Daily Insight: Trusts kicked when they're down

The price of special measures

The most financially troubled NHS trusts in England are being charged interest rates of 6 per cent on bailout loans from the Department of Health, which experts have likened to “kicking someone when they’re down”.

HSJ has learned that trusts in financial special measures are paying interest rates up to four times higher on “working capital” loans than other providers.

The DH said this is designed to “reflect the additional risk in providing this finance” to trusts in special measures.

Dozens of trusts with income and expenditure deficits are drawing down revenue loans from the DH to maintain payments to staff and suppliers, but these usually carry interest rates of 1.5 or 3.5 per cent.

However, trusts that are in financial special measures have told HSJ they are being charged 6 per cent interest on at least some of their loan – equating to £15m in annual interest payments.

Barts Health Trust, which was placed in financial special measures in July, confirmed it is being charged 6 per cent on a £54m loan, and 3.5 per cent on another loan of £83m.

This would equate to an annual interest payment of £6.2m for a trust which ended last financial year with an underlying deficit of more than £200m.

Richard Murray, policy director at the King’s Fund, said: “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.”