• Trust bailouts reach almost £2bn in 2015-16, up from £1.2bn the previous year
  • Payments necessary to maintain the day to day running of hospitals and to pay staff or creditors
  • London trust says there is “no realistic prospect” of repaying its loan without further support
  • Explore the full data

More than half of acute trusts received some form of cash bailout in 2015-16 as total “revenue support” from the Department of Health reached almost £2bn.

This compares to payments totalling around £1.2bn in 2014-15, when around a third of the acute sector received a revenue bailout.

The DH payments were necessary to maintain the day to day running of hospitals, in many cases to prevent them running out of cash to pay staff or creditors. Generally trusts running large deficits are reliant on these support payments.

Nineteen trusts received DH support worth more than 10 per cent of their annual income. North Cumbria University Hospitals Trust received loans worth 30 per cent of its income, while Barts Health Trust received the largest amount in cash terms, totalling about £130m.

Ten trusts which received the largest loans as a percentage of turnover

Trust NameRolling loans Closing
Balance
31/03/16 (£000)
Revolving loans Closing
Balance
31/03/16 (£000)
Total revenue bailout £’000As % of income
Medway NHS Foundation Trust 79300 4734 84034 33
North Cumbria University Hospitals NHS Trust 50746 20400 71146 30
Milton Keynes Hospital NHS Foundation Trust 53110   53110 28
University Hospitals of Morecambe Bay NHS Foundation Trust 60100 4938 65038 23
Tameside Hospital NHS Foundation Trust 34950   34950 21
Sherwood Forest Hospitals NHS Foundation Trust 47814 12287 60101 20
The Princess Alexandra Hospital NHS Trust 23737 15317 39054 20
The Queen Elizabeth Hospital Kings Lynn NHS Foundation Trust 32425   32425 19
Barnsley Hospital NHS Foundation Trust 26909 4800 31709 18
Worcestershire Acute Hospitals NHS Trust 38172 23775 61947 17

The vast bulk of the payments now take the form of working capital loans, carrying interest rates of up to 3.5 per cent, which the DH expects to be repaid in full within five years. The notes in the box below provide more detailed information about the loans and HSJ’s analysis.

This form of financing was introduced the previous year to replace traditional “public dividend capital”, which the DH has described “a form of free non-repayable cash”. The department said the move will “incentivise the development and implementation of sustainable recovery plans to a point where existing debt can be serviced”.

However, several trusts told HSJ that repayment would depend on various factors, while London North West Healthcare Trust, which received £109m in total, said there was no prospect of repayment within the specified timeframes without the receipt of further loans.

Richard Murray, policy director at the King’s Fund, also questioned whether trusts would be able to repay, given that further support will be needed by many trusts to plug deficits this year and beyond.

He said: “I can’t see under what scenario in the future that some of the trusts would be able to repay these sums without being forever reliant on new loans. So are these really loans or are they PDC? A trust like Barts is still heavily in deficit without trying to repay a loan of £115m over three years.

“The size of the numbers underlines just how closely involved the DH has become. This is not what foundation trusts especially were meant to be about.”

Meanwhile, there were still 12 trusts that received PDC revenue support in 2015-16, totalling £113m.

The reported provider deficit was £2.45bn in 2015-16, up from around £843m in 2014-15.

The introduction of the “sustainability and transformation fund” in 2016-17 was intended to eliminate the provider deficit and dramatically reduce the need for DH support payments. However, the sector has subsequently published financial plans delivering a deficit of £580m, with experts warning the outturn is likely to be far worse. This means a significant amount of loan funding will still be needed this year.

A spokeswoman for London North West Healthcare Trust said its support payments were required to fund its £77m deficit, adding: “There is no realistic prospect of the trust paying back the money by 2021 without further revenue support.”

University Hospitals of Morecambe Bay Foundation Trust said it is talking to regulators about its “future funding requirements”, while Princess Alexandra Hospital Trust said repayment would depend on the ongoing work to “develop sustainable financial and transformation plans” for the area.

Roy Jackson, director of finance at Hinchingbrooke Health Care Trust, said: “It is the expectation of the trust’s forward financial planning that we will return to surplus by 2021-22 and we will be in a position by that point to address historical financial support to the trust.”

How HSJ’s analysis works

  • The data was taken from a document published by the DH alongside its 2015-16 annual accounts.
  • “Revolving loans” are generally used to cover short term and fluctuating cash requirements, and attract an interest rate of 3.5 per cent. They are similar to an agreed overdraft, and are often replaced by a “rolling loan”, which has an interest rate of 1.5 per cent.
  • PDC is treated as a kind of equity investment in trusts rather than debt to be repaid.
  • HSJ has only looked at revenue loans and PDC, so has not included capital support in the numbers.
  • The PDC figures include “liquidity payments” made to trusts involved in a merger, such as Chelsea and Westminster Hospital FT and West Middlesex University Trust.
  • The bailout total in 2014-15 included around £176m of “income support” paid to 15 trusts. Reports published by NHS Improvement suggest trusts did not receive this form of support in 2015-16.
  • However, around 100 trusts did receive £331m of “additional income”, which refers to the local capital to revenue transfers requested by the DH midway through last year. HSJ has not included these payments in its figures as they were primarily intended to boost the national revenue position rather than cover cash shortfalls.
  • The figures do not include payments made to support providers with large private finance initiative repayments, or the £149m of planned “income support” for trusts involved in mergers and acquisitions.