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NHS: Finance

Volume 481: debated on Monday 20 October 2008

To ask the Secretary of State for Health which NHS trusts are deemed financially challenged; what the cumulative deficit of each such trust is; what estimate has been made of the proportion of turnover for 2008-09 that the deficit represents in each case; what support such trusts are receiving; and if he will make a statement. (227505)

The Department introduced a new working capital loans system in 2006-07. Instead of relying on brokerage as a source of funding or planned support, trust working capital requirements must now be financed by loans agreed with the Department and recorded in individual accounts. Organisations now have to address financial problems head-on and take steps to ensure that they live within their means. Deficits remain where they occur, and are transparent in final accounts at the year-end.

As a result of introducing the new loans system, there were 17 NHS trusts where the financial challenges are such that the Department either could not give a loan because the trust could not afford to meet the repayments, or where a loan was agreed, but the amount could be repaid only over a very extended timescale. Instead these trusts were advanced money as a short-term measure to cover their running costs while a rigorous review was conducted on their finances.

In the 2007/08 Quarter 4 edition of The Quarter (a copy of which has been placed in the Library), the Department announced that 10 of the original 17 trusts were no longer classified as financially challenged. This was a result of the trusts working extremely hard in conjunction with their strategic health authorities (SHA) and primary care trusts (PCT) to improve their underlying financial position. As a result they are now trading in balance and are able to produce sufficient surpluses going forward to operate as a sustainable organisation, both financially and in the provision of health care. All 10 of these organisations will have repaid their debt within five years

The remaining seven NHS organisations currently deemed as financially challenged trusts, and their forecast cumulative deficit for the end of the 2008-09 financial year, as a total and as a percentage of their forecasted 2008-09 turnover are given in the following table:



Cumulative deficit position at the end of the 2007-08 financial year

Quarter 1 forecast outturn for the 2008-09 financial year

Forecast cumulative deficit position at the end of the 2008-09 financial year

Planned turnover 2008-09

Forecast cumulative deficit position for 2008-09 financial year as percentage of 2008-09 forecast turnover

Barking, Havering and Redbridge Hospitals NHS Trust






Bromley Hospitals NHS Trust






Hinchingbrooke Healthcare NHS Trust






Queen Elizabeth Hospital NHS Trust






Queen Mary’s Sidcup NHS Trust






The Lewisham Hospital NHS Trust






Whipps Cross University Hospital NHS Trust






As reported in the 2008-09 Quarter 1 edition of ‘The Quarter’, the Department is continuing to work with these organisations to identify sustainable operating and financial solutions as we go forward.