Another Conservative policy goes up in flames on the Coronavirus bonfire – Owl
Health secretary Matt Hancock has written off £13.4bn of historic NHS debt to help the health service fight coronavirus. www.huffingtonpost.co.uk
The money is intended to help NHS trusts focus on tackling coronavirus rather than servicing loans from the Department of Health and Social Care (DHSC).
The figure owed ballooned as NHS trusts became reliant on interest-bearing loans to cover deficits in day-to-day budgets, with interest payments alone skyrocketing to £292m last year, Health Service Journal has reported.
Some 107 trusts have an average of £100m revenue debt each. The two trusts with the highest figures reach a combined total of over £1bn.
At the daily Downing Street briefing, Hancock said: “This landmark step will not only put the NHS in a stronger position to be able to respond to this global coronavirus pandemic but it will ensure our NHS has stronger foundations for the future too.”
HuffPost UK understands the sum written off is both capital debt – from building and infrastructure – and revenue debt, from running services and paying staff and suppliers. Both loans and outstanding interest payments have been cancelled.
The debt will be effectively written off by converting the loans to equity. Adjustments will be made to ensure NHS providers’ day-to-day budgets are not negatively affected by debt write-off.
Other loans entered into as “normal course of business” will not be written off as NHS trusts took them by choice and the government considers them to be affordable.
The write-off will not create any additional borrowing or fiscal cost to the Treasury as it is being written off as a transaction within DHSC.