Trusts survey the wreckage as PFI hospitals begin to crumble
* Published: 04 September 2008 09:00
* Author: Richard Vize
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* Last Updated: 03 September 2008 17:21
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Arcane accountancy rules are in danger of costing the NHS control of some of its buildings. As HSJ reveals this week, the Treasury's decision to adopt new international accountancy standards is pushing trusts with private finance initiative debts to consider hiving off their estate to charities.
The rule change, which comes into force next April after already being postponed for a year, will bring up to £16bn of PFI debt onto trust balance sheets.
It could affect the amount a foundation trust can borrow, increase costs, and throw trusts into debt for perhaps a decade.
"Lawyers, accountants and consultants have been looking for loopholes"
Faced with this financial wreckage, lawyers, accountants and consultants have been looking for loopholes. Handing over hospital buildings to a charity is one option being examined.
This is a treacherous path to take. Charity rules mean such bodies would have to be wholly independent of the hospital.
Even assuming the charity behaved itself, this raises the risk of trusts entering into immensely complex legal and practical arrangements to deliver services.
But more serious dangers lurk. It is easy to imagine a charity becoming the focus of opposition to service closures, or taking sides in a clash between managers and clinicians.
Issue of ownership
There are also issues of principle. In the heated disputes over the rights and wrongs of PFI as a way to build hospitals, government has always tried to damp down opposition by stressing that at the end of the 30 or so years the asset reverts to the NHS. Charitable status would mean this is no longer true. It raises the spectre of billions of pounds of public funds having been spent building hospitals which are not legally part of the state.
With dozens of trusts heading towards this legal and financial quagmire you may be assuming that finance managers are inundated with guidance from the Department of Health on how to cope. But on one of the occasions when government advice would be welcome, nothing of substance has been forthcoming. It has had months to act.
* Author: Richard Vize. Richard Vize is editor of HSJ