North Bristol NHS Trust first reported a cumulative deficit of £4.2 million in 2001-02, which increased to £48.8 million in 2002-03. In the subsequent three financial years the trust has recovered £3.9 million, and therefore the cumulative deficit remaining to be recovered at the end of 2005-06 is £44.9 million.
The timescale for the recovery of deficits by NHS trusts is determined by the statutory breakeven duty, which states that a cumulative deficit must be recovered in the subsequent two years following the first year in which a cumulative deficit position is reported. It is the responsibility of the strategic health authorities (SHA) to work with NHS organisations in their local health economies and agree a recovery plan that phases the recovery of deficits over a number of years. By exception, the SHA can agree an extension to the recovery period to four years in line with an agreed recovery plan. At the end of 2005-06 North Bristol NHS Trust had been in a cumulative deficit position for five years and is therefore in breach of its statutory duty.
The Department cannot simply write off historical deficits. The Department, and, consequently, the NHS, have to live within an agreed level of resources in each financial year. This level is set by HM Treasury and voted by Parliament. In order for the system as a whole to balance, a deficit in one organisation has to be matched by a surplus elsewhere. Deficits therefore must be repaid so that the resources can be returned to the organisations that generated the offsetting surpluses.
We anticipate that officials will make an announcement on the progress of this scheme shortly.
All proposals for private finance initiative schemes are assessed against a variety of criteria in order to ascertain their affordability and fit with the needs of the communities they are to serve. The financial position of the trust concerned and whether it is in deficit or surplus forms part of these considerations.