One
NHS trust in five is in bad financial trouble – and Department of
Health is failing to plan for bankruptcies
Only
urgent, radical action will prevent failures, warns Public Accounts
Committee
30
October, 2012
The
spectre of hospitals going bankrupt is raised today in a damning
report by MPs which suggests that one in five NHS trusts is in
serious financial trouble and “there is a real concern that some
will fail”.
The
scale of the challenge facing the NHS is revealed in figures showing
that 34 trusts ran up combined debts of £356m in 2011-12 and another
42 relied on handouts from local health authorities or the Department
of Health (DoH) to keep them going – almost 19 per cent of the 411
NHS organisations in total, MPs say.
Although
the NHS as a whole is in surplus, parts of it are facing bankruptcy.
But the DoH has been unable to explain what will happen if a trust
fails to pay its debts or how services to patients would be
maintained.
The
broadside from the Public Accounts Committee (PAC) comes as
administrators appointed to oversee the crisis-hit South London NHS
Healthcare Trust recommended that it be broken up and run by
neighbouring NHS trusts, or offered to private companies.
The
trust, which runs three hospitals in south London – the Princess
Royal in Bromley, the Queen Elizabeth in Woolwich and Queen Mary's in
Sidcup – overspent by £65m last year, or more than £1m a week,
and became the first in the country to be taken over by
government-appointed administrators.
The
same fate awaits other trusts unless they take radical action to cut
budgets by closing departments and merging services with neighbouring
organisations. Barking Havering and Redbridge received £55m in
handouts from the DoH last year, Peterborough and Stamford got £41m
and Mid-Staffordshire received £21m, according to the National Audit
Office.
The
DoH expects every trust to have to reconfigure services, but the PAC
said there was an "alarming" lack of data to help them
compare options.
Margaret
Hodge, the PAC chair, said: "The DoH could not explain to us how
it will deal with an NHS trust that goes bankrupt. Nor could it
provide reassurance that financial problems would not damage the
quality of care or equality of access to all citizens, wherever they
live.
"The
overall surplus of £2.1bn across all NHS bodies in 2011-12 masks the
fact that a significant minority are in financial difficulty. In
London, two trusts have a combined deficit of £115m, one of which,
South London Healthcare NHS Trust, has been placed in special
administration.
Ms
Hodge added: "It very much looks like the department is
inventing rules and processes on the hoof rather than anticipating
problems and establishing risk protocols."
The
committee is especially critical of the effect of Private Finance
Initiative (PFI) deals, used to build or redevelop hospitals, which
"inevitably distort priorities" and are "especially
worrying at a time when resources are constrained".
Contracts
agreed under the PFI scheme are covered by safeguards which guarantee
that investors have first call on NHS cash. The DoH is already facing
a bill of £1.5bn to bail out seven trusts with PFI problems –
equivalent to £60m a year, the PAC says.
"We
are particularly concerned that the financial viability of a number
of trusts is being undermined by the fact that they are locked into
unaffordable PFI contracts. It is unclear how the department will
continue to underwrite payments once most of the money moves to the
NHS Commissioning Board," Ms Hodge said.
Critical
list: London hospitals facing uncertain future
A
bankrupt NHS trust operating three hospitals that serve a million
people in south London looks set to be carved up between the NHS and
the private sector, according to controversial proposals to be
revealed today.
South
London NHS Healthcare Trust was declared bust and administrators
called in three months ago after overspending about £1m a week to
accumulate debts of £150m.
Its
three hospitals, Queen Mary's in Sidcup, Princess Royal (PRU) in
Bromley and Queen Elizabeth (QEH) in Woolwich – have struggled with
patient satisfaction and spiralling debt since they were merged into
a super-trust in 2009.
Matthew
Kershaw was parachuted in as special administrator by Andrew Lansley,
the former Health Secretary, after it became clear that its two
hugely expensive private finance initiative (PFI) deals meant the
status quo was impossible for the taxpayer to sustain.
Mr
Kershaw's radical proposals would have a knock-on effect for
neighbouring hospitals, including the merger of the PFI-built QEH
with the neighbouring Lewisham Healthcare NHS Trust, with the loss of
one A&E department.
The
PRU could be taken over by King's College Hospital NHS Foundation
Trust or, more controversially, its services put out to tender –
keeping alive several private companies' hopes for a slice of the
franchise.
One
of the biggest changes would see Queen Mary's taken over by a mental
health foundation trust, Oxleas, and land sold off to pay the debts.
The new "health campus" would no longer provide complex
surgery but would concentrate on day cases, radiotherapy and
endoscopy.
Mr
Kershaw called on the Government to pay "the excess costs"
of the two PFI hospitals until the 25-year contracts expire. He also
recommends a comprehensive re-organisation of emergency, community,
maternity and elective services across south-east London.
Thirty-nine
organisations have expressed interest in running parts of the trust,
including Circle, Care UK, Serco and Virgin Care.
