NHS trust and 150m debt situation 'indefensible', says

senior Tory
Ex-health secretary Stephen Dorrell speaks out over South London Healthcare NHS Trust
effectively going bankrupt
Nicholas Watt and James Meikle
Tuesday 26 June 2012, guardian.co.uk
http://www.guardian.co.uk/society/2012/jun/26/nhs-trust-debt-tory

A senior Conservative has attacked some private finance initiative deals on which the NHS now relies
for much of its new infrastructure as "indefensible", as the government prepares to take the
unprecedented step of effectively letting a trust running three hospitals to go bankrupt.
The former Tory health secretary Stephen Dorrell carefully did not put the blame on his own party,
which first introduced PFI in the 1990s, for the crisis facing the South London Healthcare NHS Trust,
which is likely to be placed in a form of special measures after accumulating a deficit of 150m.
Ministers are blaming an "unaffordable" PFI deal signed under Labour, which enthusiastically took
up the model, as they prepare the trust to be placed in the "unsustainable providers regime".
The trust rebutted claims, including from the health secretary Andrew Lansley, that its "longstanding and well-known financial issues" would affect patient care. A spokesman told the Guardian
that "our staff have worked hard for patients and in spite of signficant financial issues, we are
extremely proud that we now have among the lowest mortality and infection rates in the country".
Under powers introduced under Gordon Brown in 2009 Lansley will appoint an administrator to run
the trust.
The problems in south London provide the biggest test yet of whether politicians can persuade
voters that NHS funds are better spent on providing health services in the community than in
maintaining big local hospitals.
Dorrell, who chairs the Commons health select committee, suggested that lenders under PFI should,
like lenders to Greece, bear their share of risk and take "a haircut" when things went wrong.
He told BBC Radio 4's Today programme, that PFI "as originally conceived 20 years ago was to
achieve some risk transfer, to engage the private sector in making this kind of judgment and to carry
some of the risk".
But he regretted that "agreements were signed which effectively paid private sector cost when the
public sector took the risk. That is indefensible." Dorrell was sure that people would now look to see
whether it was possible to question how risk had been allocated where PFIs were undertaken that
were unsustainable and were proven to be unsustainable.
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Chris Ham, the chief executive of the King's Fund health thinktank, told Today that he thought a
handful of other NHS trusts were in a similar position to the one in south London. But the steps
Lansley were taking provided "the best mechanism for deciding what services are needed and how
they can be allocated".
He said: "Successive governments have not found it easy to grasp the nettle of too many hospitals in
relation to how much money is available." Lansley served notice on the trust, which runs Queen
Mary's in Sidcup, Queen Elizabeth in Woolwich and the Princess Royal University hospital in
Bromley, that he is minded to place it under control of a trust special administrator. This would lead
to the suspension of non-executive directors and would deprive executives, such as the finance
director, of their positions on the trust's board.
Lansley moved to pre-empt a Labour attack by saying that many of the problems dated back to a
2.5bn deal signed by the last government under the private finance initiative (PFI), to rebuild the
Bromley and Woolwich hospitals.
This costs the trust 61m a year, 14.4% of its income, and will last until 2029-2030 in the case of the
Queen Elizabeth hospital Woolwich and 2031-2032 in the case of the Princess Royal hospital in
Orpington.
Lansley wrote in his letter to the trust: "A central objective for all providers is to ensure they deliver
high quality services to patients that are clinically and financially sustainable for the long term. I
recognise that South London Healthcare NHS Trust faces deep and longstanding challenges, some of
which are not of its own making. "Nonetheless, there must be a point when these problems,
however they have arisen, are tackled. I believe we are almost at this point.
"I have sought to provide NHS organisations with the help and support they need to provide these
high quality, sustainable services to their patients, which South London Healthcare NHS Trust stands
to benefit from.
"However, even after this support has been provided, your organisation still expects to be in need of
significant financial resources from other parts of the NHS and I cannot permit this to continue. That
is why I am considering using these powers.
"I appreciate that any decision to use these powers will be unsettling for staff, but I want to stress
that the powers are being considered now so that patients in south-east London have hospital
services that have a sustainable future. This will benefit patients and bring more certainty to staff,
the public and other local stakeholders. I am determined to improve healthcare services for patients
in south-east London and will take whatever difficult steps are necessary to achieve this."
A Department of Health source said: "This hospital trust was brought to the brink of bankruptcy by
Labour. It is losing 1m a week, money which could be spent on 1,200 extra nurses for local people.
Labour turned a blind eye to these problems for years, they burdened it with two unaffordable PFI
contracts worth 61m a year and they crippled the organisation with debt from the beginning.
"The standard of care that patients receive at the hospital trust is not good enough, although there
have been some improvements in recent months. It is crucial that those improvements are not put

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at risk by the challenge of finding the huge savings that the trust needs to make. We don't want a
repeat of Stafford, where crude attempts to balance the books had tragic consequences.
"This will clearly be a difficult and controversial process, but we are determined to turn this trust
around so the patients in south-east London get the care they deserve. Unlike the last government
we will not duck the difficult decisions if they are what is needed."
A source at the trust said that the action by Lansley was prompted entirely by debt and not by the
quality of clinical care.
"This is about historic debt. The quality of care has improved measurably. We have achieved some of
the lowest mortality rates over the last 18 months. Infection rates are also three times lower than
the national average."
Mike Farrar, the chief executive of the NHS Confederation, welcomed the move, which follows a call
at his organisation's recent annual conference for the government to support the redesign of
services.
Farrar said: "To recover the kind of sums you are facing in south London you really do need
wholesale redesign of services in order to get something sustainable for the future rather than
keeping on changing management. Therefore we welcome the fact that the secretary of state is
seemingly now responding to that call for action.
"There have been a number of different management teams in there, so I don't think you could say
it has been down to the failure of any particular manager. This is a difficult system and it needs this
kind of radical action to put it into that regime where an individual can go in and look at the situation
in the round to get sensible solutions.
"This is about sustaining the services in south London for the next 20 to 30 years, not about limping
through."
In a statement the South London Healthcare NHS Trust said: "We have entered into discussions with
the Department of Health and NHS London on the best future for the trust and our priority, and that
of others involved, is to make sure that our longstanding and well-known financial issues are
resolved. Our staff have worked hard for patients and in spite of significant financial issues, we are
extremely proud that we now have among the lowest mortality and infection rates in the country.
"We expect these discussions to come to a conclusion in the second week in July when a decision
will be taken by the secretary of state. In the meantime we can reassure local patients and the public
that our staff will continue to provide services as normal."
This article was amended on 26 June. The original stated that the Princess Royal hospital was in
Bromley. It is actually in Orpington. This has been corrected.

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