Clause 13 - Public dividend capital
Health and Social Care (Community Health and Standards) Bill
5:00 pm
Mr Chris Grayling (Epsom and Ewell, Conservative)
I would like the Minister to clarify a few more points. My assumption about how this will work is that the initial public dividend capital will become a de facto loan from the Government that will be paid and repaid—interest will be paid and the principle repaid in the conventional way—once the foundation trust is set up. Will the Minister confirm that? If the public dividend capital is set against the nominal capital base of the trust when it starts up, will there be any impact on the level of public dividend capital if the trust decides to dispose of part of its asset base against which that dividend capital has been assessed and reinvest that capital in something else? Will that have any impact on the public dividend capital, or is it simply regarded as a loan—a cash sum owed to the Government?
Will foundation trusts be free to capitalise and repay their public dividend capital? Can they free themselves totally from public sector borrowing if they so wish? Can they come to an agreement to finance themselves entirely from a third-party source rather than the Department? Can they seek differential interest rates? Are they free to secure long-term 25-year finance at a low rate, or through a bank in another country, rather than repaying at a higher rate of return to the Treasury?
What is the term of the initial public dividend capital, if we assume that this is a loan? In what period does that initial block of money have to be repaid? Is that a variable interest rate or a fixed interest rate arrangement?
Will the Minister elaborate on subsection (3), which says:
''The Secretary of State may, with the consent of the Treasury, decide the terms on which any public dividend capital of an NHS foundation trust is to be treated as having been issued.''
Will he explain the purpose of the subsection more clearly? In particular, does he expect that all trusts will be treated in broadly the same way when their public dividend capital is set?
In another debate, my hon. Friend the Member for South Cambridgeshire made an important point about the different levels of public dividend capital between different trusts, based largely on the age of their buildings. Will the Government take any steps to ensure that a trust is not disproportionately disadvantaged simply because of the book value of its buildings? What valuations will be used? Will they
be the existing valuations on which the current public dividend capital is assessed, or will there be a revaluation process when the trusts are established to ensure that all trusts are operating on a level playing field, with common and comparable asset evaluation, and effectively an equivalent or fair value put on assets transferred from the public sector to their ownership.
How will the Treasury provide consent? What process will it go through? Must Treasury consent be provided for any other elements of the financing arrangement? This is the first reference to the Treasury in the Bill. Why is it in this clause? Will the Treasury have any other reference points in the financing, or is this reference to do with the Treasury's need to assess the public dividend capital, because of the implications for the public sector borrowing requirement?