York and North Yorkshire's £19m NHS debt ‘to be written off’

NHS North Yorkshire and York, which will be scrapped next year under sweeping health reforms, is facing a huge financial shortfall which could spiral if the money cannot be clawed back.

But Health Secretary Andrew Lansley has now said the Government plans to ensure the new Clinical Commissioning Groups (CCGs), which will take over from primary care trusts next April, start with “clean balance sheets” – meaning the North Yorkshire body’s debt would be written off. The CCGs will have responsibility for budgets and buying health services.

York Central MP Hugh Bayley, who raised the issue with Mr Lansley in the House of Commons, welcomed the announcement but raised concerns about how any future deficits in North Yorkshire would be dealt with.

He also said he wanted to know what would happen to the trust’s previous debts written off by strategic health authority NHS Yorkshire and the Humber, which will also be abolished next year.

Christopher Long, NHS North Yorkshire and York’s chief executive, told a board of governors meeting last week that the estimated £19 million shortfall was a “best-case scenario” and he feared it could rise to as much as £50 million, calling this the “worst nightmare”. The trust’s annual health budget is £1.2 billion.

In response to a question from Mr Bayley, the Health Secretary said: “We, along with the NHS Commissioning Board, intend all the new clinical commissioning groups across England to start on April 1, 2013, with clean balance sheets and without legacy debt from primary care trusts.

“That will give them the best possible chance of delivering the best possible care.”

Mr Lansley said primary care trusts “did not cope” with financial pressures, adding: “It is up to the new clinical leadership in Yorkshire to make these things happen more effectively.”

Mr Bayley said: “I have been pressing for the new commissioning bodies to start with a clean balance, but it’s important that it is not just this year’s deficit but also that of previous years which is written off. NHS North Yorkshire and York inherited a deficit when it was set up, and despite external consultants and two top NHS managers being brought in to deal with the problem, that deficit has continued year by year, so the Government has to address the underlying funding problem.”

NHS North Yorkshire and York said it had made its financial position clear at the recent board meeting and was now awaiting guidance. The trust has said the estimated £19 million debt is “historical”, with reasons including a “relatively low funding allocation”, the region’s “diverse geography” and a “continued overspend on contracts”.

When the trust was created in 2006, it inherited £45 million of debt from the region’s former health trusts, but that was wiped out. A further £18 million of “legacy debt” was also written off last year.