Conclusion 11

Financially distressed trusts are increasingly relying on loans from the Department to meet their running costs, with little or no prospect of paying them back. By 31 March 2019, outstanding debt issued by the Department to these trusts was £10.9 billion, up from £8 billion the previous year.20 In April 2020, the Department announced that it would be writing off £13.4 billion of loans owed by trusts and replacing this with non-repayable public dividend capital. The Department explained that the decision to write off that level of debt was taken alongside plans to return the provider sector in aggregate to financial balance.21 Although welcomed by NHS Providers, it told us that it would like to see more detail on how the write-off will work in practice, and that financial issues will only be fixed when the underlying financial problems of trusts are addressed.22 The Department noted that once the provider sector is returned to financial balance in aggregate, the focus will shift to individual trusts that have structural financial issues.23