From today, NHS organisations are to be charged ten per cent interest on money they borrow when they run up deficits.
The NHS Bank, run in conjunction with the Department of Health, has traditionally lent money at no charge.
The Department of Health (DoH) says NHS Bank was set up in 2002 to provide overdraft facilities to trusts.
Under DoH rules introduced in September 2005, ‘SHAs (Strategic Health Authorities) that overspend will record the deficit and lose that funding the following year – as well as an additional penalty (10 per cent of the deficit).’
Strategic Health Authorities act as the connecting umbrella between the DoH and all NHS trusts, including hospital trusts, primary care trusts, ambulance and mental health trusts.
From today, trusts will be charged up to 10 per cent for borrowing money, while trusts with surpluses will be able to carry the surplus over into the next financial year and get ‘bonuses’ of up to 20 per cent interest.
Health expert, Professor Brian Edwards from Sheffield University said NHS funding should be invested in services rather than banked by trusts for interest.
Desperate NHS trusts are trying to persuade the government to give up the scheme.
One trust manager, who did not wish to be named, said: ‘The problem is that they are penalising the people that can least afford to be penalised.’
The DoH states that the idea of the ‘incentive scheme’ is ‘resources are not moved between SHAs to cover up deficits, as has happened in the past.’
Strategic Health Authorities are being allocated a ‘reserve’ from the DoH and are instructed not to ‘re-distribute the resources to overspending organisations’.
Meanwhile, nursing unions and health charities have warned that specialist nurses face redundancies in the latest wave of cost-cutting ‘savings’ by NHS trusts.
Howard Catton, head of policy at the Royal College of Nursing, said that recent announcements of NHS job cuts across the country show specialist nurses are being down-graded and sacked.
He said: ‘Nurses involved in infection control, palliative care, rheumatology disorders or multiple sclerosis – those posts are being identified as at risk of redundancy and removed in order to help hospitals achieve financial balance.’
The nurses thought to be under threat are mainly community-based.
Some are part-funded by charities, such as multiple sclerosis (MS) charities, alongside the NHS.
Nicola Russell of the MS Trust said: ‘We are worried that MS may be seen as a soft target for cost-cutting because it has a lower profile than some other diseases.
‘It is outrageous that people with MS, who are already vulnerable, are being penalised for shortfalls within the NHS.’
Other charities, including the Parkinson’s Disease Society, Macmillan Cancer Relief and the British Society for Rheumatology have also expressed concern.
Meanwhile, the latest victim of government ‘reform’ and underfunding, Brighton and Sussex University Hospitals Trust, is to axe 325 NHS posts under plans to save more than £10m over the next year.
Among those affected are staff at the Royal Alexandra children’s hospital.
Chief executive Peter Coles said the majority of the cuts, which amount to more than 7 per cent of the trust’s workforce, will be achieved through natural turnover, early retirement and voluntary redundancy.
However there are likely to be some compulsory redundancies, he warned.