Struggling trusts owe DH quarter of a billion in bailout cash

The figures, released under the Freedom of Information Act, show hospital trusts had been given £778m in working capital loans by the DH in 2006-07 and £247m since then.

At the end of 2010-11 trusts owed £269m and 11 trusts had £10m or more outstanding.

The list includes Royal United Hospital Bath Trust, which was given £38m in 2006-07 and still owes £13.7m, and North Bristol Trust which was loaned £52m and has £18.4m left to pay.

Loan repayments place an additional burden on non-FTs that are looking to be authorised by Monitor before the “drop-dead date” of April 2014.

Of the 11 trusts owing more than £10m, the nine non-FTs already have an average cost improvement programme saving of 7.2 per cent for 2011-12 – higher than Monitor’s worst case estimate for the savings required for the year of 6.5 per cent.

A finance director at a trust that has repaid its working capital loan told HSJ: “We’re happy we managed to pay it off before the current situation with trusts having to set such high CIPs. The repayments had to be made from the year-end surplus so the amounts repaid can be looked at as a measure of the stability of a trust.”

The biggest repayments came in 2008-09 when there was an accounting “fix” allowing trusts to make repayments before the end of the financial year, he said.

Trusts repaid more than £258m in 2008-09, roughly the same as the next two years combined.

• Read more: Trusts received £28m in ‘sweetener’ loans

Finance consultant and HSJ columnist Noel Plumridge said: “It’s not clear where trusts are going to find the money to fund these debts when primary care trusts are battening down the hatches.

“The repayments in  2008-09, 2009-10 and 2010-11 were in the context of 4 per cent growth whereas the position now is ‘flat cash’ for the foreseeable future. All of which will make achieving foundation trust status still more difficult.”

NHS London was forced to contradict a report from the capital’s challenged trust board last week which said trusts in the foundation pipeline were to be allowed to waive repayments of their public dividend capital (PDC).

The challenged trust board’s report said: “The requirement for trusts which enter the FT pipeline to repay their PDC in the short term has been stopped. This longer term approach will assist trusts in dealing with their legacy of debt and move much more quickly into financial balance. This means that monies held by PCTs and planned to be used to repay PDC will no longer be required, freeing up extra resources across London.”

However, an NHS London spokesman said the document, produced by the North Central London cluster, was “incorrect” and had been withdrawn.

A spokesman for North Bristol Trust said: “The trust has kept to repayment plans and anticipates paying off the outstanding DH loan by the time we move into our new private finance initiative hospital in 2014.”

A spokesman for RUH Bath said: “[the trust] borrowed £38m to clear a legacy debt in 2006 and this will be repaid in full by March 31st 2012.

“Through working more efficiently and with cost savings we have steadily repaid the loan over the past 5 years and remained in the black, balancing our books each year to date.”