Hospital accounting treatment confirmed

Shadow chief secretary to the Treasury David Lawsÿsecured confirmation from Chief Secretary Paul Boateng that officials sent a letter to the Office of National Statistics concerning the correct accounting treatment for the classification of the hospitals’ borrowing.

Boateng claimed this was done ‘with the full involvement of Department of Health officials’ and ‘was a routine enquiry and not undertaken by ministers’.

But Laws said the disclosure was significant in view of the on-going battle between chancellor Gordon Brown andÿhealth secretary Alan Milburn, who wants the maximum freedom for the hospitals to develop.ÿ

Laws said thatÿ’there is still huge concern within the Treasury that Milburn is trying to secure borrowing powers for the hospitals outside the Treasury’s remit’ÿÿwith accounting treatment equating with Network Rail’s – whose contingent liabilities are off the national account for ONS purposes, disputed by the Comptroller and Auditor General Sir John Bourn.ÿ

He said the Treasury’s concern was thatÿeventually all hospitals will be ‘foundation hospitals’ – the majority of whose trust board members would not be state appointees, which he said was a key factor in the status of Network Rail.

ÿLiberal Democrat Shadow Chancellor Matthew Taylor is writing to the ONS for his views on the issue of ring-fencing the hospitals’ borrowing outside Treasury control.

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