A plan to shake up hospital services in Huddersfield and Calderdale could cost an in-debt trust £765m to repay over 40 years.
Local NHS chiefs hope to secure £480m in loans for the Right Care Right Time Right Place plan but will then pay back substantial interest charges.
The proposals will close Huddersfield Royal Infirmary’s A&E while emergency care services will be centralised at Calderdale Royal Hospital, Halifax. The existing Royal Infirmary could be replaced by a smaller unit on the Acre Mills site.
It is expected the £480m will come from the government’s Independent Trust Financing Facility (ITFF) which charges the ‘National Loan Fund’ rate of 2.54%.
Health chiefs forecast the loan will be paid off in 40 years costing the local NHS £285m in interest and totalling £765m.
It is estimated that the repayments will be equivalent to approximately £1.6m a month.
Hospital chiefs have said that a loan, rather than a grant, is not the ‘optimal source of financing’ for the proposal which includes building a new Huddersfield Royal Infirmary (HRI).
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But Calderdale and Huddersfield Foundation Trust (CHFT) has admitted it would be unlikely to obtain a grant because of the ‘current economic climate’.
The information has been published in a five-year strategic document by CHFT which runs HRI and Calderdale Royal Hospital (CRH).
It says: “Financing of capital expenditure has been assumed to be through loans raised with the ITFF.
“It is appreciated that this may not be the optimal source of financing, but it has been deemed prudent to assume that Public Dividend Capital (PDC) funding will not be available for capital works in the current economic climate.”
If Right Care Right Time Right Place goes ahead, interest payments will begin next year before ‘principal’ repayments start in 2020.
The document says: “Subject to securing the external funding support as above, the trust’s income and expenditure and cash position are forecast to be sufficient to support the trust’s interest and repayment obligations.”
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It adds: “New loan agreements are assumed to be profiled over a 40-year repayment period.
“This is reflected in the Equal Instalments of Principal (EIP) National Loan Fund rate of 2.54%.
“Interest repayment commences on drawdown from FY17, with principal repayment beginning in FY20 on completion of works.”
By comparison, retaining current services until 2022 would require £217m, not including £129m in interest.
But health chiefs have said the status quo is unsustainable and does not provide the best patient care.
