Published on: 28 June 2012
Following the significant financial challenges facing Peterborough and Stamford Hospitals NHS Foundation Trust Monitor commissioned KPMG to produce an independent report looking at the underlying causes and whether more could have been done to prevent them. The report looks primarily at what happened at the Trust and Monitor's regulatory processes.
In the report, Learning and Implications from Peterborough and Stamford Hospitals NHS Foundation Trust, KPMG acknowledge that Monitor wrote to the Trust in 2006, stating that it believed the long-term affordability of a proposed new PFI hospital to be in significant doubt. This letter was copied to the Department of Health and HM Treasury.
The report describes how Monitor's power to intervene as the regulator was very limited in scope. This is because the financial breach that might arise as a result of Peterborough entering the PFI was prospective. Monitor's regulatory approach, and one of the key principles of the foundation trust policy, is that the boards of foundation trusts have primary responsibility for the performance of their trust.
At the time the contract was signed, Peterborough's financial risk rating under Monitor's Compliance Framework was satisfactory. Under the guiding legislation, the National Health Service Act 2006, Monitor can use its intervention powers only where there is a current and significant failure by an FT to comply with the terms of its Authorisation or there was a previous such failure and a likelihood that the FT would repeat that failure. That was not the case at the time the contract was signed by Peterborough. Responsibility for committing to the PFI rested with Peterborough’s management. As stated in KPMG's report, Monitor did not have the power to prevent it from committing to an unaffordable PFI in 2007.
The KPMG report includes some recommendations for Monitor to help identify potential problems of this nature at an earlier stage. Monitor agrees with all the recommendations in the KPMG report and our response can be read here.