Health trusts given longer to pay debts

DEBT-ridden health trusts in the region will now have longer to pay off their historic deficits after a change in Government regulations.The East of England Strategic Health Authority (SHA) yesterday welcomed the move, saying it expects the region's NHS to be clear of debts by this time next year.

DEBT-ridden health trusts in the region will now have longer to pay off their historic deficits after a change in Government regulations.

The East of England Strategic Health Authority (SHA) yesterday welcomed the move, saying it expects the region's NHS to be clear of debts by this time next year.

The Department of Health yesterday decided to remove Resource and Allocation Budgeting (RAB), following an announcement by Health Secretary Patricia Hewitt.

Under RAB rules, the debts of NHS trusts are carried forward into the next year through equivalent reductions in income. At the same time trusts are required to make a surplus also equivalent to its debt, providing a strong disincentive to overspend.

The SHA said the decision recognises that finances are improving across the NHS, in particular in the East of England, and RAB is no longer considered an appropriate constraint.

Neil McKay, SHA chief executive, said: “The announcement clearly shows the way forward for the NHS in terms of financial stability.

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“The majority of NHS organisations in the east, 26 of 33, are now in financial balance recurrently and their financial positions will continue to improve this year. We expect to be clear of debts by March 2008.

“The decision relieves the financial pressure associated with some trusts who have historical debt. It allows them a longer period of time to repay, giving them more flexibility to manage their resources at the frontline of healthcare.

“The removal of RAB will also help trusts in the area to implement sound financial management, a vital step in the strive to achieve foundation status.”