Economic regulator Monitor has been criticised in a new report for failing to grasp the negative financial impact of an unaffordable PFI scheme.
The National Audit Office (NAO) report, published today, said Monitor did raise ‘well-founded concerns’ about the Peterborough and Stamford NHS Trust PFI scheme before the business case was signed off in 2007 but added that between the business case sign-off in 2007 and the opening of the new PFI hospital in 2010 it did not adequately scrutinise the future impact of the scheme.
A statement from the NAO, said: ‘Despite its earlier views, the regulator (Monitor) rated the Trust as a very low financial risk, reflecting its reported financial position but this risk rating did not reflect the future impact of the PFI development. Monitor had a number of opportunities to intervene before finally placing the Trust in breach of its terms In October 2011 but concluded that an intervention would not necessarily improve or change the outcome positively.’
Since the hospital opened, the Trust has faced a large, recurring deficit.
In 2011-12, the in-year deficit was £46 million and the Trust is predicting an in-year deficit of more than £50 million in 2012-13.
The report will come as a blow for the independent economic regulator whose role is being greatly expanded to cover all NHS providers, including private providers of NHS services. Until now Monitor has regulated foundation trusts only.
In its new role, Monitor will issue provider licences which will involve Monitor carrying out a risk rating of potential NHS providers.
A consultation on the licence conditions closed in October.
Amyas Morse, head of the National Audit Office, said today: ‘The Trust, the Department of Health, commissioners and Monitor need to work together and take urgent action to help the Trust get back on its feet.’
Monitor chief executive, Dr David Bennett, said:
‘Monitor is working with the Trust, the Department of Health, and other local NHS organisations to deliver a sustainable financial solution for Peterborough and Stamford Hospitals NHS Foundation Trust which safeguards the delivery of quality services for patients.
‘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. In particular, we expect the Trust to reduce costs and increase activity while maintaining quality services for local patients.
Meanwhile Monitor commissioned an independent review to learn lessons from this experience and is implementing the recommendations to strengthen its oversight of long-term investments by foundation trusts.’