• NHS providers owed the DHSC more than £11bn at the end of 2017-18, up from £8.1m
  • Experts say there is no hope of debts being repaid
  • Dozens of trusts struggling to mainatin cash flows to pay staff and suppliers
  • Table showing trusts with the deepest debts

A steep increase in emergency bailouts means NHS trusts’ total borrowing from the Department of Health and Social Care has overtaken their PFI liabilities.

According to year end accounts published by NHS Improvement, NHS providers owed the DHSC more than £11bn, up from £8.1bn at the end of the previous year.

For the first time, these debts to the department have become the largest source of provider borrowings, ahead of liabilities relating to the private finance initiative. PFI liabilities stood at £9.2bn, down from £9.4bn the previous year.

The figures reflect the fact that dozens of trusts are struggling to maintain adequate cash levels due to their recurring income and expenditure deficits, and have become reliant on interest bearing loans from the DHSC to pay staff and suppliers.

Trust leaders have said the loan system has left many trusts in “a vicious circle of inevitable failure”, while policy experts suggested it would be “fantasy” to expect some of the debts to be repaid.

Of the £11bn balance, around £7.3bn relates to “interim revenue support”, which are emergency loans issued in exceptional circumstances to maintain day to day services. The net amount drawn down last year, of around £2.6bn, broadly matched the figure from 2016-17.

The remaining £3.7bn relates largely to longer term strategic loans for capital investments.

 2014-15    2015-16   2016-17  2017-18  
Total DHSC debts - cumulative balance (£bn)     
2.91 5.27 8.1 11.01
Emergency loan debt - cumulative balance (£bn)                                      0.83 2.12 4.72 7.3

Richard Murray, director of policy at the King’s Fund and former director of finance at the DHSC, told HSJ: “Every year NHS providers continue to pile up debts with the department that there is no prospect of them ever repaying in the normal course of business.

“Back in 2016 we had the first fundamental “reset” on NHS finances. Alongside the 10 year plan for the NHS there now needs to be a second reset that removes these elements of fantasy finance and that allows providers and commissioners to plan on a sustainable basis.”

Trusts must pay interest on the loans which ranges between 1.5 and 6 per cent, with those in financial special measures paying the highest rate. A parliamentary statement in March suggested that trusts paid interest charges on their emergency loans of more than £85m in 2017-18.

HSJ asked the DHSC if there is any prospect of debts being written off, as part of the long term NHS plan.

A spokesman said: “The government has committed to increase NHS funding by £20.5 billion a year more in real terms by 2023, and we will agree a long term plan with NHS leaders, clinicians, and health experts, part of which will be working to ensure no NHS organisation faces a financial deficit.

“The department and NHSI keep trust finances and debt under constant review to ensure we can support providers’ plans to balance sustainable finances with excellent quality care for patients.”

David Williams, policy advisor at NHS Providers, said the loans system is “locking trusts with significant cash flow problems into a vicious circle of inevitable failure”, and added: “The rising amount of borrowing from the Department of Health and Social Care shows how trusts are increasingly living hand to mouth, having to borrow just to pay bills and staff. This does not support good planning or good care.”

Twenty trusts with the largest debts

Trust nameBudget deficit
2017-19 (£m)
DHSC debts
at April 2018 (£m)
DHSC debts
as % of turnover
Medway NHS Foundation Trust -62 217 75
North Cumbria University Acute Hospitals NHS Trust -40 186 74
Sherwood Forest Hospitals NHS Foundation Trust -24 178 60
North West Anglia NHS Foundation Trust -39 174 59
Wye Valley NHS Trust -26 104 58
The Royal National Orthopaedic Hospital NHS Trust -12 75 53
Milton Keynes General Hospital NHS Foundation Trust -16 110 51
Kettering General Hospital NHS Foundation Trust -34 119 51
University Hospitals of Morecambe Bay NHS Foundation Trust -65 157 48
Worcestershire Acute Hospitals NHS Trust -53 195 48
King’s College Hospital NHS Foundation Trust -132 513 46
United Lincolnshire Hospitals NHS Trust -81 201 46
The Queen Elizabeth Hospital, Kings Lynn NHS Foundation Trust -21 84 46
The Princess Alexandra Hospital NHS Trust -28 95 45
George Eliot Hospital NHS Trust -19 62 45
Brighton and Sussex University Hospitals NHS Trust -56 237 43
West Hertfordshire Hospitals NHS Trust -43 136 42
East Sussex Healthcare NHS Trust -55 157 41
Yeovil District Hospital NHS Foundation Trust -19 59 41
Southport and Ormskirk Hospital NHS Trust -34 73 39