Government to write off £13.4bn in historic NHS debt amid coronavirus crisis

Health secretary says he wants to free up hospital trusts from worrying about balancing the books

The government will write off £13.4bn of NHS debt to allow the health service to focus on the response to coronavirus crisis, the health secretary has said.

Matt Hancock announced plans to wipe out historic debts to let hospital trusts channel their resources into battling the outbreak, rather than balancing the books.

In his first public appearance after self-isolating for seven days, Mr Hancock also paid an emotional tribute to NHS staff who have lost their lives, including doctors who had come to work in the British health service and “paid the ultimate price”.

The health secretary told the daily Downing Street briefing that he would ease financial pressures on trusts that have built up significant debts after years of austerity.

Mr Hancock said: “Today, to help NHS trusts to deliver what’s needed without worrying about past finances, I can announce that I’m writing off £13.4bn of historic NHS debt.

“This landmark step will not only put the NHS in a stronger position to be able to respond to this global coronavirus pandemic but it will ensure our NHS has stronger foundations for the future too.”

Struggling NHS providers have become increasingly reliant on loans from the Department for Health and Social Care to balance their day-to-day budgets or their capital budgets, which fund infrastructure projects.​

Some 107 trusts in England have an average of £100m revenue debt each. The two trusts with the highest debts have a combined total of over £1bn, according to government figures.

Under the new rules set out in a letter to all NHS trusts, hospitals needing extra cash will be given equity, rather than borrowing from the government and repaying a loan.

Debts will be written off from 31 March, with loans and interest wiped from balance sheets for 2020-21.

The move comes without cost to the Treasury, as it is being effectively written off as a transaction within the Department of Health and Social Care.

NHS England chief executive, Sir Simon Stevens, said: “We’ve advocated for and support this pragmatic move which will put NHS hospitals, mental health and community services in a stronger position – not just to respond to the immediate challenges of the global coronavirus pandemic, but also in the years ahead to deliver widespread improvements set out in our NHS Long Term Plan.”

More than £300m has also been made available to fund community pharmacies supplying vital medicines during the outbreak, Mr Hancock announced.

Some £200m was paid on 1 April to pharmacy contractors, with an additional £100m to be allocated next month.