Health Department

NHS MEL (2000)39

Dear Colleague

1. This circular updates guidance issued in NHS Circular FIN (T) (1996)1 on Treasury Management in NHS Trusts. The changes made to Trust banking arrangements have been promulgated by the Health Act 1999 which received Royal Assent on 30 June 1999 and most of the provisions came into effect through a Commencement Order, on 1 October 1999.
2. In particular, paragraph 63 of Schedule 4 of the 1999 Act amends paragraphs 6 and 7 of Schedule 7B to the 1978 Act. This change gives Scottish Ministers a power to direct where Trusts may invest any temporary cash surpluses and set limits on the amounts invested.

Background

3. The new Scottish Parliament has brought with it an increase in the scrutiny of funding available for the public sector as a whole. This scrutiny resulted in a review of cash balances held by Trusts on reconfiguration, resulting in a number of Trusts having to return cash balances held in excess of the determined level. This circular intends to prevent such a build up of large cash balances in the future.
4. The aim of this circular is to limit the amount of working cash held in commercial bank accounts at Trust level to no more than £50,000.
5. Any excess funds available for investment at Trust level should be invested with the Office of the Paymaster General (OPG). This is because, although funds invested in commercial banks or other institutions may yield greater interest for an individual Trust, the cost to the public sector as a whole must be minimised. Therefore any Trusts still with current investments with commercial banks should transfer the investments to the OPG account as soon as is practicable. All BACS sponsorship should likewise be transferred to OPG as soon as possible.

20^th July 2000
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Tel: 0131-244-2032
Fax: 0131-244-2057
e-mail: mark.dailey@scotland.gov.uk
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• Directors of Finance should bring this circular to the attention of all staff involved in treasury management immediately.
  
  
• Trust treasury management arrangements should be reviewed to ensure that they comply with the circular.
  
  
• This circular should be brought to the attention of the Trust Board, to the Board’s Audit Committee and the Trust’s internal auditors.
  
  
• As required by NHS Circular FIN (T) (1996)1, any Trust which has not had its treasury management procedures reviewed by its internal auditors should make arrangements for this to be undertaken as soon as is practicable.

Yours sincerely