Northumberland finalises £100m loan to local NHS trust
0Northumberland County Council has finalised a loan of £100 million to a local NHS trust, which will use the money to buy itself out of its outstanding PFI contracts.
The 25 year loan, completed at the end of March, will be charged to Northumbria Healthcare NHS Foundation Trust at 0.25 per cent above the Public Works Loan Board rate.
The loan is aimed at reducing liabilities remaining on PFI contracts for work on Hexham Hospital and the second phase of Ashington’s Wansbeck General Hospital.
Steve Mason, lead executive director corporate resources at the council, told Room151:
“Our rationale for the loan is protecting local health services and reducing the necessity for cuts by the trust.”
Mason said that the council did not take on any extra borrowing in order to provide the loan.
He said: “We treat our borrowing as an overall portfolio, and periodically borrow money if we can get it at a low rate. But we thought the fairest way to work out a rate to charge the trust was to link it to the PWLB rate.”
The terms of the loan gives the council security over a number of property assets owned by the trust.
In addition, Mason said that if the trust was to get into financial difficulties, it would be able to sit down with health regulator Monitor to work on recovery plans.
He added: “The trust has a very high credit rating. There is a risk with anything you do, but the council’s view was that this risk was an acceptable one.”
The loan comes after Warrington Borough Council agreed in February to lend a housing association £90 million to encourage new affordable housing.
Mason said that more and more councils were examining similar types of deals, where they lend to other public service providers.
But he added: “I believe ours is the first arrangement of its kind involving a council helping to buy out a health provider’s PFI contracts.”
