How was the capital borrowing argument resolved?
Mr Blair hammered out a compromise deal on October 8 2002 in which hospitals would be able to borrow “at their own discretion, not that of the government”. This would appear to suggest that Mr Milburn has won the battle, but perhaps not the war. Foundation hospitals will have quick and flexible access to borrowing, but any loans will be marked on the DoH’s balance sheet, ensuring that they remain part of conventional public sector borrowing and that the government effectively underwrites the foundations’ finances. This situation will continue over the next three years, suggesting that the battle over foundation trusts could be rejoined at the time of the next spending review. What will foundations trusts borrow cash for? Despite the row over these new borrowing powers, they will probably not have a very radical effect in practice. Foundation hospitals are unlikely to take out loans for new buildings – that will still be done largely through the private finance initiative. Hospitals alr
