Pennine Acute Trust has debts of over £160m scrapped by government in NHS financial reset

Date published: 17 April 2020

From the start of this month, The Pennine Acute Trust is to have over £160m of debt scrapped as part of the £13.4 billion debt write-off announced by the Health Secretary.

Pennine Acute NHS Trust - which operates Rochdale Infirmary, Fairfield General Hospital, the Royal Oldham Hospital and North Manchester General Hospital – has had £160,561,000 of debts written off as a major financial reset for NHS providers.

This is part of a package of major reforms to the NHS financial system, designed in a collaboration between the Department of Health and Social Care and NHS England, which will begin from the start of the new financial year.

This package is launched in combination with a simpler internal payment system to help NHS trusts in dealing with the coronavirus (COVID-19) response, which was agreed with NHS England last week.  

This significant change will mean hospitals will get all the necessary funding to carry out their emergency response, despite many hospitals cancelling or limiting some of their usual services such as elective surgery or walk-in clinics due to the virus.

Health Secretary Matt Hancock said: “As we tackle this crisis, nobody in our health service should be distracted by their hospital’s past finances.

“£13.4 billion debt write off will wipe the slate clean and allow NHS hospitals to plan for the future and invest in vital services.

“I remain committed to providing the NHS with whatever it needs to tackle coronavirus, and the changes to the funding model will give the NHS immediate financial certainty to plan and deliver their emergency response.”

While many NHS trusts manage strong finances, under the existing rules, some took out loans to plug financial gaps in their day-to-day (revenue) or capital (infrastructure) budgets.

NHS chief executive, Sir Simon Stevens, said: “We’ve advocated for and support this pragmatic move which will put NHS hospitals, mental health and community services in a stronger position – not just to respond to the immediate challenges of the global coronavirus pandemic, but also in the years ahead to deliver widespread improvements set out in our NHS Long Term Plan.”

Under the new rules set out in a letter to all NHS trusts, should hospitals need extra cash this will be given with equity, rather than needing to borrow from the government and repay a loan. 

The letters also include details on every local area’s capital budget for 2020/21, providing certainty to the NHS for the new financial year and enabling investment in vital longer-term infrastructure upgrades as soon as possible.

These budgets come on top of the capital facility the government launched in February to ensure the NHS has access to whatever extra capital investment it needs, without charges, to respond to the COVID-19 outbreak.

A spokesperson for the Northern Care Alliance NHS Group which brings together the Salford Royal and Pennine Acute trusts said: “The Department of Health and Social Care, as part of the 2020/21 planning round, has introduced new cash and capital regimes for the NHS. DHSC has confirmed that under this new regime all interim and distressed financing loans will be replaced by Public Dividend Capital with an effective date of 1st April 2020. NHS providers won’t be advantaged or disadvantaged as a result of this change.”

Heywood and Middleton MP, Chris Clarkson, has welcomed the announcement.

The MP praised these measures and stated that “as we deal with this unprecedented situation, no hospital should be distracted by any historic debt and these changes will provide much needed financial support during this period of intense pressure for our precious NHS, as well as lay the foundations for longer term commitments to support our health service becoming financially sustainable.”

These measures form part of major reforms to the financial management of the NHS, which will give hospitals access to extra cash and capital investments as they respond to the outbreak of coronavirus and beyond.

Mr Clarkson added: “During this crisis we all have our role to play in protecting our wonderful NHS and its dedicated staff and I urge all my constituents to follow government guidelines as we care for the more vulnerable in our community in these difficult times.”

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