At least 10 primary care trusts would face finishing 2012-13 in the red without loans or bailouts from their neighbouring commissioners, HSJ research has found.

Under the government’s NHS reforms, debts incurred by PCTs in the current financial year will be passed to the clinical commissioning groups which succeed them in April. Department of Health financial rules state that no PCT can plan for a deficit in 2012-13.

The department’s latest quarterly report shows that at the end of September only one PCT - North Yorkshire and York - out of 151 was forecasting a deficit for the year. However, HSJ analysis of the latest published finance reports of nearly every PCT cluster in England has found a further 10 PCTs are only expected to finish the year in the black with the financial support of their peers.

In the cases of Hillingdon and Bexley part of that support will come as loans, expected to be repaid by their successor CCGs after PCTs are abolished.

In other cases, it will be straight transfers of funds from in-surplus PCTs to those facing deficit, often taken from the 2 per cent that was “topsliced” from commissioners’ allocations for non-recurrent expenditure this year (see box below).

Croydon: historical financial challenge

South West London PCT cluster board papers show NHS Croydon is likely to receive more than double the amount it paid into the cluster’s fund for “non-recurrent” expenditure in 2012-13.

NHS Croydon’s entire contribution to the £45.5m fund - £11.4m - was paid back to the PCT earlier in the financial year, to help it achieve financial balance.

On top of this, this month’s board papers show Croydon will receive £8.7m of the fund for strategic and transitional costs.

The cluster also intends to use a further £5.5m from the fund to help Croydon balance its books this year.

An NHS South West London spokeswoman said Croydon had “a historical financial challenge from 2010-11”, when a huge hole developed in its finances.

She added: “Croydon CCG is working hard on a three-year plan to improve its financial position; we have been very clear that turnaround would not be achieved in a year.”

This portion of each PCT’s funding is held by its strategic health authority, and can only be accessed by the PCT following approval of a business case for its use.

Nearly all of the commissioners HSJ found to be in receipt of, or expecting, financial support from their neighbours were based in outer London; the majority of those providing support were inner-London PCTs.

In the North Central London cluster, outer London PCTs Barnet, Enfield and Haringey - which all recorded deficits last year - were in the red nine months into the current financial year.

The cluster’s latest finance report said that without “further actions” the trio would finish the year with respective deficits of £2.5m, £3.5m and £4.3m.

However, it added that a “risk share arrangement” would enable all PCTs in the cluster to break even or show surpluses for the year.

Its two inner London members, Camden and Islington, expect to overshoot their planned surpluses by £17.4m and £10m respectively. A cluster spokeswoman said the risk share would work by “the transfer of [budgets] formally through the Department of Health”.

The North West London cluster established a £41m “challenged trust board” fund this year, with contributions from Brent, Westminster, Kensington and Chelsea, Hammersmith and Fulham, and Ealing. It allocated £14.6m to Harrow, £9.6m to Hounslow, and £5.1m to Hillingdon (see box below).

Hillingdon: £15m loan from neighbour

Hillingdon received £5.1m in 2012-13 from a “challenged trust board” fund established by other PCTs in North West London.

However, by the end of November it was £7.5m in deficit, due to “significant slippage” on its savings programme and above-plan activity at its local hospital, cluster board papers state. Its forecast deficit for the year was £22m.

To plug this gap Hillingdon will take a £15m loan from neighbouring Brent PCT. It is expected that this loan will be repaid by Hillingdon’s successor body - Hillingdon Clinical Commissioning Group - over three years. The balance of Hillingdon’s forecast deficit is to be covered on a “non-repayable basis” from the 2 per cent of NHS North West London funds held back at the start of the year for one-off spending.

The paper added that Brent had the headroom to make the £15m loan due to in-year underspends on budgets such as prescribing, caps on acute contracts, “slippage in investments”, and a lack of need for its contingency funds.

Ealing, which according to North West London’s operating plan contributed £5.9m to the fund, received £11.3m.

At the end of November, all four recipient PCTs were forecasting balanced books for 2012-13, although all but Harrow were in deficit at that point in the financial year.

The only significant example HSJ found of a PCT outside London receiving financial support from its neighbours was in South Gloucestershire. It is forecasting a surplus of £1.4m, after receiving a non-recurrent transfer of £9.7m from two neighbouring PCTs.

A Bristol, North Somerset and South Gloucestershire cluster spokesman said funds had also been transferred to South Gloucestershire in 2011-12 to ensure “a stable and consistent approach to commissioning services through the transitional period”.

Differences between the financial reporting conventions used by NHS organisations make it difficult to establish the full scale or spread of mutual financial support among PCTs.

Nuffield Trust chief economist Anita Charlesworth said: “Financial problems on both commissioner and provider sides have been concentrated in the outer ring around London for a number of years.”

An NHS London spokesman said the requests from mainly outer London PCTs for financial support had arisen for “a variety of historic reasons”, including funding levels and demographics.

He added: “Mutual financial support is being provided on a cluster basis to ensure continuity of services but this is not sustainable in the longer term without strategic change.”

North Yorkshire and York: inherited anger

North Yorkshire and York planned for a £19m deficit in 2012-13, although its latest finance report forecasts that the actual deficit will be just £15m.

If the forecast proves accurate, the deficit will be apportioned to the various commissioners that replace it in 2013-14.

In a paper to the primary care trust’s board meeting this month, North Yorkshire and York chair Kevin McAleese asked: “If the CCGs are newly legally constituted bodies, how can they be held to be legally responsible for the debts of their predecessors?”

Mr McAleese said when York Teaching Hospital Foundation Trust took over Scarborough and East Yorkshire Healthcare last year, the latter trust’s debts “were all written off by the [strategic health authority], which is now refusing to do the same thing for the clinical commissioning groups”.

He predicted local CCGs would “seek to explore this matter further in the next few weeks by whatever means are at their disposal”.

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