Financial benefits

As an NHS foundation trust there will be a number of changes to the way we manage our finances, meaning we can pass on greater benefits to our patients.


How are our finances managed as a foundation trust?

We will be free from central government control and, therefore, we will be able to invest in the services where they are needed and not where we are told to. We will also have contracts funded for three years, rather than one year at a time, which will give us more financial stability and the scope to plan longer term.

We will have greater freedoms to borrow money outside of the NHS which will give us the flexibility to develop services more quickly and efficiently. There are strict regulations about the amount that can be borrowed and we will need to demonstrate to our Council of Governors and to our regulator, Monitor, that we can cover the cost of any loan.  

We will submit regular financial reports to Monitor which then allocates a financial risk rating based on our financial performance (including the quality of our financial judgements and our assessment of risk). Monitor will also determine the amount we can borrow if, for example, we need to do so to fund a major project. We will be required to make a surplus and to have clear plans for how this will be invested.

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Will we be able to keep surplus funding?

Yes, we will be able to keep any surplus funding and reinvest it into new or improved services. For example, as a foundation trust, we will also be able to retain and invest the proceeds of land or asset sales.

In the year ending March 2009, 115 NHS foundation trusts generated total revenues of £22.765 billion and retained surpluses of £269 million. 

The operating and financial freedoms for NHS foundation trusts will enable us to take prompt decisions to invest in services, resulting in immediate improvements in care.  We will also be able to take a long-term view and to accumulate surpluses that make a sustained investment in what our patients and our local communities need over a longer period.

Other foundation trusts are using their surpluses to improve patient care by:

  • developing clinical services
  • investing in estate, facilities and equipment, and 
  • accumulating reserves over a longer period to carry out major capital programmes and investment.

Some examples include:

Derby University Hospitals NHS Foundation Trust has opened a new hospital and is using its surplus to purchase and install medical equipment including radiotherapy equipment, CT and MRI scanners.  It is also using its surplus to purchase land to create a second staff car park at the new hospital.

Royal Bournemouth and Christchurch Hospitals NHS Foundation Trust is investing £10 million in new buildings and equipment.  

East London NHS Foundation Trust invested £15 million in a programme to improve and upgrade its community premises and in-patient facilities.

In 2008/09 the South London & Maudsley NHS Foundation Trust invested £7.3 million which included support to clinical directorates to speed up service improvement and quality, cleanliness, and monitoring of their patient’s experiences.

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What happens if we get into financial difficulty?

The regulator Monitor continually reviews an NHS foundation trust’s financial performance to make sure that it is financially robust and operating within the terms of authorisation – the conditions which it agreed to when it became a foundation trust. Monitor also issues risk ratings that demonstrate how the trust is meeting its obligations in terms of mandatory services (the services it is authorised to provide), governance and finance. If there are significant problems, Monitor has the power to remove the Board of Directors which has overall responsibility for running the organisation. This would only be in extreme circumstances.

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