Serious financial and technical failings in Sherwood Forest NHS Trust could be symptomatic of a wider structural problem with the NHS.
The Sherwood Forest NHS Trust is responsible for King’s Mill Hospital and Newark Hospital, which provide health care to people in and around Ashfield, Mansfield, Newark, Sherwood and parts of Derbyshire and Lincolnshire.
On 21st September, the foundation’s trust regulator, Monitor, identified that the Trust had failed to carry out its functions “effectively, efficiently and economically” and had not fulfilled governance requirements. These failures put the Trust in direct breach of its terms of Authorisation.
Four days later it was revealed that the Trust was encountering financial difficulties as it struggled to meet its Private Financial Initiative (PFI) repayments following the start of a £320 million expansion of King’s Mill Hospital.
PFIs ensure the creation of public-private partnerships, which in turn permits the funding of public infrastructure projects by private capital. The PFIs that were agreed for the NHS resulted in private firms building hospitals and investing in other health care projects.
On the 4th of October, Tracy Doucét, the chairman of the Sherwood Forest NHS Trust, resigned. In her statement of resignation she said that the Trust had begun to establish strong foundations of a relationship between the Trust and its wider stakeholders as they seek to “understand the scale and size of the challenge we face in meeting the financial challenges ahead”. She did not give her reason for stepping down.
Financial challenges are not the Trust’s only problem. Two days later it emerged that King’s Mill Hospital had been responsible for giving the wrong results of breast cancer tests to 120 women. Hospital officials admitted that the mistakes made were not the result of any medical error but due to a technical issue. There does not appear to be any link between the Trust’s financial difficulties and the failure of breast cancer test results.
The Trust may not be entirely to blame for its recent failings. Following the release of the Monitor report, the Trust revealed that its Board had identified the risks of “maintaining on-going compliance [with its expected Trust requirements] as early as 2010”. It claimed that these risks were principally the result of the PFI. Doucét admitted that, “both the Board and Monitor recognise the additional challenges presented by our PFI and the degree to which this exacerbates the already significant financial pressures facing all NHS organisations”.
There is an estimated twenty-one other NHS Trusts which are currently experiencing serious financial difficulties as a direct result of PFIs. The projects undertaken by PFIs were approved at the end of the 1990’s under the Labour government and although they produced benefits in the short term, in the long term the paying back of large debts was just delayed until a later date.
NHS Trusts were expected to make their repayments on average between twenty-five and thirty years, at a high rate of interest. In 2012 some trusts are spending up to a fifth of their budget on their PFI repayments.
In a report released by the Treasury in March of this year, it was revealed that the capital costs of projects administered by PFIs in the Department of Health came to £11,614,290,000 with the total repayments to be £79,157, 270,000. The total capital costs of projects administered by PFIs for all departments came to £54,712,090,000 with the total repayments for all departments set to £301,343,154,097.
As a consequence private firms are making billions of pounds in profit, some up to 71%, whilst public services are under strain as a result of having to pay back such a stupendously large debt burden. Furthermore, PFI debts do not form part of the Treasury deficit balance sheet.
These are not the only financial deals that the Labour government approved of for the NHS. One hospital, for example, paid £52,000 for a job that should have cost £750. The building of a hospital in South Bromley will cost the NHS £1.2 billion even though this is ten times more than it is worth.
Andy Burnham, health secretary under the last Labour government, was in charge of 221 PFI projects. He responded last year that, “We made mistakes. I’m not defending every pen-stroke of the PFI contracts we signed.”
According to an investigation administered by the Daily Telegraph in January, young people starting work this year will be paying taxes to settle PFI debts until they reach the age of seventy.