Hospital hit by high interest rate

IPSWICH Hospital is facing “loan shark rate” interest payments today as it tries to repay its debt.Politicians have criticised the government for charging high levels of interest to hospitals rather than letting them spend the cash on patients.

IPSWICH Hospital is facing “loan shark rate” interest payments today as it tries to repay its debt.

Politicians have criticised the government for charging high levels of interest to hospitals rather than letting them spend the cash on patients.

Ipswich Hospital has already shelled out more than �2million in repayments for the �23.4m loan it took in March 2007 to help ease dire financial pressures.

It arranged an interest rate of 5.35 per cent, which was favourable at the time but has become less attractive as interest rates have plummeted because of the recession.

Although the hospital's books are now in a better state any extra cash would help the Heath Road hospital, which has been criticised recently for cancelling too many operations, and has suffered with staff shortages because of high sickness levels.

Ben Gummer, Conservative parliamentary candidate for Ipswich, said: "I am astounded to find out that the government is charging our hospital such a high rate of interest on its debts.

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“Many people are on a lower mortgage rate with commercial banks than the government charges its own public services.

“How can it be possibly right for the hospital to be paying an interest rate so much more than the base rate or the rate of inflation?”

Meanwhile Liberal Democrat health spokesman Norman Lamb, who revealed the nationwide interest rates, which reached as high as 5.6 pc for some hospitals, said: “How can the government justify ripping off hospitals in this way? It should end this unfair practice of charging loan shark rates.

“With rates having plummeted elsewhere, they should treat hospitals fairly. This money could be spent on patients, equipment or recruiting staff.”

A spokeswoman for Ipswich Hospital said: “It was vital to the trust that we got the loan. We were fully aware of the interest rate when we took it out.”

She added that all the loan should be repaid by April 2010.

A Department of Health spokesman said: “"The department lends to the NHS at very competitive government rates that are unlikely to be available from commercial banks.

"Interest paid on loans is not lost to the NHS - it is repaid to the department and is available for reinvestment in the NHS."

Should the government charge a lower interest rate to Ipswich Hospital? Write to Your Letters, Evening Star, 30 Lower Brook Street, Ipswich IP4 1AN or e-mail eveningstarletters@eveningstar.co.uk.