Troubled NHS trust has £18m of debt written off

The bail-out in 2008/9 was handed to North Yorkshire’s primary care trust (PCT), which has been beset by severe financial problems for a decade.

But the decision to clear it, ahead of moves under Government reforms to hand NHS spending to GP commissioning groups, comes amid signs the PCT is struggling to hit its £23m savings target in 2011-12, prompting warnings further measures will be needed.

A new report by the district auditor also warns the reforms will present a “major challenge” to the PCT to “continue delivery of efficient and effective services, preserve sound financial control and stewardship, and support the successful transition to new arrangements, with no loss in quality”.

Last night Coun Jim Clark, chairman of North Yorkshire’s scrutiny of health committee, welcomed the write-off, which he said would give the PCT a “level playing field going forward”.

A regional health authority spokesman said the decision to cancel the legacy debt was recognition of progress it had made in tackling its financial position and the need to give GPs the “best chance of developing robust balanced plans for the future”.

PCT director of finance Adrian Snarr said it faced a challenging savings target in 2011-12 but due to improved budget and project management, it was making “good progress towards delivery”.

He added: “During this period of transition we are working closely with GP leaders in our emerging clinical commissioning groups to ensure that we work within the resources given and continue to improve the financial position of the local health economy.”