News special - Give PCTs a clean slate, urge health managers

4 Apr 02
Debts of up to £500m inherited by English primary care trusts should be written off by the government, an influential group of NHS professionals has said.

05 April 2002

Around 300 PCTs this week took over much of the duties previously held by health authorities, with the latter merged into 28 strategic health authorities.

But the NHS Alliance said the PCTs were already destabilised, having inherited estimated accumulated debts of £500m from the authorities. They were also struggling to appoint key managers.

Around half the PCTs already existed, although they had fewer responsibilities, but about 150 have switched from primary care groups to PCTs this week.

They will commission and provide family and community health services, such as general practice, mental health services and district nursing, as well as commissioning secondary care from acute hospital trusts.

At present, they control around 50% of the NHS budget, although this should rise to 75% over the next few years as long-term agreements between health authorities and acute trusts expire.

'All PCTs should start with a clean slate as all historic local NHS debts are cancelled as far as is reasonably possible. Allowing PCTs to produce three- or five-year rolling programmes to cope with deficits would also help,' the NHS Alliance wrote in its report The vision in practice. 'Otherwise there is a risk of demoralisation and cynicism that PCTs will fail at the first hurdle because of their predecessors' action or inaction.'

Critics say services have been suffering because of too much organisational change – but this week the Department of Health announced further changes with the launch of the first four care trusts, where PCTs merge with social services.

There is a recent precedent for writing off debts. In Scotland, when the new NHS Boards were set up last October, the Scottish Executive spent £79m paying off their predecessors' debts.

However, writing off debts in England would cost rather more. According to new figures from the Department of Health, the total accumulated debt in English health authorities and trusts in 2000/01 reached £1.6bn.

Stuart Marples, chief executive of the Institute of Healthcare Management, said the call to clear all inherited debts would give PCTs a 'fresh and exciting' start.

He went on: 'Of course this would require a magnificent and expensive act by the government. We have no knowledge of the potential size of the debts they have inherited but the figures quoted are alarming. We also recognise that in the early months all new organisations have to make sense of their history before finding the freedom to progress.

'The early years of hospital trusts, while they had inherited complicated financial rules to adhere to, were recognisable by the freedom they had to manage their environment. This freedom should be given to PCTs.'

He added that the government must also invest in management. 'I think there needs to be a massive investment in management and that means numbers and training and development. The demands on these new organisations are enormous but we need top-class management to deliver it.'

Accumulated debts are growing in the NHS, according to the King's Fund, which analyses the latest figures in this week's Public Finance. Debt in English health authorities and trusts is now three times higher than in 1996/97.

Then, it stood at £484m, and has risen every year since to reach £1.6bn in 2000/01. Health authorities with the biggest accumulated deficits include Ealing, Hammersmith and Hounslow, South Essex and Manchester. Trusts in the same bracket include Birmingham Children's Hospital and Hastings & Rother.

At the same time, some health authorities and trusts have been accumulating surpluses, including West Kent and Bromley health authorities, and East Berkshire and Horizon trusts.

Much of the deficits could be technical – for example, good accounting practice dictates that potential liabilities for clinical negligence claims be included on the balance sheet, even if the claims may not be successful or not be paid out for years.


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