Struggling NHS trusts to receive £1.5 billion government bailout

By Becky Marshall

The government’s Department of Health have announced that seven struggling NHS hospital trusts are each to benefit from a £1.5 billion bailout fund, available over a period of 25 years. The seven identified NHS trusts have suffered financial problems, partly caused by Private Finance Initiative repayments and also by the governments request for the NHS to make significant savings by 2015.

The £1.5 billion fund has been made available so that the government can ensure that the country’s NHS trusts, suffering the greatest financial problems, do not allow their standards of patient healthcare to slip. Conditions have been attached to the bailout fund in the form of four key tests, which the trusts must meet before they may have access to the money. The tests state that the trust must be facing problems which are exceptional and far greater than those faced by other NHS trusts. In addition, each trust should be able to demonstrate that their problems are historical and show that they have a decent plan in place for the future management of their resources. Finally, in order to be eligible for the fund, trusts should be able to demonstrate that annual productivity savings are high and that they deliver good quality service and performance levels.

The seven NHS trusts which are to receive the £1.5 billion government bailout fund include Maidstone and Tunbridge Wells; St Helens and Knowsley; South London; Peterborough and Stamford; Barking, Havering and Redbridge; Dartford and Gravesham and North Cumbria.

The news of the £1.5 billion bailout will not have come as a surprise to many, for the financial problems in the health service have been brewing for a while. Six months ago, Andrew Lansley, the Health Secretary, stated that 22 NHS trusts had contacted him claiming that their ‘clinical and financial stability’ was being threatened by the cost of contracts. Last week, Lansley suggested that private finance initiative (PFI) schemes lie at the root of these current problems, leaving parts of the NHS with a ‘dismal legacy’ as trusts struggle to repay large debts.

PFI schemes were first introduced by the Conservative government under John Major, but were much more widely adopted by the Labour government during their time in power. PFI schemes involved the building of a hospital (or school) by a private contractor who would own the building for up to 35 years. It was then the responsibility of the public sector (NHS trusts in this case) to pay the contractor for ongoing building maintenance as well as repaying the cost of building construction at a rate of interest.

Andrew Lansley, stated that the PFI schemes had left parts of the NHS relying on plans would not be viable in future years. He insinuated that Labour had “swept these problems under the carpet for a decade”leaving the current government a “£60 billion post-dated PFI cheque to deal with”. The Health Secretary went on to say that he would like to encourage greater transparency and openness in the process of giving financial aid to the health service and although some ‘tough solutions’ may be required, the government will not allow sick people to suffer due to the debt crisis created by previous governments.

However, PFI is not the only cause of the current financial problems within the NHS. In October 2011, a report from the National Audit Office, found that NHS trusts are also struggling due to the government’s need to make savings (in order to combat the budget deficit).

By 2015, the NHS is required to make savings of up to £20 billion, meaning it needs to see a 4% increase in productivity.

This is a long term problem that the NHS will have to face and given that productivity in the health service has seen a gradual decrease in the last decade, the next few years will be particularly challenging if it is to meet this target without in some way sacrificing the quality of health care patients receive.

Add Comment

Click here to post a comment

Your email address will not be published. Required fields are marked *