• Thirty-nine out of the 44 STP areas include providers that drew down revenue bailouts from the DH last year, which will have to be repaid
  • Proportionally, West, North and East Cumbria STP footprint had the largest “outstanding balance” at the end of 2015-16
  • Five STP areas will not be affected by these loan repayments
  • Download full trust data

The vast majority of health systems in England face loan repayments to the Department of Health which come to a combined total of £2bn, according to analysis by HSJ.

Thirty-nine out of the 44 sustainability and transformation plan areas include providers that drew down revenue bailouts from the DH last year, which will have to be repaid over the next three to five years.

The individual trusts are responsible for the repayments, but these must be factored into the wider STP’s financial plans.

Proportionally, West, North and East Cumbria STP had the largest “closing balance” at the end of 2015-16.

Based on the funding allocation of Cumbria Clinical Commissioning Group, the debt of £71m represented 8.5 per cent of income. In reality the percentage is even larger as the entire debt relates to North Cumbria University Hospitals Trust, while a significant proportion of the CCG’s income actually sits with the Lancashire and South Cumbria STP.

North East London had the largest outstanding balance in cash terms, of £161m, representing 5 per cent of its income for the year.

Map: Amount owed as a proportion of STP turnover. Darker colours represent larger debt

Herefordshire and Worcestershire; Milton Keynes, Bedfordshire and Luton; and Hertfordshire and West Essex will also have to repay loans worth more than 5 per cent of their income.

The debts are often largely attributable to one large provider in the region, such as North Cumbria University Hospitals Trust, or Barts Health Trust in north east London.

There are five STPs which do not contain providers facing repayments.

The total closing balance across England at the end of 2015-16 was slightly over £2bn.

This is likely to increase in 2016-17, as many providers are still running operating deficits, which will require further bailout support.

NHS England wants each STP to work towards regional “control totals” – effectively merging the financial performance of individual organisations – but only a handful of areas are thought to be close to this.

The DH loans – which are published alongside its annual accounts – are necessary to maintain the day to day running of hospitals. In many cases this to prevent them running out of cash to pay staff or creditors. Generally trusts running large deficits are reliant on these support payments.

This form of financing was introduced in 2014-15 to replace traditional “public dividend capital”, which was a form of free non-repayable cash.

The DH said the move would “incentivise the development and implementation of sustainable recovery plans to a point where existing debt can be serviced”.

However, some trusts have previously told HSJ that repayment will depend on various factors, or that further loans would be required to repay the existing loans in the set timescales.

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

The support is often issued to trusts as a short term “revolving loan” carrying an interest rate of 3.5 per cent, but these are usually replaced by a longer term “rolling loan” at 1.5 per cent.

Using the 1.5 per cent interest rate, this equates to an annual interest payment of at least £30m nationally.

A spokesman for Cumbria Clinical Commissioning Group said the “full scale of the financial challenges facing our health system and the financial modelling takes into account all of our responsibilities”.

A spokesman for Herefordshire and Worcestershire STP confirmed the loan repayments have been factored into the financial plans, and there has been no indications that the outstanding balance could be converted to PDC, and therefore not have to be repaid.

He added: “We are aware of the implications but are confident we have a financial plan to deal with this.”

A spokeswoman for North East London STP said the situation was “very challenging”.

Milton Keynes, Bedfordshire and Luton; and Hertfordshire and West Essex did not respond.

The data was taken from a document published by the DH alongside its 2015-16 annual accounts.

HSJ collated the outstanding balance of all “interim revenue support” loans for each provider, and then for each STP area.

PDC or capital support were not included.

Map: Trusts which have drawn down the loans in 2015-16

Related files/tables