Chris Lancelot: Consortia must not inherit PCT debts

I am convinced that the White Paper represents a golden opportunity for clinicians to run the NHS both efficiently, and for the good of the patients.

The GP Record, by Fran Orford www.francartoons.com
The GP Record, by Fran Orford www.francartoons.com

But what about existing financial deficits? Setting up and running the consortia will be challenging enough without the burden of inheriting crippling PCT debts.

The money itself isn't the only problem: the principle of debt inheritance is inherently dangerous. If PCTs know that their liabilities will ultimately be transferred they will have little incentive to balance their books. Indeed, PCTs opposed to the government's plans could try to undermine them by deliberately creating increased debts to pass on to their successors.

There is an even worse possibility. Clearly the new consortia need to select the very best people for their chief executives and managerial staff. Yet GP's survey last February showed that the vast majority of PCTs were rated as 'fair' or 'poor', which implies that there are many incompetent PCT managers, all now facing redundancy.

Redundancies cost money - lots of it. But what if the PCT were to transfer staff under the Transfer of Undertakings (Protection of Employment) regulations (TUPE)? Not only would this preserve jobs, but the PCT would emphasise that it would also vastly reduce current PCT costs and thus inherited debt.

However, this means potentially second-rate staff being transferred. Worse, if their employment were later terminated they would cost the consortium vast amounts in severance pay, because under TUPE the new employer takes over the 'length of service' factor in calculating redundancy payments.

The bottom line is this: if consortia inherit debts from their PCTs there is a very real possibility that consortia will feel forced to minimise that debt by taking on the very personnel they shouldn't be employing, simply to cut redundancy payments.

The solution is simple: the government should make it clear that consortia will not inherit PCT debts. This would give initial equality to all consortia, create no incentives for PCTs to run up debts, stop consortia being pressured to accept existing PCT staff, and - perhaps most important of all - allow the fledgling consortia to select their new staff solely on merit.

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