Clause 13 - Public dividend capital
Health and Social Care (Community Health and Standards) Bill
5:00 pm
Mr Andrew Lansley (South Cambridgeshire, Conservative)
We have had a substantial debate, and I took the opportunity earlier to ask some questions about the relationship of public dividend capital to the borrowing code, so I will not return to that point. However, I should like to ask two questions, the first of which is, I confess, probably due to my ignorance, so I hope that the Minister will be able to enlighten me. Under section 10 of the NHS and Community Care Act 1990, NHS trusts are established with originating public dividend capital. Subsequent to their establishment as NHS trusts, where the trusts have received grants from the Government for the purpose of providing additional capital investment, have they had corresponding increases in their public dividend capital? Discontinuity and inequality will build up if they have not. Foundation trusts should start out with similar balance sheets. In so far as they have assets, they should have public dividend capital, and vice versa.
Secondly, when the NHS foundation trusts come to borrow money from the foundation trust financing facility, clearly they will pay a rate of interest on what they receive as capital in that form. Separately, NHS trusts and foundation trusts, in so far as they have
public dividend capital, will pay a dividend; that is covered in subsection (4).
What is the relationship between those two rates likely to be? If NHS trusts receive capital from the Government with a dividend payable that is substantially less in terms of its return on capital than the return on capital requested of NHS foundation trusts in the form of interest on their financing facility, discontinuity between those two things will mean that there is a disincentive to becoming a foundation trust and borrowing money from the financing facility, rather than going to the Department for capital allocations, as happens at the moment. Will the Minister give us some reassurance that there will not be that perverse disincentive?