NHS: Finance

Health written question – answered on 25th January 2013.

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Photo of Clive Efford Clive Efford Shadow Minister (Culture, Media and Sport)

To ask the Secretary of State for Health

(1) what consideration he has given to the possible consequences of the manipulation of Libor for interest rates paid by the NHS; and if he will make a statement;

(2) what effect there was on interest rates paid on NHS capital projects financed under the private finance initiative through the manipulation of Libor; what estimate he has made of the cost per scheme to each hospital trust; and if he will make a statement;

(3) which NHS capital projects have been financed under the private finance initiative that could have been affected by the manipulation of Libor by banks; and if he will make a statement;

(4) whether he is considering taking legal action to recoup any overpayments on interest rates paid on NHS capital projects financed under the private finance initiative as a consequence of the manipulation of Libor; and if he will make a statement.

Photo of Daniel Poulter Daniel Poulter The Parliamentary Under-Secretary of State for Health

The issue of Libor rates is clearly a very complicated matter and one which is not directly under the control of this Department. It is however one where very significant resources have already been targeted. As has been very widely reported, a number of banks have already been investigated by the relevant regulatory authorities and fines levied, and it is reported that further investigations are on-going. The Financial Services Authority has completed its own investigation into Libor and the Wheatley Review, commissioned by the Chancellor of the Exchequer, my right hon. Friend Mr Osborne, has also already reported, with the Government accepting the recommendations in full and is now consulting on secondary legislation to implement these.

It is by no means clear that private finance initiative (PR) projects entered into by institutions in the national health service, have been adversely affected by the manipulation of Libor. In fact, it is reported that at certain times banks’ Libor submissions resulted in a lower declaration of Libor. This may have had the effect of lowering the private sector's borrowing costs, thus reducing the PFI payments required by the NHS body. Whether or not there is a subsequent investigation by the Serious Fraud Office or other body is not a matter for this Department to comment on.

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