The Treasury has given the NHS a year's stay of execution over changes to accountancy rules with major implications for private finance initiative schemes. The move to international financial reporting standards was due to be implemented across the public sector from this April.
The majority of the NHS's£10bn of PFI assets are "off balance sheet" and so do not count as public sector debt. But the Treasury has been told that the international standards mean that many PFI debts should move "on balance sheet".
The Treasury has not yet issued guidance as to how PFI schemes should be accounted for under the rules. Last week the Commons Treasury select committee was told this was causing problems for the Ministry of Defence and Department of Health.
Chartered Institute of Public Finance and Accountancy policy director Ian Carruthers told the committee: "The delays [mean] there were very serious concerns about abilities to implement [the rules], particularly in the health service where there would potentially be an impact on the way in which charges are determined for the payment by results regime."
Moving PFI schemes' assets onto NHS balance sheets would mean trusts became eligible for a 3.5 per cent capital charge against their value - which would need to be compensated by an adjustment to the payment by results tariff. Yet the tariff for 2008-09 has already been set.
Neither the DH nor MoD will implement the change in April. A Treasury source told HSJ that was likely to lead to a delay for all government departments.