Prestigious trusts sought to ‘circumvent’ spending limits, Treasury rules

The Royal Marsden and the Christie foundation trusts both donated millions to their associated charities without permission from NHSE or the Treasury.

The pair sought retrospective approval, but this was denied by the Treasury, which said they had fallen foul of government spending rules.

NHSE has now written to all trusts saying “we are not expecting these transactions to occur”.

Capital budgets have increased in recent years after being held down in the decade after 2010.

However the cost of addressing all backlog maintenance in the service continues to rise, and last year it increased to nearly £12bn.

Trusts must keep spending within caps known as capital departmental expenditure limits, or CDEL, even if they have enough cash to fund projects themselves.

At the time, the Royal Marsden said its £9m transfer was for the charity’s work on “modern patient environments” and “state-of-the-art equipment”. It was not clear what the Christie intended its donation be used for.

The letter, from acting deputy chief financial officer Nikhil Khashu, says: “The Chief Secretary’s [Laura Trott] view is that he would not have approved [the requests] at the time if it had come to HMT as it was an attempt to circumvent capital expenditure rules which exist to ensure the most effective allocation of resources within systems.”

It adds: “NHSE regional teams have formally written to these trusts to inform them of the Chief Secretary’s decision and that further non-compliance may lead to NHSE considering use of its regulatory powers.”

The letter says this type of transfer could be classed as special payments, for which Treasury approval should be sought before any offer is made.

The Christie’s £5.8m donation was described as a “significant weakness” in decision-making by audit firm Grant Thornton.

At the Marsden, auditors Deloitte said the trust had “entered into the transaction in good faith”, but said the transfer of £9m showed a “significant weakness in governance arrangements”.

Emma Knowles, director of policy and communications at the Healthcare Financial Management Association, said: “We understand that the trusts involved in these transactions sought legal advice, this letter reminds NHS bodies how important it is to look beyond legality to the regularity and propriety of such unusual transactions and to seek approval in advance of making them.”

HSJ asked if the providers would be required to claw back the funds. Both the Marsden and the Christie declined to comment. NHSE and the Treasury were also approached for comment.

Officials have previously said the DHSC needs to “hold the line” against foundation trusts that wish to spend cash balances on capital projects.