• Liverpool University Hospitals to benefit from significant capital funds and relatively low efficiency targets
  • Despite being in deficit, the trust’s efficiency targets will be lower than the baseline expectation of 1.6 per cent
  • CEO Steve Warburton says regulators had understood argument about funding flows in the city

Liverpool’s new acute trust will benefit from significant financial support over the next four years, in the form of capital funding and relatively low efficiency targets.

Steve Warburton, chief executive of the newly formed Liverpool University Hospitals Foundation Trust, said national regulators had recognised the pressures facing the trust, which is running an underlying deficit of around £65m.

In the long-term plan, NHS England and NHS Improvement said providers in deficit would need to make baseline efficiency savings of “at least” 1.6 per cent, as opposed to 1.1 per cent required of those in surplus.

Yet despite LUH expecting to remain in deficit for at least two more years, Mr Warburton said the trust had been set lower targets than the 1.6 per cent figure.

The Treasury has also guaranteed the trust will receive significant capital funding to complete the new Royal Liverpool Hospital, which was left part-built when Carillion, the contractor, collapsed.

Mr Warburton told HSJ: “We’re getting a lot of support…from the regulatory point of view, they want LUH to be a success [which is] absolutely the right thing to do strategically. They recognise the pressures we’re working under.

“Next year the control total doesn’t require us to deliver much above the 1.1 per cent, as long as we’re able to deliver this year’s control total on a recurrent basis. It’s a little bit more than 1.1 but not up at 1.6 is my understanding.”

He said regulators had “understood the point” he made earlier this year, that Liverpool’s adult acute hospitals were “carrying all the significant financial and operational risk”. The city has five specialist hospitals, four of which have consistently reported surpluses.

The trust was formed this month through the merger of Aintree University Hospital FT and Royal Liverpool and Broadgreen University Hospitals Trust.

Mr Warburton added: “Overall we’re in a great position. The deficit position is manageable, and we expect to get the construction costs of [the] new hospital fully funded [by the government] without the ties of a PFI…

“There’s still a lot of remedial work to be done and it’s likely to be a couple of years before it’s ready to receive patients. But it’s all going in the right direction. The business case will frame the amount that’s needed but it’s going to be in the region of £300m.”

Under the previous private finance initiative contract, the trust would have had to pay for the construction of the new hospital through its revenue budget over several decades. The government has since scrapped PFI, and instead pledged to fund multiple NHS building projects through public funding.

Meanwhile, the new trust has assumed a “good” rating from the Care Quality Commission, following an aggregation of the ratings for the two trusts. Aintree was recently rated “good”, while RLBUHT was “requires improvement”.

The two predecessor trusts reported a combined deficit of £83m in 2018-19, without receiving any share of the national “provider sustainability fund”.

The new trust has planned a deficit of £25m this year, which assumes income of £43m through the PSF and “financial recovery fund”.

Next year the trust is planning a £4.2m deficit, which assumes FRF of £60m.

Mr Warburton said the trust expects to still have an underlying deficit of around £50m in 2023-24.

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