Interest Rates for Troubled Trusts Strongly Criticised

Interest rates of 6% are being charged on the bailout loans taken out by the most financially disadvantaged NHS trusts in England.

Experts have suggested that this is an extremely insidious policy that is effectively punishing some of the most vulnerable patients in Britain.

Indeed, evidence indicates that those trusts currently in financial special measures can pay up to 400% more on working capital loans than other organisations.

The Department of Health claims that this reflects the additional risk involved in lending to such trusts.

But healthcare leaders assert that it merely exacerbates an already troubling situation.

Richard Murray, policy director at the King’s Fund, suggested that this approach is completely unacceptable and counter-productive.

“This underlines just how keen the department is to make life in financial special measures as unpleasant as possible, thereby encouraging other trusts to live within their financial targets. However, for the struggling organisations already dependent on DH support, raising the hurdle in this way risks them simply coming back for more money when they cannot make the repayments. It feels rather like kicking someone when they’re down.”

Murray believes that some of the most troubled trusts in the NHS system, such as Barts, will find it impossible to ever settle the agreed credit.

Other trusts in financial special measures are Brighton and Sussex University Hospitals Trust; East Sussex Healthcare Trust; North Bristol Trust; Gloucestershire Hospitals Foundation Trust; and Maidstone and Tunbridge Wells Trust.

And several more trusts are set to join this unenviable group, following measures put in place by NHS Improvement.

Approximately 120 trusts forecast a deficit at the end of the financial year, and many of these will be considered for working capital loans.

Commenting on the issue, a spokesman for the Department of Health outlined the ethos behind the interest policy.

“An interest rate of 6 per cent is charged only to providers that are in financial special measures. This is to reflect the additional risk in providing this finance during the process of reasserting the financial controls needed. Providers that do not agree their control total are charged 3.5 per cent interest.”

However, there have been some positive stories emerging in recent weeks.

For example, both Norfolk and Norwich University Hospitals FT and Croydon Health Services Trust were removed from special measures just last month, after their financial situation significantly improved.

It has been reported, though, that NHS trusts will collectively accrue a deficit of approximately £900 million in the existing fiscal year, which is significantly more than the government target for this figure.


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