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| 'Unfair' NHS debt rule scrapped | 'Unfair' NHS debt rule scrapped |
| (10 minutes later) | |
| NHS managers have welcomed the decision to scrap the so-called "double whammy" penalty health trusts face when they fall into deficit. | NHS managers have welcomed the decision to scrap the so-called "double whammy" penalty health trusts face when they fall into deficit. |
| The government has announced it is to change the way hospitals are penalised when they fail to balance the books. | The government has announced it is to change the way hospitals are penalised when they fail to balance the books. |
| Hospitals and other NHS trust have traditionally had to pay back a deficit they accrue as well as having money deducted from the next year's budget. | Hospitals and other NHS trust have traditionally had to pay back a deficit they accrue as well as having money deducted from the next year's budget. |
| This has meant that some trusts have found it nearly impossible to balance. | This has meant that some trusts have found it nearly impossible to balance. |
| The double penalty system has been in place for most NHS trusts for the last seven years under the Treasury's Resources Accounting and Budgeting (RAB) rules. | The double penalty system has been in place for most NHS trusts for the last seven years under the Treasury's Resources Accounting and Budgeting (RAB) rules. |
| We are moving NHS trusts out of the RAB regime as this was inconsistent and unfair David Nicholson, NHS chief executive | We are moving NHS trusts out of the RAB regime as this was inconsistent and unfair David Nicholson, NHS chief executive |
| Experts have long argued that the system was only ever meant to be for government departments rather than applied down to a NHS trust level. | Experts have long argued that the system was only ever meant to be for government departments rather than applied down to a NHS trust level. |
| No other department has passed on the system in such a way. | No other department has passed on the system in such a way. |
| The move has been anticipated for a while, but ministers have been reluctant to push ahead with it while the NHS was mired in deficit. | The move has been anticipated for a while, but ministers have been reluctant to push ahead with it while the NHS was mired in deficit. |
| Sources said they wanted to keep the pressure on health service managers to balance the books. | |
| The government now believes the NHS will at least break even this year - albeit with the help of a £450m contingency fund, built up by making cuts to training and public health budgets. | The government now believes the NHS will at least break even this year - albeit with the help of a £450m contingency fund, built up by making cuts to training and public health budgets. |
| Health chiefs also held back some of the extra £5.4bn the NHS was due from the government record increases in the health budget. | Health chiefs also held back some of the extra £5.4bn the NHS was due from the government record increases in the health budget. |
| Critics have attacked the government for this, saying this money was earmarked for front-line services rather than balancing the books. | Critics have attacked the government for this, saying this money was earmarked for front-line services rather than balancing the books. |
| Nonetheless, the decision to stop RAB being applied to individual trusts has been warmly received. | Nonetheless, the decision to stop RAB being applied to individual trusts has been warmly received. |
| It means that those trusts which do run up deficts this financial year will have the debt wiped off by losing some of the following year's budget rather than having to pay the debt back on top of facing a budget reduction. | It means that those trusts which do run up deficts this financial year will have the debt wiped off by losing some of the following year's budget rather than having to pay the debt back on top of facing a budget reduction. |
| 'Right decision' | 'Right decision' |
| Gill Morgan, chief executive of the NHS Confederatin, which represents health service managers, said the government had "finally made the right decision". | Gill Morgan, chief executive of the NHS Confederatin, which represents health service managers, said the government had "finally made the right decision". |
| "This accounting rule has taken millions of pounds away from frontline services, placing a number of trusts in severe financial difficulty and made getting out of deficit extremely difficult if not impossible." | "This accounting rule has taken millions of pounds away from frontline services, placing a number of trusts in severe financial difficulty and made getting out of deficit extremely difficult if not impossible." |
| And Steve Bundred, chief executive of the Audit Commission, which recommended last year that RAB not be imposed on individual NHS trusts, added: "Deficits are not being written-off. But an unfair system is being corrected. Trusts will no longer effectively have to recover deficits twice." | And Steve Bundred, chief executive of the Audit Commission, which recommended last year that RAB not be imposed on individual NHS trusts, added: "Deficits are not being written-off. But an unfair system is being corrected. Trusts will no longer effectively have to recover deficits twice." |
| NHS chief executive David Nicholson said: "We are moving NHS trusts out of the RAB regime as this was inconsistent and unfair." | NHS chief executive David Nicholson said: "We are moving NHS trusts out of the RAB regime as this was inconsistent and unfair." |