• South Tyneside and Sunderland FT has explored borrowing money from two councils to press ahead with its major reforms plans
  • Discussions have remained “informal” and no negotiations have taken place
  • Plans have been met with criticism from campaigners and local MP

A foundation trust could use money borrowed from two local councils to fund multimillion pound reconfiguration plans.

South Tyneside and Sunderland Foundation Trust has held exploratory talks with South Tyneside and Sunderland City councils over potentially borrowing money via the Public Works Loan Board.

The trust is planning reforms to services including acute medicine, emergency surgery and elective care as part of the second phase of its Path to Excellence change programme.

However, HSJ has been told the talks have remained “informal”.

Councillor Geoff Walker, chair of Sunderland City Council’s health and wellbeing board, said: “No negotiations have taken place between the city council and the trust.

“There has been an inquiry from the FT to the city council as to whether a loan was possible.”

Councillor Tracey Dixon, South Tyneside Council’s deputy leader with responsibility for independence and wellbeing, told HSJ the council has borrowing powers which were not open to the NHS.

She added: “The council has not received a request from the FT to apply for a loan from the PWLB, although we have had an informal discussion about whether we could use our borrowing powers to loan funds to enable visible improvements at the hospital site [South Tyneside District Hospital] in Harton Lane.”

A total sum of £50m – £35m from South Tyneside Council and £15m from Sunderland City Council –  was previously reported by Chronicle Live but “final figures have not been agreed”.

STSFT received interim revenue support funding from the Department of Health and Social Care during 2018-19, which suggested the deal would need government approval. However, because it has not received extra funding in 2019-20, this may not be the case.

DHSC said in a statement: “The rules are clear that NHS organisations must seek best value for money for the taxpayer, and trusts facing financial difficulties would require our approval to borrow additional money from local authorities.”

News of the borrowing discussions have led to criticism from local campaigners. Save South Tyneside Hospital Campaign have submitted two petitions against the proposals, comprising nearly 2,000 signatures.

Emma Lewell-Buck, Labour MP for South Shields, said on Twitter: “Having looked closely at the options being explored for Path to Excellence phase two, I am in no doubt that any funding South Tyneside Council chooses to give to the CCG is not to secure or safeguard any of our South Tyneside hospital services.

“In fact, it will potentially downgrade our hospital further, lose us emergency and acute services as well as vital hospital beds.”

She added: “If there is an option for the council to get £35m from the Treasury then it should be spent on improving services for our area, not potentially stripping them down.”