Wednesday 31 October 2012

Britain


One NHS trust in five is in bad financial trouble – and Department of Health is failing to plan for bankruptcies
Only urgent, radical action will prevent failures, warns Public Accounts Committee



30 October, 2012

The spectre of hospitals going bankrupt is raised today in a damning report by MPs which suggests that one in five NHS trusts is in serious financial trouble and “there is a real concern that some will fail”.


The scale of the challenge facing the NHS is revealed in figures showing that 34 trusts ran up combined debts of £356m in 2011-12 and another 42 relied on handouts from local health authorities or the Department of Health (DoH) to keep them going – almost 19 per cent of the 411 NHS organisations in total, MPs say.


Although the NHS as a whole is in surplus, parts of it are facing bankruptcy. But the DoH has been unable to explain what will happen if a trust fails to pay its debts or how services to patients would be maintained.


The broadside from the Public Accounts Committee (PAC) comes as administrators appointed to oversee the crisis-hit South London NHS Healthcare Trust recommended that it be broken up and run by neighbouring NHS trusts, or offered to private companies.


The trust, which runs three hospitals in south London – the Princess Royal in Bromley, the Queen Elizabeth in Woolwich and Queen Mary's in Sidcup – overspent by £65m last year, or more than £1m a week, and became the first in the country to be taken over by government-appointed administrators.


The same fate awaits other trusts unless they take radical action to cut budgets by closing departments and merging services with neighbouring organisations. Barking Havering and Redbridge received £55m in handouts from the DoH last year, Peterborough and Stamford got £41m and Mid-Staffordshire received £21m, according to the National Audit Office.


The DoH expects every trust to have to reconfigure services, but the PAC said there was an "alarming" lack of data to help them compare options.


Margaret Hodge, the PAC chair, said: "The DoH could not explain to us how it will deal with an NHS trust that goes bankrupt. Nor could it provide reassurance that financial problems would not damage the quality of care or equality of access to all citizens, wherever they live.


"The overall surplus of £2.1bn across all NHS bodies in 2011-12 masks the fact that a significant minority are in financial difficulty. In London, two trusts have a combined deficit of £115m, one of which, South London Healthcare NHS Trust, has been placed in special administration.


Ms Hodge added: "It very much looks like the department is inventing rules and processes on the hoof rather than anticipating problems and establishing risk protocols."


The committee is especially critical of the effect of Private Finance Initiative (PFI) deals, used to build or redevelop hospitals, which "inevitably distort priorities" and are "especially worrying at a time when resources are constrained".


Contracts agreed under the PFI scheme are covered by safeguards which guarantee that investors have first call on NHS cash. The DoH is already facing a bill of £1.5bn to bail out seven trusts with PFI problems – equivalent to £60m a year, the PAC says.


"We are particularly concerned that the financial viability of a number of trusts is being undermined by the fact that they are locked into unaffordable PFI contracts. It is unclear how the department will continue to underwrite payments once most of the money moves to the NHS Commissioning Board," Ms Hodge said.


Critical list: London hospitals facing uncertain future


A bankrupt NHS trust operating three hospitals that serve a million people in south London looks set to be carved up between the NHS and the private sector, according to controversial proposals to be revealed today.


South London NHS Healthcare Trust was declared bust and administrators called in three months ago after overspending about £1m a week to accumulate debts of £150m.


Its three hospitals, Queen Mary's in Sidcup, Princess Royal (PRU) in Bromley and Queen Elizabeth (QEH) in Woolwich – have struggled with patient satisfaction and spiralling debt since they were merged into a super-trust in 2009.


Matthew Kershaw was parachuted in as special administrator by Andrew Lansley, the former Health Secretary, after it became clear that its two hugely expensive private finance initiative (PFI) deals meant the status quo was impossible for the taxpayer to sustain.


Mr Kershaw's radical proposals would have a knock-on effect for neighbouring hospitals, including the merger of the PFI-built QEH with the neighbouring Lewisham Healthcare NHS Trust, with the loss of one A&E department.


The PRU could be taken over by King's College Hospital NHS Foundation Trust or, more controversially, its services put out to tender – keeping alive several private companies' hopes for a slice of the franchise.


One of the biggest changes would see Queen Mary's taken over by a mental health foundation trust, Oxleas, and land sold off to pay the debts. The new "health campus" would no longer provide complex surgery but would concentrate on day cases, radiotherapy and endoscopy.


Mr Kershaw called on the Government to pay "the excess costs" of the two PFI hospitals until the 25-year contracts expire. He also recommends a comprehensive re-organisation of emergency, community, maternity and elective services across south-east London.


Thirty-nine organisations have expressed interest in running parts of the trust, including Circle, Care UK, Serco and Virgin Care.


