Foundation trusts could be ordered to sell surplus land or reduce the pay of senior managers as a condition of securing additional funding from the Department of Health.

New DH guidance released this week said the health secretary could require FTs to take specific measures if they want interim funding to ensure their viability.

Applications from trusts for loans or public dividend capital are administered by the independent trust finance facility, an advisory committee to the Department of Health.

Richmond House

The Department of Health has not previously set explicit conditions for extra funding for foundation trusts

The guidance said that “among other things” the new conditions set by the DH could include: reductions in the use of temporary staff, “use of collaborative procurement routes” or “the adoption of a shared services solution”.

The DH has not previously set explicit conditions for extra funding for FTs, whose semi-independent status would not normally allow the department this level of control over their operations.

The guidance added that under existing rules a breach of the terms of the financing could see trusts placed in special measures.

The 23 page document sets out the new terms and conditions around applying to the independent trust finance facility for different kinds of funding.

Head of analysis at the Foundation Trust Network Sivakumar Anandaciva urged the centre “to think carefully” before applying the restrictions and “to take a credible view of what is actually deliverable” when applying them.

“A fundamental aspect of being a foundation trust is that you are an autonomous organisation that is locally accountable to your members and local patients,” he added.

“In this context it is unhelpful to have the release of essential interim funding to pay staff salaries and purchase clinical supplies made contingent on set of central prescriptions that may not be achievable or responsive to local needs.”

Health Minister Dr Dan Poulter said: “We expect trusts to have a strong grip on their finances. As successive governments have done, in some situations we provide financial support, dependant on trusts developing and sticking to a strong recovery plan, to make sure they continue to deliver safe and sustainable services within a balanced financial position.

“We are introducing new conditions around reducing agency staffing costs and having an efficient procurement which will lead to significant savings and more money being made available for frontline patient care.”

The facility had previously been known as the foundation trust finance facility, dealing only with loans to the FT sector.

Originally intended to cover only capital developments, the fund has increasingly considered applications to cover revenue shortfalls and now also assesses applications by non-foundation trusts.

In May this year, HSJ revealed applications were made to the ITFF by hospital trusts which had trouble paying utility bills or replacing medical equipment.

The minutes of the committee’s meetings, released under the Freedom of Information Act, also showed trusts had sought funding to expand their private work to compete in international markets.