National Health Service Act 2006

Financial matters E+W

40 Power of Secretary of State to give financial assistance E+W

(1) The Secretary of State may give financial assistance to any NHS foundation trust.

(2) The financial assistance may be given by way of loan, public dividend capital, grant or other payment.

(3) The Secretary of State may guarantee the payment of any amount payable by an NHS foundation trust under an externally financed development agreement.

(4) “Externally financed development agreement” has the same meaning as in paragraph 23 of Schedule 4, reading references in sub-paragraphs (3) and (5) of that paragraph to the NHS trust as references to the NHS foundation trust.

[F1 (5) As soon as is practicable after the end of each financial year, the Secretary of State must prepare a report on the exercise of the power under subsection (1).

(6) In relation to each exercise of the power under that subsection during the year to which the report relates, the report must specify the amount of the loan, issue of public dividend capital, grant or other payment and—

(a) in the case of a loan, the amount (if any) outstanding at the end of the year and the other terms on which the loan was made,

(b) in the case of an issue of public dividend capital, the terms on which it was issued (or, where a decision under section 42(3) is made in relation to it during that year, the terms so decided as those on which it is treated as having been issued), and

(c) in the case of a grant or other payment, the terms on which it was made.

(7) In relation to each loan made under that subsection during a previous financial year but not repaid by the beginning of the year to which the report relates, the report must specify—

(a) the amount outstanding at the beginning of the year,

(b) the amount (if any) outstanding at the end of the year, and

(c) the other terms on which the loan was made.

(8) A report under subsection (5) must, in relation to each NHS foundation trust, specify—

(a) the amount of the public dividend capital of that trust at the end of the year to which the report relates, and

(b) the conditions on which it is held.

(9) The Secretary of State must publish a report under subsection (5).]

Textual Amendments

F1 S. 40(5)-(9) inserted (1.4.2013 for specified purposes) by Health and Social Care Act 2012 (c. 7), ss. 163(1), 306(4); S.I. 2013/160, art. 2(2) (with arts. 7-9)

F2 41 Prudential borrowing code E+W

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Textual Amendments

F2 S. 41 omitted (1.4.2013) by virtue of Health and Social Care Act 2012 (c. 7), ss. 163(2), 306(4); S.I. 2013/671, art. 2(3)

42 Public dividend capital E+W

(1) Where an NHS trust becomes an NHS foundation trust, the amount which was the public dividend capital of the NHS trust immediately before the giving of the authorisation continues as public dividend capital of the NHS foundation trust held on the same conditions (“initial public dividend capital”), but subject to this section.

(2) Any amount issued to an NHS foundation trust as public dividend capital under section 40 is (like initial public dividend capital) an asset of the Consolidated Fund.

(3) The Secretary of State may, with the consent of the Treasury, decide the terms on which any public dividend capital of an NHS foundation trust must be treated as having been issued.

F3 (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F4 (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6) Any amount paid to the Secretary of State by an NHS foundation trust by way of repayment of public dividend capital must be paid into the Consolidated Fund.

[F5 (7) The terms which may be decided under subsection (3) include terms to which the exercise of any power of an NHS foundation trust to do any of the following will be subject as a consequence—

(a) providing goods or services,

(b) borrowing or investing money,

(c) providing financial assistance,

(d) acquiring or disposing of property,

(e) entering into contracts, or making other arrangements, to do anything referred to in paragraphs (a) to (d),

(f) applying for dissolution (whether or not when also applying for the establishment of one or more other trusts),

(g) applying to acquire another body.]

Textual Amendments

F3 S. 42(4) omitted (1.4.2013) by virtue of Health and Social Care Act 2012 (c. 7), ss. 163(3), 306(4); S.I. 2013/160, art. 2(2) (with arts. 7-9)

F4 S. 42(5) omitted (1.4.2013) by virtue of Health and Social Care Act 2012 (c. 7), ss. 163(4), 306(4); S.I. 2013/160, art. 2(2) (with arts. 7-9)

F5 S. 42(7) inserted (1.4.2013) by Health and Social Care Act 2012 (c. 7), ss. 163(5), 306(4); S.I. 2013/160, art. 2(2) (with arts. 7-9)

[F6 42A Criteria for making loans etc. E+W

(1) The Secretary of State must publish guidance on the powers conferred by sections 40 and 42.

(2) The guidance on the power to make a loan under section 40(1) must in particular—

(a) explain that, in exercising the power, the Secretary of State will apply the principle that a loan should be made only where there is a reasonable expectation that it will be repaid in accordance with the terms on which it is made;

(b) include other criteria that the Secretary of State will apply when determining whether to exercise the power and, if so, the terms on which to make the loan.

(3) The guidance on that power must also explain—

(a) the process for applying for a loan under section 40(1);

(b) the consequences of failing to comply with terms on which a loan is made under that provision.

(4) The guidance on the power to decide terms under section 42(3) must, in particular, include the criteria that the Secretary of State will apply when deciding the terms.

(5) The guidance on that power must also explain the consequences of failing to comply with the terms decided.

(6) In preparing guidance under this section, the Secretary of State must have regard (among other things) to any generally accepted principles used by financial institutions to determine whether to make loans to bodies corporate and the terms on which to make loans to them.

(7) Before publishing the guidance, the Secretary of State must consult—

(a) the Treasury,

(b) [F7 NHS England], and

(c) such other persons as the Secretary of State considers appropriate.]

Textual Amendments

F6 S. 42A inserted (1.4.2013) by Health and Social Care Act 2012 (c. 7), ss. 163(6), 306(4); S.I. 2013/160, art. 2(2) (with arts. 7-9)

F7 Words in s. 42A(7)(b) substituted (1.7.2022) by Health and Care Act 2022 (c. 31), s. 186(6), Sch. 5 para. 16; S.I. 2022/734, reg. 2(a), Sch. (with regs. 13, 29, 30)

[F8 42B Limits on capital expenditure E+W

(1) NHS England may make an order imposing a limit on the capital expenditure of an NHS foundation trust in respect of a single financial year.

(2) The order must specify—

(a) the trust,

(b) the capital expenditure limit, and

(c) the financial year to which the limit relates.

(3) NHS England must consult the trust before making the order.

(4) NHS England must publish each order under this section.

(5) An order under this section may be made at any time during or before the financial year to which it relates.

(6) A trust that is the subject of an order under this section must not exceed the capital expenditure limit imposed by the order during the financial year to which it relates.

(7) In this section “capital expenditure”, in relation to an NHS foundation trust, means expenditure of the trust which falls to be capitalised in its annual accounts.

Textual Amendments

F8 Ss. 42B, 42C inserted (1.7.2022) by Health and Care Act 2022 (c. 31), ss. 62(2), 186(6); S.I. 2022/734, reg. 2(a), Sch. (with regs. 13, 29, 30)

42C Guidance in relation to orders under section 42B E+W

(1) NHS England must publish guidance about the exercise of its power to make orders under section 42B, including guidance about—

(a) the circumstances in which it is likely to make an order, and

(b) the method it will use to determine the capital expenditure limit.

(2) NHS England must consult the Secretary of State before it publishes guidance, or revised guidance, under this section.

(3) NHS England must have regard to the guidance in exercising its power to make orders under section 42B.]

Textual Amendments

F8 Ss. 42B, 42C inserted (1.7.2022) by Health and Care Act 2022 (c. 31), ss. 62(2), 186(6); S.I. 2022/734, reg. 2(a), Sch. (with regs. 13, 29, 30)