England’s health secretary, Andrew Lansley, has begun the process of putting South London Healthcare NHS Trust, which has debts of £150m (€190m; $235m), into administration. This is the first time that a health secretary has implemented failure powers against an NHS trust, and it is effectively the first step to declaring the trust bankrupt.

South London Healthcare Trust, which controls three hospitals in southeast London, reported a £65m deficit in 2011-12 and is on course to run up a similar deficit for 2012-13 because it is losing £1.3m a week. The trust’s financial difficulties are the result of two private finance initiative (PFI) deals it signed that have left the trust with debt repayments believed to be around £61m a year. The trust is just one of 22 NHS trusts facing serious financial difficulties because of expensive PFI schemes.1

Under the 2009 Health Act the health secretary has the power to suspend the …