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21 trusts have received £1 billion in bailouts

NAO report warns of risks of continuing to bail out weak organisations

Ingrid Torjesen

Thursday, 05 July 2012

More than £1 billion in bailouts has been given by the government to a group of 21 trusts since 2006, a report by the National Audit Office (NAO) has revealed.

The report 'Securing the future financial sustainability of the NHS' highlights the large gap that exists between the strongest and weakest NHS organisations in terms of financial sustainability.

Although in 2011-12 there was a surplus of £2.1 billion across the NHS as a whole, several organisations, particularly some hospital trusts, struggled financially. According to the NAO’s report, 10 NHS trusts, 21 NHS foundation trusts, and three Primary Care Trusts (PCTs) reported a combined deficit of £356 million, and the NAO estimates, based on a census of PCTs, that without direct financial support, a further 15 NHS trusts and seven PCTs may have reported deficits.

Between 2006-07 and 2011-12 four foundation trusts and 17 NHS trusts needed injections of working capital from the Department of Health totalling £1 billion; of this money, £356 million went to South London Healthcare NHS Trust and its predecessor bodies, and £195 million to Barking, Havering and Redbridge University Hospitals NHS Trust. 

The Department anticipates that NHS trusts and NHS foundation trusts are likely to need around £300 million more public dividend capital in 2012-13.

More than half of PCTs surveyed by the NAO said they were concerned about the financial sustainability of their healthcare providers. Previously, PCTs and Strategic Health Authorities (SHAs) have been able to support otherwise weak providers, but it is unclear whether clinical commissioning groups and the NHS Commissioning Board will agree to provide financial support to providers, in the same way.

The NAO report says it is hard to see how continuing to give financial support to organisations in difficulty will be a sustainable way of reconciling growing demand for healthcare with the size of efficiency gains required within the NHS.

Amyas Morse, head of the NAO, said: "So far the NHS is meeting the challenge of maintaining strong finances in a period of austerity. It is clear, however, that parts of the service are under strain.

"For value for money to be delivered in future, two things are required: firstly, careful management of the risks created by transition to a new commissioning model; and, secondly a coherent and transparent financial support mechanism which outlines when trusts should be supported, or allowed to fail."

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