£1.5billion fund to bail out NHS trusts struggling with PFI debts

Government money will help trusts meet multi-milion pound repayments

The Government has announced a £1.5billion moneypot will be made available to seven NHS hospital trusts to help pay crippling PFI debts.

Health Secretary, Andrew Lansley, announced last year that he was probing the finances of 22 trusts he claimed were struggling to balance the books because they were having to pay back huge PFI debts on new buildings.

And last week he said that, of those 22 organisations, seven would need further help, and he has set up an emergency funding system to meet the costs of repayments for, in some cases, the next 25-30 years.

The cash is being given to the trusts as grants, so will not have to be paid back. It is hoped this intervention will help them get their finances back in order.

Lansley said: “The NHS is delivering great results for patients, but we know that a small number of NHS trusts with PFI arrangements have historic problems relating to these arrangements that make it very difficult for them to manage financially.

“Today’s announcement is the latest stage in a programme of work we began in 2010 to identify and tackle financial problems at local level in the NHS. In the past, local trusts have received extra funding on the quiet in order to avoid embarrassment. We have already signalled that we are determined to end these backroom deals by bringing greater transparency and openness to the process.

“We need to balance the accountability of the NHS at local level to live within its means on one hand, with recognising that there is a legacy of debt for some trusts with PFI schemes.

The NHS is delivering great results for patients, but we know that a small number of NHS trusts with PFI arrangements have historic problems relating to these arrangements that make it very difficult for them to manage financially

”And we need to be certain that those NHS trusts that face historic financial problems are not taking their eye off the most important issue of all – maintaining and improving their frontline patient care.”

The trusts affected are: Barking, Havering and Redbridge NHS Trust, Dartford and Gravesham NHS Trust, Maidstone and Tunbridge Wells NHS Trust, North Cumbria NHS Trust, Peterborough and Stamford Hospitals NHS Foundation Trust, South London Healthcare NHS Trust and St Helen’s and Knowsley NHS Trust.

We need to balance the accountability of the NHS at local level to live within its means on one hand, with recognising that there is a legacy of debt for some trusts with PFI schemes

The south London trust faces a PFI repayment bill of £66.8m in 2012/13 based on a deal agreed in July 1998. It still has 25 years of payments to go. The Cumberland Infirmary was the first hospital in the country to be built under PFI, but it is also now in financial difficulty, having to pay 10% of its budget - £18.6m - to its provider in the 2012/13 financial year. And St Helen’s and Knowsley NHS Trust, which runs Whiston and St Helen’s hospitals, faces an annual bill of £42.5m. A spokesman said: “We are pleased to learn the Government will make money available to support the additional costs of the rebuilding of the trust's new hospital facilities.

"This is a contribution to support the trust to meet the costs of the PFI estate."

The Department of Health has set four conditions for trusts using the fund. That:

  • The problems they face must be exceptional and beyond those faced by other organisations
  • The problems must be historic and they have a clear plan to manage their resources in the future
  • They can show they are delivering high levels of annual productivity savings
  • They can deliver clinically-viable, high-quality services , including delivering low waiting times and other performance measures

The announcement of funding comes in the wake of the publication, in December, of a report by the Public Accounts Committee into the PFI crisis. It stated: “The cost of private finance schemes is an additional challenge for a limited number of hospitals. Long-term private finance initiatives deals reduce the department's ability to establish a level playing field of financially sustainable, autonomous trusts. In many cases efficiency savings alone will not be enough to make unviable trusts financially sustainable. The department faces a particular dilemma about how to manage the debt of these hospitals as their long-term financial commitments make reconfiguration more difficult.”

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