Government must act on hospital debt

4.20.00pm GMT Fri 29th Feb 2008

By keeping Cornwall's hospitals in the dark over the amount of debt they will be expected to pay back to the Government and the time that they have to do so, Ministers are making it impossible for them to plan for the future. The warning comes from Cornwall's Liberal Democrats who fear that uncertainty over the debt is jeopardising Royal Cornwall Hospital Trust's (RCHT) enormous turnaround over the last year.

Cornwall's NHS funding formula, first introduced under the Conservatives, links low local wages to hospital funding. Cornwall's hospitals have been left with much lower funding than the national average, and as a result the Trust is now £57million in debt. But under the authority of John Watkinson, who was appointed Chief Executive just over 12 months ago, the Trust has undergone huge reforms and is now forecast to operate at a surplus for the first time in years.

However, Liberal Democrat campaigners and Cornwall's MPs warn that until hospital bosses know exactly how much of the debt incurred by the unfair funding formula they will be expected to pay back, and how quickly, they cannot budget effectively and face being plunged back into the red.

Local campaigner and Liberal Democrat Parliamentary Candidate for Truro & Falmouth, Terrye Teverson, commented:

"The Government doesn't want to look as if it's bailing out failing Trusts, but Royal Cornwall Hospital has shown that it is on the up, and Ministers need to shed some light on their plans for the debt. Otherwise recent sacrifices to balance the budget may have all been for nothing. It's bad enough the Government have forced recent cutbacks - it would be a disaster if it proved to be of no benefit to patients in the long run."

Local Liberal Democrats have been working with Cornwall's Liberal Democrat MPs to highlight the uncertainty surrounding the outstanding balance. The MPs have written to Health Minister Alan Johnson to demand answers on the Government's intentions for RCHT's repayments, urging the Minister to help cut hospital debt.

Royal Cornwall Hospital's local MP, Matthew Taylor, said:

"Unfair funding under successive Conservatives and Labour Governments has tied Cornwall's NHS funding to local wages - which are amongst the lowest in the country - and as a result Cornwall's hospitals have been forced into debt. To now demand all that money back would mean risking all of the good work and success achieved by the Trust in the last year. We are calling on the Minister to make it clear that Cornish patients will not pay the price for a debt that was the Government's fault in the first place."

Cornwall's MPs won a promise from Government to review the unfair link between low wages and funding in 2005, but are still waiting for the results of that enquiry.

Julia Goldsworthy, MP for Falmouth and Camborne, added:

"As far as we know the research that the Government promised on the unfair formula is still on Ministers desks. Not only will it prove that the funding system pushed the Trust into debt, but it needs to be made public as soon as possible so that Cornwall's hospitals know if there are going to be any changes in the way their money is calculated. With the end of the financial year fast approaching the Trust needs this information to finalise its budget to make sure that recent progress is not reversed."