NHS debt ‘write-off’ could cost hospitals millions

Matt Hancock’s pledge to ‘write off’ £13.4 billion of debt owed by NHS trusts ahead of the worst of the coronavirus crisis could end up costing hospitals millions in annual payments back to the government.

The Independent has revealed that the way the government converted the billions of pounds owed by effectively insolvent NHS trusts will mean hospitals having to pay an annual charge on their assets back to the government in perpetuity.

Experts also warn that the government failed to fix the underlying shortfall in hospital funding, with many trusts unable to meet the costs of providing services with the income they receive from NHS England. Without reform, this means that some trusts could build up debts again within a few years.

Anita Charlesworth, director of research and economics at the Health Foundation, told The Independent: “What the government has done is convert the debt into an equity share. Writing off this debt is not cost free. This is a better deal for NHS providers, but there will be a charge.

“There is no guarantee of that. It remains the case that even with this, this reset is only really valuable if there’s enough revenue in the system to ensure that on an ongoing basis trusts have enough income to meet their day-to-day running costs and pay their PDC ​[public dividend capital]. If there isn’t sufficient funding in the system, for the overwhelming majority of trusts, then we will be back in this position in a few years’ time.”

The write off pledge was made in April.