FINANCE Troubles putting service delivery under threat, claims report

Published: 16/06/2005, Volume II5, No. 5960 Page 14

The accumulated deficit at one trust could swell to a staggering£142m in two years, auditors have found.

They say the financial crisis at the Royal West Sussex trust in Chichester is putting service delivery at risk after it ended the financial year with a£20m accumulated deficit.

The public interest report, prepared for the Audit Commission by PricewaterhouseCoopers, highlighted the trust's dire situation: on some projections the accumulated deficit could rise to a staggering£142m in 2007-08.

Even with a proposed substantial annual savings plan in place, the trust is likely to be in deficit for the next three years. The report reveals:

l the trust is looking at sale and leaseback schemes for some of its property, and asset disposal;

l at one point directors were so concerned they could be held personally liable for goods ordered when there was insufficient money for them that the trust stopped issuing purchase orders until Surrey and Sussex strategic health authority offered reassurances;

l the trust has been unable to pay all money owed to the Inland Revenue.

l it has had to reschedule payments for a new treatment centre, which means it will have to pay interest which it would not have otherwise incurred; and l the trust set a balanced budget for 2004-05 - as it is obliged to do - but from the start of the year nonexecutive directors felt it might not be delivered. A financial recovery plan was abandoned earlier this year as unrealistic.

But the report also highlights the increasing activity the trust has had to cope with over the last few years and points out that it is in the top 15 per cent of trusts for efficiency.

'The trust said it was losing out under payment by results and the potential deficit only appeared so high because of the cumulative effect of NHS accounting procedure.

Trust chief executive Robert Lapraik said: 'The increase in activity has not been matched by an increase in income... [The trust] is still paid significantly below its cost, leaving it with a sizeable deficit to manage.' The trust said it was a strategic objective to strengthen the existing links with Portsmouth Hospitals trust, but that putting more work out to other providers could be too expensive.