Royal Free faces debt of £240million
NHS Trust posts record deficit, with 'significant doubt' over whether it can go on
15 August, 2019 — By Tom Foot
The Royal Free Hospital
AN NHS trust that balanced its books seven years ago has posted a record deficit and is fore- cast to have racked up £240million in repayable loans by the end of the year, an independent audit has revealed.
The Royal Free London Group’s debt is casting a “significant doubt” about its ability to “continue to provide healthcare services”, the Pricewaterhouse-Coopers report said.
The audit is buried in a 330-page Royal Free annual report that says seven loans worth £243.9m will be owed to the Department of Health and Social Care by the end of March.
Underfunded hospital trusts struggling to cover costs have been forced to take out interest-accruing loans from central government.
Some trusts are paying interest rates of 6 per cent and these have become an “unmanageable burden” on the NHS.
The system helps to disguise the true deficit facing the NHS, according to John Lister, from the Health Campaigns Together group.
“The government has systematically refused to keep NHS hospitals afloat, and therefore it is shovelling hidden cash in through the back door,” he said.
“If they weren’t getting these funds, the reported deficit would be hugely bigger, and that would trigger questions about how long you can continue trading in this way.
“That is the way the NHS is jogging along. It’s all fantasy figures. It is unstable.”
Mr Lister said the total loans taken out by NHS trusts across the country was in excess of £12billion.
NHS Improvement – the body that regulates foundation trusts including the Royal Free – has issued a formal financial warning to the Royal Free after it posted its highest- ever deficit of £80.9m.
The Free – which had balanced its book when it became an independently- run “foundation trust” in 2012 – said in its annual report: “The board under- stands that there is a significant risk around the underlying position of the trust in terms of ongoing sustainability.”
Its loan support com- pares with £108m borrowed by Barts NHS trust, while the Whittington has not needed any loans.
The PWC report said: “The trust is forecast to hold approximately £243.9m in loans with the Department of Health and Social Care at the end of 2019/20.”
PWC said this created an “existence of a material uncertainty” about the hospital financial position.
The Department of Health and Social Care said it was providing “interim loans to help ensure the continuity and stability of services for patients and to help hospitals and health trusts get their finances in order”.
A Royal Free London statement said: “The Roy- al Free London Group is one of the largest trusts in the country and, like many other large trusts, has a number of loans with the Department of Health and Social Care, including a capital loan for the redevelopment of the emergency department at the Royal Free Hospital.
“The trust has a financial improvement plan in place and is seeking to make a reduction of £49.5m in our spending this financial year.
“We are asking all staff to help us achieve this by identifying where savings can be made.”