News story

11th May 2004

MP Warns of New Funding Crisis for Local Hospitals

An answer in Parliament to Northavon MP Steve Webb has raised the spectre of a multi-million pound debt hanging over local hospitals for years to come. Paying off the debt could mean cuts in hospital services or the postponement of urgently needed rebuilding projects.

Last year, North Bristol NHS Trust, which operates Frenchay and Southmead Hospitals, admitted that it had run up a record deficit of 44 million pounds. In order to bail out the Trust it was loaned 18 million pounds in 2003-04 and an expected 20 million pounds in 2004-05 by other parts of the NHS through a mechanism known as the "NHS Bank".

 Because of the scale of the Trust's financial problems it is expected to borrow millions more in 2005-06 and it is estimated that the total debt could easily run to 50 million pounds or more.

It has never been entirely clear whether this money would have to be paid back, but it was generally expected that if North Bristol sorted itself out, the debt might be largely or wholly written off. However, in reply to a question from Northavon MP Steve Webb, the Department of Health have indicated that some or all of the debt may have to be repaid. 

Health Minister Rosie Winterton said: "Decisions on recovery of funds will be  determined at a later stage and may well involve reductions to capital resources as well as or instead of revenue".

Steve Webb said: "It would be outrageous if our local hospitals had to find another 50 million pounds worth of cuts in order to repay this money. It would not be possible to find cash on this scale without real cuts in services.

"Provided that the local NHS trust improves its financial management in future, this money should be written off. Otherwise it will be a huge millstone around the necks of local people for years to come".