Head of the NHS in England Sir Nigel Crisp is to stand down, acknowledging his accountability for health service financial problems.
Sir Nigel, 54, who has been chief executive since November 2000, has overseen huge spending increases and waiting list falls to record lows.
But he has come under pressure in recent months as the NHS heads towards a record overspend of Ј620m for 2005-6.
Sir Nigel said he was saddened by these problems and that he was accountable.
Looking back over the past five years, Sir Nigel said he was proud the NHS has achieved or exceeded the challenging targets it had been set.
He added: "There've been enormous changes but not everything has gone well. I am particularly saddened by the financial problems we're grappling with.
"As chief executive I wish to acknowledge my accountability for these problems, just as I may take some credit for the achievements."
He said the timing of his retirement "was right" for the health service, adding: "The NHS needs a chief executive who can give leadership over several more years."
Cut backs
However, NHS managers have reported that operations are being delayed and wards closed as they struggle to balance the books.
Many health trusts have cut posts or brought in recruitment freezes.
And many lay the blame for the financial mess at the door of the government and its officials.
The government says spending had only outstripped resources in a quarter of trusts and that 'turnaround teams' are helping them bring finances out of the red.
Downing Street denied Sir Nigel was "carrying the can" for NHS cash problems, saying taking responsibility was part of leadership.
A spokesman added that Sir Nigel had been granted a peerage, on the personal recommendation of Prime Minister Tony Blair.
"When he took over the question was, could the NHS survive. The question now is how to entrench the improvements.
'NHS in chaos'
"These are important achievements that Sir Nigel should take great pride in," Mr Blair said.
Health Secretary Patricia Hewitt also remarked on Sir Nigel's achievements in driving through "huge improvements" in patient care.
But Sir Nigel has also faced pressure over the magnitude and scale of reforms in the NHS, many of which are being pushed through simultaneously.
Shadow Health Secretary Andrew Lansley said Sir Nigel's rushed departure was "a clear admission" the NHS was in crisis.
"Ministers can try and blame Sir Nigel but they are responsible.
"The NHS is plunging into the red because ministers raised costs and pushed targets without regard to the overall impact on services."
Job split
Following Sir Nigel's departure, the NHS chief executive's job will be split.
Sir Ian Carruthers, who is the Department of Health's acting director of commissioning, takes over as acting NHS chief executive.
Hugh Taylor, the director of strategy and business development, becomes acting permanent secretary.
Sir Nigel himself is going to be involved in government projects helping African healthcare systems.
Liberal Democrat health spokesman Steve Webb supported the move to split his two roles as head of the NHS and permanent secretary.
He said the health service needed a boss which sometimes said to government, the policy being pursued is damaging the health service.
He added: "The reform program has certainly lacked coherence and has not been well managed."
Dr Gill Morgan, chief executive of the NHS Confederation which represents over 90 per cent of NHS bodies, said Sir Nigel had overseen a turbulent period of record change which, when complete, will transform the NHS into a 21st Century organisation.
James Johnson, British Medical Association chairman, said there were clearly problems in the NHS and that he looked forward to working with Sir Nigel's successors to help tackle these problems in the best way.
(BBC)
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