Northern Devon Healthcare Trust will see more than £20million in historic debt written off thanks to the Government’s pledge of a ‘financial reset’ of the NHS.

Earlier this month health secretary Matt Hancock announced more than £13billion would be written off nationwide as part of support for the NHS while it deals with the coronavirus crisis.

The Government says it is part of a package of major reforms to the NHS financial system – under the new rules set out in a letter to all NHS trusts, should hospitals need extra cash this will be given with equity, rather than needing to borrow from the government and repay a loan.

The historic debt will effectively be written off by converting the loans to equity (Public Dividend Capital).

Welcoming the move to write off the local debt of £20,003,000, North Devon MP Selaine Saxby said: ““t is a welcome boost to the Northern Devon Healthcare Trust to have this historic debt wiped.

“However, it is just as important, that under the new rules set out by the Secretary of State, in a letter, to all NHS trusts, hospitals needing extra cash will be given equity, rather than having to borrow from the Government and repay after this crisis has passed.

“This gives Northern Devon Healthcare Trust the financial assurance that they can pull out all of the stops in the fight against Covid-19.”

Torridge and West Devon MP Geoffrey Cox also welcomed the news, which included £140m removed from around the neck of University Hospitals Plymouth NHS Trust, which covers part of his constituency area.

He said: “These are the two main NHS trusts serving my constituents in Torridge and West Devon, and it is essential that both hospitals are able to function as effectively as possible, both through the current pandemic and beyond.

“This announcement comes alongside a new NHS funding model to make sure the NHS has the necessary funding and support to respond to the coronavirus pandemic, further demonstrating the government’s commitment to doing whatever it takes to tackle coronavirus.”

When he made the announcement, health secretary Matt Hancock said: “As we tackle this crisis, nobody in our health service should be distracted by their hospital’s past finances.

“Today’s £13.4billion debt write off will wipe the slate clean and allow NHS hospitals to plan for the future and invest in vital services.

“I remain committed to providing the NHS with whatever it needs to tackle coronavirus, and the changes to the funding model will give the NHS immediate financial certainty to plan and deliver their emergency response.”