The proposals will now go out to public consultation for 30 days, and Jeremy Hunt, the Health Secretary, is expected to make a decision early in February.




British banking jobs at risk as UBS announces plans to cut 10,000 jobs worldwide
More British banking jobs were at risk today after UBS said it is to cut up to 10,000 roles worldwide in moves to shrink its investment banking arm.



30 October, 2012

The Zurich-based bank plans to reduce its headcount from 64,000 to 54,000 by 2015, with some 75% of the losses made outside Switzerland.


UBS, which has around 6,500 staff in London, said the restructuring would deliver savings of 5.4 billion Swiss francs (£3.5 billion) by 2015.


The bank, which wants to shift focus away from investment banking operations, reported a 40% slide in pre-tax operating profits to 2.3 billion Swiss francs (£1.5 billion) in the six months to June 30.


UBS wants to concentrate on its traditional strengths in advisory, research, equities, foreign exchange and precious metals and exit other business lines, mainly in fixed income.


The bank said these divisions had been "rendered uneconomical by changes in regulation and market developments".


The job cuts will target "front-to-back processes" across the bank, UBS said, and simplify its product portfolio and production processes.


Group chief executive Sergio Ermotti said: "This decision has been a difficult one, particularly in a business such as ours that is all about its people.


"Some reductions will result from natural attrition and we will take whatever measures we can to mitigate the overall effect. Throughout the process we will ensure that our people will be supported and treated with care."


The bank announced the plans as part of its third-quarter results, which revealed a loss of 2.2 billion Swiss francs (£1.4 billion) in the three months to September, compared with a profit of 1 billion Swiss francs (£670 million) last year.


The loss was driven by a one-off charge of 3.1 billion Swiss francs (£2 billion) linked to the restructuring of its investment banking division and a debt-related charge of 863 million Swiss francs (£574 million), UBS said.


Unveiling its half-year losses in July, UBS claimed that the botched stock market listing of social networking giant Facebook cost it 349 million Swiss francs (£227 million).


It blamed the loss on the "gross mishandling" of the flotation by Nasdaq, which involved a series of technical errors that caused a delay in the start of trading of Facebook shares in May.


A former UBS banker, Kweku Adoboli, yesterday denied being a rogue trader when he lost the bank £1.4 billion.


The 32-year-old is currently on trial at London's Southwark Crown Court, accused of gambling away the money while working for UBS during the global financial crisis.


Occupy protesters were right, says Bank of England official
The anti-capitalist protesters who occupied St Paul’s Cathedral were both morally and intellectually right, a senior Bank of England official said last night.


30 October, 2012

Andrew Haldane, a member of the Bank’s financial policy committee, said the Occupy movement was correct in its attack on the international financial system.

The Occupy movement sprang up last year and staged significant demonstrations in both the City of London and New York, protesting about the unequal distribution of wealth and the influence of the financial services industry. Members of the movement occupied the grounds of St Paul’s and remained camped there for more than three months until police evicted them in February last year.

Occupy has been successful in its efforts to popularise the problems of the global financial system for one very simple reason; they are right,” Mr Haldane said last night. Mr Haldane, the Bank’s executive director for financial stability, was speaking to Occupy Economics, an offshoot of the Occupy movement, at an event in central London.

In a speech entitled Socially Useful Banking, he said the protesters had helped bring about a “reformation” in financial services and the way they are regulated.
Partly because of the protests, he suggested, both bank executives and policymakers were persuaded that banks must behave in a more moral way, and take greater account of inequality in wider society.


Occupy’s voice has been both loud and persuasive and policymakers have listened and are acting,” he said. “In fact, I want to argue that we are in the early stages of a reformation of finance, a reformation which Occupy has helped stir.”

The protesters had been right about bankers’ behaviour and the consequences of extremely high salaries and bonuses in the financial sector and other industries, he said.

I do not just mean right in a moral sense,” he added.

It is the analytical, every bit as much as the moral, ground that Occupy has taken. For the hard-headed facts suggest that, at the heart of the global financial crisis, were — and are — problems of deep and rising inequality.”

Mr Haldane concluded by telling the activists that they had helped bring about nothing less than a new financial order.

If I am right and a new leaf is being turned, then Occupy will have played a key role in this fledgling financial reformation,” he said.

You have put the arguments. You have helped win the debate.”

In the text of his speech distributed by the Bank last night, Mr Haldane made no reference to the techniques employed by the Occupy protesters.

The occupation of St Paul’s last year was controversial, and led to claims that the protesters were despoiling the cathedral’s grounds.

The protest ended after the Corporation of London won a legal order allowing the activists to be evicted.

Earlier this month, members of the group marked the first anniversary of the St Paul’s protest by entering the cathedral during a service and chaining themselves to the pulpit.

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