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Wednesday, 23 January, 2002, 13:28 GMT
Cash injection wipes out health debt
Surgeons, generic
Hospital workers are still eager to see new investment
Debts of 41m at health authorities are to be written off by the Welsh Assembly, Health Minister Jane Hutt has pledged.

All loans to authorities issued before 31 March, 2001, will be shelved in a gesture by the Cardiff administration.

On Wednesday morning, Ms Hutt announced she wanted to give a clean slate to the controversial new health boards set to replace local authorities in April 2003.

Disappearing debts
Dyfed-Powys - 23.71m
Carmarthenshire NHS Trust - 3.17m
Ceredigion & Mid Wales NHS Trust - 1.3m
Pembrokeshire & Derwen NHS Trust - 2.8m
Bro Taf Health Authority - 6.68m
Cardiff and Vale NHS Trust - 3.5m
Six bodies in mid, west and south-east Wales will start the next financial year with red ink gone from their books.

That means authorities will not have to repay millions, including 23.71m at Dyfed-Powys Health Authority and 6.68m in the Bro Taf area.

It follows the Scottish Executive's decision to shelve debts at authorities and trusts last year. Ms Hutt insisted it was because of new money made available after discussion with Finance Minister Edwina Hart.

In a statement, she said: "This announcement means NHS trusts and health authorities can start the year on an even keel and funding can be directed straight to patient care.

"As we move on towards the restructuring of the health service and a new funding formula I am ensuring that the NHS has the best possible start as we move towards change."

Budget overspend

Opposition parties welcomed the gift, which could free authorities to spend more at cash-strapped hospitals - something doctors have been crying out for.

Liberal Democrat health committee chair Kirsty Williams said the NHS in Powys, in which her constituency sits, had struggled with debt for years.

Health Minister, Jane Hutt
Jane Hutt has warned authorities not to overspend
But Conservative health spokesman David Melding and Plaid Cymru's Brian Hancock voiced concern authorities which had not overspent their budget would end up losers.

In recent years, health chiefs in the sprawling Dyfed-Powys authority area have had to ask the government for millions to keep treating patients.

That included a 10m grant from the Welsh Office before the inception of the devolved assembly in Cardiff.

In November, assembly members voted in favour of Jane Hutt's plan to scrap all five regional health authorities in 2003, replacing them with 22 authorities on matched local government lines.

Part of a 10-year modernisation strategy, the proposal drew fierce criticism from Tory and Plaid members, claiming it would increase beauracracy - David Melding labelled the idea a "disaster."

Spending warning

The health minister claimed it would remove a whole tier of management excess and lead to a quicker redistribution of cash to patient care.

And on Wednesday, she was adamant about her cash gesture: "If a trust had debts of 7m, and they had been required to pay that back over 7 years, that would have meant 1,350,000 repaid each year.

"Now that money will be available for patient care in each of the 7 years."

But authorities are not allowed to build new debts and must break even in 2001/02 and 2002/03 before their red ink is washed away.

Ms Hutt warned overspending authorities: "I must stress that it is absolutely essential that NHS Wales bodies accept the discipline of living within their budget.

BBC Wales's Susie Phillips
"Jane Hutt said she wanted to give all the health authorites a fresh start"
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