Hospitals must plunder reserves to cover £165m rise in energy bills

Revelations over the rising bills has led to fears hospitals may cut services, as well as criticism that some parts of the NHS have not been taking "green" cash-saving schemes seriously.

Details obtained by Channel 4 News from the NHS Purchasing and Supply Agency (Pasa), which arranges the energy contracts for 85 per cent of NHS organisations in the UK, revealed it expects NHS costs for gas and electricity to be almost £430m in 2008/9 - a £165m increase on the previous year.

The sharp rise in prices has led many health trusts to predict overspends in energy budgets.

The costs vary depending on the size or the organisation, and how energy efficient it is.

Professor Peter Smith, director of the Centre for Health Economics at the University of York, warned that although £165m was not a huge total in terms of NHS budgets, it could cause problems.

He said: "Trusts are faced with unexpected extra costs for all sorts of reasons. In aggregate, the NHS secured a significant surplus last year, and I don't believe there should be too many problems in meeting these costs.

"However, although it should not cause a problem to most trusts, there could be a few for whom the extra costs are very serious."

NHS bodies have benefited from falling energy costs in previous years, the cost of Pasa contracts in 2006/7 was £211m; compared with £256m in 2005/6.

But with all energy, not just oil, now traded as a worldwide commodity prices have soared.

Norman Lamb, health spokesman for the Liberal Democrats, said: "Inevitably there is a real concern that there will be a knock-on effect on hospital budgets which could impact on patient care.

"The increase is not unexpected due to the impact that higher energy bills are having across the economy - but it could have a very disturbing potential impact."

Lamb said the rising energy bills were a reflection of "weak" energy efficient guidelines.

He said: "My frustration is that there has been a massive building programme since 1997 using PFI but certainly until recently they only paid lip-service to achieving high energy efficiency standards."

A report produced by the Welsh Assembly found that many PFI hospitals had been built with "no more than compliance with the statutory minima" in terms of energy efficiency.

Richard Rugg, head of public sector at the Carbon Trust, said: "There are a very large number of NHS trusts and PCTs that need to make an improvement in their energy efficiency programmes.

"We need bodies to engage with our Carbon Management Programme, and that requires a financial commitment. Not enough of the bodies have an energy manager, or someone whose responsibility it is. But it's not even enough to have one person - it's about creating a new culture."

He said that while there was pleased with the "rising interest" from NHS bodies regarding energy efficiency projects, still only a fifth of the sector had signed up to the trust's flagship NHS CM programme, launched two years ago.

The programme - a one year process - helps hospitals cut bills by assessing simple things such as lighting, heating, insulation and transport.

Mr Rudd added: "In PFI projects the energy efficiency levels vary per site - but the level of influence we can have is influenced by that [PFI]. It's just a case of making sure you speak the right language to them and explain the business benefits."

According to the Carbon Trust, The NHS in England is responsible for emitting approximately 3.7 million tonnes of carbon dioxide every year from its buildings alone. The Department of Health has set targets for the NHS to reduce its carbon emissions by 15 per cent by 2010.

David Philliskirk, director of estates and facilities at East Sussex Hospitals NHS Trust, which faces a £1m overspend to pay for gas and electricity, "From a service perspective it's not a problem for us; we have seen energy prices and costs fall in recent years, what we need to do now is to top up that funding.

"It is a cost pressure that we would rather not have, but in the context of a £266m turnover it is not a big problem. The cost will be met from the reserves.

"The up-side under these circumstances is that energy efficiency programmes are becoming more and more attractive. We are currently progressing a £3m energy conservation investment plan for our boiler house."

Due to a change in the way Pasa calculates its contracts it was unable to provide contract costs for oil, but gas and electricity make up the vast majority of costs for NHS bodies.

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