CASH-STRAPPED health services serving York and Selby are to be fined £1.3 million for accruing a multi-million pound debt.

Penny Jones, acting chief executive of Selby and York Primary Care Trust (PCT), revealed at a meeting with York councillors that the Government was levying the huge financial penalty on the trust because of its massive debts, which are expected to be £23.7 million at the end of this financial year.

The news is another blow for the trust, which has already been identified as suffering some of the worst cash problems in the country.

Last month, we revealed how the issue was so severe an emergency turnaround team had been sent in by the Government, with Selby and York one of only 18 NHS organisations across the country identified as needing "urgent intervention".

Mrs Jones told City of York Council's Social Services and Health Scrutiny Board the fine would be levied during the next financial year, so it would not impact on the trust's debt status before then.

Outside the meeting, board chairman Coun Ian Cuthbertson said: "It's unfortunate that the Government feels it necessary to fine a PCT which recognises the deficit that has been accumulated, and has set about addressing the problem."

But the Department of Health denied the £1.3 million was a "fine", saying it was "part of the normal financial management system in the NHS".

A spokeswoman said: "The Government has provided record levels of additional funding for the NHS and all organisations should be able to balance their finances.

"However, if one organisation within the NHS overspends, there must be underspending elsewhere to ensure the system as a whole balances."

She said the Government had recently developed a policy of adding interest to repayments, to provide an "additional incentive" to balance the books.

But Selby MP John Grogan said after the meeting he would be questioning ministers in Government about the need to exact financial penalties on

debt-ridden PCTs.

Mr Grogan, who chairs a back bench MPs' health committee, said: "If you're in deficit and you get fined, it just makes the situation worse. I disagree with it."

When asked whether there had been any financial mismanagement, Mrs Jones admitted at the meeting the PCT's contract and performance sections had not been strong enough.

She said: "I think people know the director of finance has left the PCT, and the previous chief executive has left the PCT in terms of their accountability of that situation."

The trust's former chief executive, Jeremy Clough, stepped down last September after an Audit Commission review revealed the full scale of the organisation's financial difficulties.

Mrs Jones said in a statement later released by the PCT: "The positions of chief executive and director of finance carry with them accountability for the overall financial situation of the trust, and as such they accepted

responsibility for the financial position of the PCT."

She said the new management team at the trust had identified its commissioning and contracting functions needed improvement, and a new director of commissioning and finance director were now in place.

The trust's battle to balance its books has resulted in a programme of service cuts, including plans to deal with some outpatients by email and telephone, reduce emergency admissions and cut the number of beds at Selby Hospital.

In early January, we reported that it was still about £2.4 million adrift of its debt target for April, but Mrs Jones said at the meeting that this figure now stood at £250,000, savings for which plans still have to be made.

Next year, it must save £12.4 million - money which, added to the growth in funds contributed by the Government, would see it back to financial balance by the following year.

But there was some positive news, after the Government confirmed it would pay for the trust's turnaround team for the first three months, money that the PCT would otherwise have to pay itself.

Mrs Jones said: "We have got excellent patients, we've got a very good PCT. We're very quick at finding out what's wrong with you, we've got a good hospital that treats very fast - all of that, unfortunately, equals unaffordable.

"We are working to get a plan in place that minimises the impact on patient care. We are not the only PCT with that challenge, but it isn't going to be easy."

The Department of Health spokeswoman said: "Where an organisation underspends in one year, they receive the money back in the following year.

"For the system to balance, this means that an organisation that overspends must similarly pay the money back in the following year.

"As part of the financial planning process for 2005/06, the policy of adding interest to the repayment of all overspending and underspending was developed, to provide an additional incentive to improve financial management and deliver financial balance."

The Department of Health has agreed to fund the first three months of turnaround teams in PCTs.

But the spokeswoman said when this time was up, it would be a matter for the PCT and strategic health authority to fund additional help.

Bosses under fire in major shake-up

MANAGEMENT posts would be slashed in a proposed shake-up to the way health services are delivered in the region.

A consultation process is currently underway on plans to merge four Primary Care Trusts (PCTs) in Yorkshire, to join up three strategic health authorities and create a large new ambulance service.

The Government wants to see fewer PCTs with more strategic responsibilities, and the vision for Yorkshire is for Selby and York PCT to join three

others: Craven, Harrogate and Rural; Hambleton and Richmondshire; and Scarborough, Whitby and Ryedale, to form a North Yorkshire and York trust.

It is also proposed three strategic health authorities (SHAs) should join forces to form a Yorkshire and Humber authority.

Penny Jones, acting chief executive of Selby and York PCT, told councillors the changes to PCTs and SHAs would mean savings would be made on management costs, which would be invested into cancer services and palliative care.

Management level jobs would also be cut if ambulance services merged, and the cash saved ploughed back into the service.

Mrs Jones said: "PCTs are still not strong enough to have a great influence on what happens in acute hospitals. We're talking about stronger and bigger PCTs and a reduction of management costs."

But the plans sparked concern from some councillors that large, monolithic health services would lose their local focus.

Talking about the ambulance merger, Coun Sandy Fraser said: "Increasingly we are seeing NHS bodies getting larger and larger and covering wider areas. I think there must be a concern that services get more and more remote from the people they serve."

Jeremy Clough, speaking in his new role as project director for North and East Yorkshire and Northern Lincolnshire Strategic Health Authority, said: "I'm optimistic about the ability of NHS organisations to think about localities. There are benefits about larger ambulance services. I absolutely believe ambulance services are smaller than they need to be.

"When you get a crash on the border between WYMAS and TENYAS, you're likely to get two ambulances. There's an issue about how a strategic organisation managing a wider area could do that better."

PCT chiefs admit to errors over centre cuts

HEALTH chiefs should have consulted better on a controversial decision to slash hours at York's Walk-In Centre, the primary care trust's chief executive has admitted.

The decision to cut opening hours at the centre was unveiled before Christmas, but York Hospital said at the time it had not been consulted by Selby and York Primary Care Trust (PCT).

It was feared the new hours - a reduction of 49 hours a week trialled over Christmas and New Year - would bring an influx of patients into the hospital's A&E department.

Penny Jones, acting chief executive of Selby and York PCT, said at the social services and health scrutiny board meeting the trust should have been better consulted on the move.

"We put our hands up," she said. "We should have informed people and our partners better. We accept that, and we apologise for that."

Mike Proctor, director of nursing at York Hospital, said cutting the Walk-In Centre's hours had not had an obvious impact on A&E waiting times.

He said the hospital was hitting its A&E waiting times target for more than 98 per cent of patients dealt with in four hours, but it was too early to say whether average waiting times had been affected by the cut.

The PCT said at the time it was reducing the hours on a trial basis to allow nursing staff to work more closely with GPs providing the emergency out-of-hours service.

Updated: 10:10 Monday, February 13, 2006