Health Department
Directorate of Finance

Dear Colleague

TREASURY MANAGEMENT IN NHS BODIES

Summary

1 . This circular updates guidance issued in NHS Circulars: FIN(GEN)(1994)1; FIN(T)(1996)l and MEL(2000)39. Changes to health bodies' banking arrangements were included in the Health Act 1999 which received Royal Assent on 30 June 1999 and of which most of the provisions came into effect on 1 October 1999.

Background

2. NHSScotland bodies have raised a number of issues following publication of MEL(2000)39. This letter seeks to clarify the position on those issues.

3. The Office of the Paymaster General (OPG) is to be used as the principal bank account for all NHS bodies. This circular requires each NHS body to limit the amount of cash held in approved commercial institutions to a maximum of £50,000. Any funds above that level must be invested in OPG. For the purposes of this, NHS bodies include Health Boards, NHS Boards, Special Health Boards, NHS Trusts, and the Common Services Agency. Approved institutions remain those defined in FIN(GEN)(1994) 1.

18th June 2001

______________________________

Chief Executives and
 General Managers
   NHS Trusts, Health Boards,
   Special Health Boards

General Manager,
   Common Services Agency

Director of Finance,
   Common Services Agency

4. Each health body may invest no more than £50,000 in approved commercial institutions. The £50,000 is defined as the net balance of all non-OPG accounts held. The limit represents the organisation's ledger or cash book balance and must not be exceeded either in year or at the year end. The £50,000 limit does not include:

• patients' funds balances
• cash machine balances

The tendering process for commercial banking services only applies to the commercial account or accounts where the £50,000 maximum is deposited.

5. Notwithstanding that up to £50,000 may be held in commercial accounts, each health body should ensure that all commercial account balances are kept to a minimum without becoming overdrawn.

6. As a consequence of the adoption of OPG as every NHS body's principal bank, BACS sponsorship should be transferred to OPG within 3 months of the date of issue of this HDL.

Action

7. Chief Executives and Directors of Finance should bring this Circular to the attention of all staff involved in treasury management immediately.

8. Trust treasury management arrangements should be reviewed to ensure that they
comply with the Circular.

9. This Circular must be brought to the attention of each NHS body's board, to the
board's Audit Committee, and to the internal auditors.

10. 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.

11. The Department will monitor compliance with this letter not later than 6 months from the date of its issue.

Contact Information

12. If any organisation within NHSScotland has specific banking queries, the OPG can be contacted by telephone:

Alternatively they can be contacted via e-mail at the following address:

opgservices@payMaster.co.uk

Yours sincerely

JOHN ALDRIDGE
Director of Finance