Mid Yorkshire Hospitals Trust’s latest Annual Report (2018/19) carries a note from the Auditors warning that Mid Yorkshire Hospitals has a chronic and cumulative deficit, no plan in place to repay the accumulated deficit of £159m (almost a third of the trust’s total income), no plan to return the trust to a recurrent break-even position, and relies on the expectation that “cash funding loan finance” from the Department of Health and Social Care will continue “without interruption”.

On this basis the auditors note that “These events and conditions … constitute a material uncertainty that may cast significant doubt on the Trust’s ability to continue as a going concern.”

The auditors also report that “we are not satisfied that, in all significant respects, Mid Yorkshire Hospitals NHS Trust put in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources for the year ended 31 March 2019.”

Sounds scary: but it turns out that Mid Yorkshire is in the same boat as many other major trusts across the country: London’s Royal Free Hospital has built up seven loans worth £243.9m, after posting its highest-ever deficit last year of £81m.

According to a recent Health Service Journal report so many loans have been issued to prop up flagging finances that “trusts combined debts to the department reached £14 billion by the end of 2018-19.”

Loans from the DHSC are now half as much again as the £9 billion of hospital assets still being paid for in over 100 PFI hospital projects, and set to cost a staggering £55 billion over the next 30 years, according to a new IPPR report, which echoes some of the findings of a recent book on PFI by this author.

Mid Yorkshire is one of many trusts that now demonstrate the problems of running both a loan and a PFI contract. Four of the ten trusts with the largest relative loans compared to income also have major PFI contracts.

Dozens more trusts have run up debts to the DHSC of hundreds of millions as they attempt to keep services going and deal with rising costs and demand for care after nine years of effectively frozen funding.

The most indebted as a share of trust income is Medway in Kent, with loans equivalent to almost 90% of annual turnover. The ten most indebted trusts all owe upwards of 60% of their turnover (more than double the level in mid Yorkshire): but the largest debt is King’s College Hospital in London which has run up a tab of £653m (capital loans of £139.6m and revenue / working capital loans of £514.2m) – equal to 59% of its exceptionally high trust turnover.

As the auditor implies, these loans are now on such a scale that they can never be repaid. Last year senior NHS bosses actually floated the idea of writing them off; it’s clear that with so many trusts so deep in the red and exceeding the “control total” limits, NHS England cannot intervene in them all, and the scale of cuts required to balance the books would be politically unthinkable even for a right wing Tory government.

So they settle for auditors adding largely meaningless critical notes to the accounts, to flag up the problem in a way they hope will not attract too much attention, and allow the loans to pile up – as a problem for any future government to tackle.

New campaign – by NHS bosses

Meanwhile NHS Providers, frustrated at the chronic failure of government to invest sufficient capital to maintain, let alone improve the NHS have launched a campaign of their own for additional capital funding.

A hard-hitting document headed “Rebuild Our NHS” points out three hard facts:

  • No capital budget has been set for the NHS beyond 2020/21
  • Current levels of capital spending are insufficient for the NHS’ needs
  • Existing mechanisms for individual NHS organisations to access capital funding do not work

It may not surprise many health workers to hear senior NHS managers pointing out that

“The NHS’ annual capital budget is now less than the NHS’ entire backlog maintenance bill (which is growing by 10% a year), meaning issues like leaking roofs and broken boilers, ligature points in mental health facilities and outdated technology cannot be fully addressed – even before any investment can be made in new buildings and services.”

But many will be surprised to hear that

“Agreements for major new NHS infrastructure projects effectively ceased in 2015, when the PFI regime fell out of favour without an alternative being put in its place. In the case of some capital projects, NHS organisations have had to take out interest-bearing loans from the government to help finance them – even though almost half of all trusts reported a deficit in 2018/19 and will be unable to repay these loans.”

NHS Providers go on to call for:

  • A multiyear NHS capital funding settlement, “allowing the NHS to plan for the long term and transform its services and equipment”
  • A commitment to bring the NHS’ capital budget “into line with comparable economies”.
  • An efficient and effective mechanism for prioritising, accessing and spending NHS capital based on need.

Campaigners may not agree with all the schemes NHS Providers want to finance with the new money, but it’s clear that the discontent with the present desperate lack of finance is not restricted to trade unions and campaigns.

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John Lister
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