CASH-strapped WYE Valley NHS Trust will make an all-important break even on its 2014-15 budget but only with the help of £12.7 million worth of one off financial support  from the NHS.

The support was secured on the condition that the trust achieved broke even.

An “asset impairment” identified in a re-evaluation of the Trust’s land and buildings over the financial year won’t affect the break even figure.

But the trust already acknowledges a need to  draw on cash support again over the coming “very challenging” year.

In its annual plan, the trust identified the need for an in-year borrowing facility to be agreed by the Department of Health (DoH).

This facility, previously known as the temporary borrowing limit or  TBL has been agreed between the trust and the DoH and subject to an agreed draw down of funds – with the trust providing information on its cash flow to support its borrowing requirements.

For 2015/16, the DoH has put in place a new process known as the Interim Revolving Working Capital Facility (IRWCF).

This requires the Trust to sign up to a formal facility agreement with specified terms and conditions relating to payment and re-payment.

The facility allows for the charging of interest on sums borrowed, previous arrangements did not allow for this.

An IRWCF initially agreed by the DoH is for £9.2m, a figure based on 20 days operating expenditure using the Trust’s 2013/14 accounts as the basis of calculation.

This limit will be revisited based on subsequent agreed plans.

The trust says the funding is required in order to maintain its in-year liquidity whilst managing a deficit budget and an extensive capital programme.

This week, the  trust board was asked to  authorise a loan  to carry out the near £5 million first stage of  re-build and expansion plans for Hereford County Hospital, a borrowing facility for which needs to be  established with the Department of Health.

A loan facility agreement requiring board resolution is agreed in the form of a 15 year loan to be re-paid in six-month instalments.

In turn, the trust must produce a cash-flow forecast to support the need for each cash draw down on the loan facility.

The trust’s financial position reflects a tough 2014-15 as the extent of urgent activity had a significant impact on patient flow.

That position shows the trust drew on temporary borrowing as support from July last year through to January.

Temporary borrowing of £12.7 million was repaid with the non-recurrent support received in February.

The trust has an agreement with the Herefordshire Clinical Commissioning Group to advance income on a quarterly basis – repayable over the following two months – to assist with the PFI payments on Hereford County Hospital.

PFI liabilities are presently shown at totalling more than £57 million, an increase of  £3.1 million with the adoption of a new financial model.

After the first half of the financial year, the trust constructed a recovery plan to manage its finances to a position that was no worse than a deficit of £12.7 million before support – this was £3.7 million more than the budgeted deficit for the year.

 After producing the plan, a number of additional allocations were released, including winter pressures and resilience funding.

The trust had to ensure that the costs incurred did not exceed these new income streams, at the same time as controlling the “run rate” on all other cost commitments.

In this respect the trust was successful and delivered against the recovery plan  for the final six months of the financial year.

At service level, some key variances were:

* Elective Care -  Although the service unit earned day case income above plan, in doing so it incurred significant costs above budget.

However, this position also included the impact of over 500 cancelled elective operations because beds were not available.

The service unit was £1.9 million behind plan at the year’s end.

* Urgent care/Care closer to home – Income levels were significantly greater than the budgeted levels, even after applying the national threshold cap.

This was a result of extremely high urgent care demand.

The cost of meeting this demand was nearly £3 million in excess of the additional income and the service unit was £2.9 million over budget at the year’s end.

Pay saw an overspend against budget of £3.7 million, the main factors being nursing, with nurses needed for urgent care escalation areas and agency cover for vacancies, and specific medical staffing.