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29 November 2012 | Anna Reynolds
Peterborough and Stamford NHS Trust is in a “critical financial position” with a deficit of £46 million after building a hospital it could not afford, according to the National Audit office (NAO).
The NAO has accused the then board of the Trust for failing to recognise that building Peterborough City Hospital would put its finances under considerable strain.
“The Trust board’s poor financial management and procurement of an unaffordable private finance initiative (PFI) scheme have left the trust in a critical financial position,” said Amyas Morse, head of the NAO.
The board proceeded to build the hospital despite concerns raised by Monitor - the regulator of foundation trusts - about the affordability of the scheme. The NAO report also criticised the Department of Health (DH) for inadequately evaluating the cost of the project, which the Trust predicts will generate an additional deficit of £50 million in 2012-13.
The NAO blames Monitor for rating the trust as a “low financial risk” and said its rating did not reflect the future impact of the PFI development. Further, the report said Monitor had a number of opportunities to intervene but failed to do so. The NAO urged the Trust, DH, commissioners and Monitor to work together to take immediate action to get the Trust “back on its feet”.
In response, Dr Peter Reading, interim chief executive at the Trust, said in a statement: “The board acknowledges these shortcomings over the past year and has put in new structures and systems to improve our financial forecasting. This has enabled us to receive financial support from the Department of Health in early 2012 and we are anticipating further support in early 2013.”
Monitor chief executive Dr David Bennett said: “Monitor queried the affordability of the PFI scheme from the start, and the Department only approved it on condition our concerns were addressed by the Trust. The Trust went ahead with the PFI anyway.
“Once the financial situation at Peterborough became clear, Monitor took regulatory action, and we continue to work closely with the Trust, along with commissioners and the Department of Health, to turn around its financial performance.”