Investigation into shock blackhole in Doncaster trust’s finances

Matthew Lowry, former Director of Finance

Matthew Lowry, former Director of Finance

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Hospital bosses facing an investigation into a shock multi-million-pound blackhole in their finances are warning of huge cuts ahead amid new evidence the crisis dates back 18 months.

Latest estimates by managers at Doncaster and Bassetlaw Hospitals NHS Foundation Trust suggest it was £21m in the red in the eight months to November but the full extent of its debts is only expected to become clear next month.

Doncaster Royal Infirmary.

Doncaster Royal Infirmary.

Officials are warning cuts of 10 per cent will be needed to curb runaway expenditure including significant overspending on temporary doctors and nurses, with even bills for postage said to be £370,000 over budget since April.

NHS chiefs now believe overspending at the trust began 18 months ago and say the independently-audited accounts for 2014-15 could have been misstated by as much as £12m.

A “control and grip” plan is being drawn up to deal with the crisis but the trust is expected to face sanctions from regulators next month over serious failings which first emerged in July when officials discovered bank accounts held less cash than expected.

Among questions facing hospital chiefs is how the crisis went unnoticed for so long. New figures suggest the organisation, which serves more than 400,000 people, entered 2015-16 facing a £20m deficit instead of a predicted £2m surplus – and the position has since dramatically worsened.

“There is an underlying issue of historic underfunding in the NHS and hospitals cannot provide the levels of service that is expected,”

Consultants from finance giant KPMG are carrying out an investigation into the misreporting of financial performance. Finance chief Matthew Lowry quit last month and a permanent successor is expected in the new year.

Officials say the reliability of current financial statements is “low” until a thorough examination of its accounts has been completed. No estimate of the likely full-year deficit is expected until February.

Unison regional secretary John Cafferty said the financial difficulties were symptomatic of wider problems across the NHS which is deeply in the red.

“There is an underlying issue of historic underfunding in the NHS and hospitals cannot provide the levels of service that is expected,” he said.

Latest figures presented to a board meeting yesterday show expenditure is estimated to be running £20.7m above the level expected. Executives were told the trust has 43 more doctors in post than it needs and some wards are overstaffed with nurses. Overspending even includes postage costs which are £370,000 above plan.

Early curbs on spending have already been put in place including cuts in recruitment, bank and agency staff, overtime, supplies ordering and capital expenditure.

A total of £14.7m in emergency cash has been made available to the trust to pay long-standing trade creditors. Small businesses and local firms are being prioritised.

Managers have been warned it was likely accounts for 2014-15 had been “materially misstated” and the overall position had been deteriorating for 18 months.

Last night a trust spokesman said the size of the deficit “cannot be accurately quantified at this stage” but managers had been told to find cuts of 10 per cent. It was likely these would take up to three years to deliver and assessments would be made of each scheme to ensure “there is no detrimental impact on quality”.