The
proposals will now go out to public consultation for 30 days, and
Jeremy Hunt, the Health Secretary, is expected to make a decision
early in February.
British
banking jobs at risk as UBS announces plans to cut 10,000 jobs
worldwide
More
British banking jobs were at risk today after UBS said it is to cut
up to 10,000 roles worldwide in moves to shrink its investment
banking arm.
30
October, 2012
The
Zurich-based bank plans to reduce its headcount from 64,000 to 54,000
by 2015, with some 75% of the losses made outside Switzerland.
UBS,
which has around 6,500 staff in London, said the restructuring would
deliver savings of 5.4 billion Swiss francs (£3.5 billion) by 2015.
The
bank, which wants to shift focus away from investment banking
operations, reported a 40% slide in pre-tax operating profits to 2.3
billion Swiss francs (£1.5 billion) in the six months to June 30.
UBS
wants to concentrate on its traditional strengths in advisory,
research, equities, foreign exchange and precious metals and exit
other business lines, mainly in fixed income.
The
bank said these divisions had been "rendered uneconomical by
changes in regulation and market developments".
The
job cuts will target "front-to-back processes" across the
bank, UBS said, and simplify its product portfolio and production
processes.
Group
chief executive Sergio Ermotti said: "This decision has been a
difficult one, particularly in a business such as ours that is all
about its people.
"Some
reductions will result from natural attrition and we will take
whatever measures we can to mitigate the overall effect. Throughout
the process we will ensure that our people will be supported and
treated with care."
The
bank announced the plans as part of its third-quarter results, which
revealed a loss of 2.2 billion Swiss francs (£1.4 billion) in the
three months to September, compared with a profit of 1 billion Swiss
francs (£670 million) last year.
The
loss was driven by a one-off charge of 3.1 billion Swiss francs (£2
billion) linked to the restructuring of its investment banking
division and a debt-related charge of 863 million Swiss francs (£574
million), UBS said.
Unveiling
its half-year losses in July, UBS claimed that the botched stock
market listing of social networking giant Facebook cost it 349
million Swiss francs (£227 million).
It
blamed the loss on the "gross mishandling" of the flotation
by Nasdaq, which involved a series of technical errors that caused a
delay in the start of trading of Facebook shares in May.
A
former UBS banker, Kweku Adoboli, yesterday denied being a rogue
trader when he lost the bank £1.4 billion.
The
32-year-old is currently on trial at London's Southwark Crown Court,
accused of gambling away the money while working for UBS during the
global financial crisis.
Occupy
protesters were right, says Bank of England official
The
anti-capitalist protesters who occupied St Paul’s Cathedral were
both morally and intellectually right, a senior Bank of England
official said last night.
30
October, 2012
Andrew
Haldane, a member of the Bank’s financial policy committee, said
the Occupy movement was correct in its attack on the international
financial system.
The
Occupy movement sprang up last year and staged significant
demonstrations in both the City of London and New York, protesting
about the unequal distribution of wealth and the influence of the
financial services industry. Members of the movement occupied the
grounds of St Paul’s and remained camped there for more than three
months until police evicted them in February last year.
“Occupy
has been successful in its efforts to popularise the problems of the
global financial system for one very simple reason; they are right,”
Mr Haldane said last night. Mr Haldane, the Bank’s executive
director for financial stability, was speaking to Occupy Economics,
an offshoot of the Occupy movement, at an event in central London.
In
a speech entitled Socially Useful Banking, he said the protesters had
helped bring about a “reformation” in financial services and the
way they are regulated.
Partly
because of the protests, he suggested, both bank executives and
policymakers were persuaded that banks must behave in a more moral
way, and take greater account of inequality in wider society.
“Occupy’s
voice has been both loud and persuasive and policymakers have
listened and are acting,” he said. “In fact, I want to argue that
we are in the early stages of a reformation of finance, a reformation
which Occupy has helped stir.”
The
protesters had been right about bankers’ behaviour and the
consequences of extremely high salaries and bonuses in the financial
sector and other industries, he said.
“I
do not just mean right in a moral sense,” he added.
“It
is the analytical, every bit as much as the moral, ground that Occupy
has taken. For the hard-headed facts suggest that, at the heart of
the global financial crisis, were — and are — problems of deep
and rising inequality.”
Mr
Haldane concluded by telling the activists that they had helped bring
about nothing less than a new financial order.
“If
I am right and a new leaf is being turned, then Occupy will have
played a key role in this fledgling financial reformation,” he
said.
“You
have put the arguments. You have helped win the debate.”
In
the text of his speech distributed by the Bank last night, Mr Haldane
made no reference to the techniques employed by the Occupy
protesters.
The
occupation of St Paul’s last year was controversial, and led to
claims that the protesters were despoiling the cathedral’s grounds.
The
protest ended after the Corporation of London won a legal order
allowing the activists to be evicted.
Earlier
this month, members of the group marked the first anniversary of the
St Paul’s protest by entering the cathedral during a service and
chaining themselves to the pulpit.
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