• Providers’ combined debts to DHSC reached £14bn by end of 2018-19
  • Trust leaders attempting to restructure and renegotiate their loans
  • Former NHS Improvement chief executive has said “deeply unlikely” debts could be repaid
  • Trusts with the largest debts

Heavily-indebted NHS providers are bidding to restructure their loans with the Department of Health and Social Care, albeit with little prospect of them being written off.

Trusts’ combined debts to the department reached £14bn by the end of 2018-19, with more than half relating to around 30 providers.

The debt has risen steeply over the last three years, as dozens of trusts with budget deficits have become reliant on interest-bearing loans to maintain payments to staff and suppliers. Last year, the debts surpassed trusts’ combined private finance initiative liabilities, which now stand at £9bn.

Although the interest rates on the loans vary, interest payments totalled £292m last year, which is an average rate of around 2 per cent.

Ian Dalton, the former chief executive of NHS Improvement, previously said national leaders would “have to have a serious look” at writing off some of the debts, as it was “deeply unlikely” they could be repaid.

Total trust debts to DHSC

The liabilities for some have now reached more than two-thirds of their total annual income, and are still rising due to recurrent budget deficits.

King’s College Hospitals Foundation Trust has the largest debt in cash terms, of £653m, which accrued interest charges of £17m last year. Although at 59 per cent, its debts are not in the top 10 as a proportion of annual turnover.

The trusts most in need of support told HSJ they are talking to regulators and the department about the potential for debts to be restructured, which could involve them being renegotiated or reduced. The trusts suggested there was little possibility of the debts being written off completely.

North Cumbria University Hospitals Trust said: “The long-term implication is that trusts recover their annual deficits and then use forward surpluses to pay off the debt… currently the trust is not aware of any potential for it to be written off.”

Medway FT said it was pursuing options with NHS Improvement regarding “possible restructuring and other solutions”.

Wye Valley Trust said it is unable to repay its debts and has proposed a possible restructuring plan.

United Lincolnshire Hospitals Trust said it “doesn’t currently have a plan” to repay the bulk of its debt and is talking to NHSI about possible options.

Most indebted trusts

 Debt to DHSC (£m)Debt as % of turnoverInterest paid (£m)Planned deficit in 2019-20 (£m)
Medway Foundation Trust 264.6 88.8 3.7 -22.3
North Cumbria University Hospitals Trust 247.2 87.1 3.3 -22
Wye Valley Trust 147.3 79.2 2.7 -17.3
University Hospitals of Morecambe Bay Foundation Trust 233.8 69.5 4.1 -38.5
Royal National Orthopaedic Hospital Trust 105.5 68.0 1.2 -1.9
United Lincolnshire Hospitals Trust 302.5 67.6 6.3 -41.4
Sherwood Forest Hospitals Foundation Trust 212.9 66.8 2.9 -15
Worcestershire Acute Hospitals Trust 273.1 66.3 3.5 -73
The Queen Elizabeth Hospital King’s Lynn Foundation Trust           120.2 63.7 1.8 -2.3
Southport and Ormskirk Hospital Trust 104.9 62.4 2.7 -8.3

The DHSC did not directly address HSJ’s questions about the debts. A spokesman repeated the government had supported the NHS long-term plan with a new funding settlement, with an ambition of “no provider being in deficit by 2024”.

He added: “We keep NHS accounts under constant review so we can support trusts’ plans to balance good finances with excellent quality care for patients.”

NHS England and NHS Improvement did not wish to comment.

The bulk of the debt relates to “interim revenue support” (£10bn), the receipt of which triggers increased regulatory oversight. The number of trusts receiving interim support increased to 114 last year, compared to 102 the year before. The rest relates to capital and “normal course of business” loans. 

Miriam Deakin, director of policy and strategy at NHS Providers, said: “The present situation is unsustainable. Some trusts are being loaded with debt that they have no realistic prospect of paying back, compounded by interest payments.

“Many trusts with debts are in health economies that are not funded adequately for the care their populations need. Charging interest only imposes an additional pressure which trusts have to make up through further cost reductions, income increase or productivity gains.

“In this set of circumstances, writing off debts must be a serious proposition. But a move such as this needs to be part of a wider rebalancing that takes into account the unavoidable financial pressures trusts face.”