever been in terms of the detailed analysis and our transparency with our department colleagues and therefore Treasury.

‘But we are trying to turn a tanker here in terms of not just our spending but our process of budgeting.’

The overspend is being attributed to higher reliance on specialist treatments and procedures being carried out in the UK, increased drugs costs with a single line of drugs adding hundred of thousands of pounds to the bill, more surgical activity and operational pressures.

Chief executive Teresa Cope said some £30m has been spent just responding to pay awards in the last three years and £13m on basic compliance and safety matters.

Board member Nigel Wood warned that ‘slavishly salami-slicing’ would ‘lose hearts and minds’.

The higher rate of personal income tax rose from 20% to 22% in April, with the additional income — forecast to be worth up to £20m — being ring-fenced for the island’s healthcare services.

Treasury Minister Dr Alex Allinson described it as a ‘short term’ measure. He proposed a standalone annual NHS levy which would replace the tax increase and also apply to residents who don’t pay income tax here.

A spokesperson for Treasury said Manx Care’s overspend was of ‘significant concern’.

He said: ‘In this year’s Budget there was a significant investment in the healthcare provided for the island’s community, with a 2% rise in the higher rate of income tax being ring-fenced to contribute towards the increase to Manx Care’s budget of £43.8m.

‘The Department of Health and Social Care, supported by the Treasury, has brought in specialist advice and independent analysis to support improvements to the scrutiny of Manx Care’s financial governance.

‘It is of significant concern that the organisation is already over budget by £2.4m after the first quarter of this financial year and a range of measures have already been implemented by Manx Care as part of its cost improvement programme.

‘It is crucial that all government departments achieve their budget targets and adhere to the medium-term financial plan set out in the February Budget — this provides for significant investments in front-line services, the implementation of the Childcare Strategy to increase access and affordability for pre-school provision, and a significant uplift to the support available for working families.

‘The Treasury has been providing enhanced financial reviews on department performance, expert financial support where needed and all departments are putting in place ‘back to balance plans’.

Manx Care was set up in 2021 as part of a move towards making the island’s health and social care system more affordable and financially sustainable.

But it ended its first year £9.9m in deficit and required a supplementary funding vote from Tynwald to cover the shortfall.

The following year, it reported an overspend of £8.8m despite achieving £9.9m in savings and identified a £40m funding gap between what it was mandated to do and what cash was available.

Then in its third year, Manx care went over-budget by £30m - unprecedented even in the long history of overspends by the island’s health service.

In March Health Minister Lawrie Hooper said that given the significant investment made in this year’s Budget, it was ‘absolutely imperative’ that Manx Care delivered on that investment in an ‘efficient and effective way’.

A report by the chief executive revealed that the costs to Manx Care of this year’s TT and Southern 100 events had come to £304,000, which has been mainly spent on additional staffing costs.