Meeting NHS capital needs will be a test of commitment for the new government

David Williams profile picture

05 December 2019

David Williams
Senior Policy Advisor - Finances


After years of underinvestment, there is a high level of concern within the health service about the condition of its facilities. Given that, and the strength of public feeling that the next government needs to invest more in buildings and equipment, it is unsurprising that NHS capital has played a much bigger role in this election than any other in recent memory.

The three main parties have all promised new waves of infrastructure spending in their manifestos:

  • The Conservatives restated their commitments, made shortly before the election was called, to “fund and build” 40 new hospitals over the next ten years. These include six trusts to share £2.7bn of funding for rebuilds by 2025, and up to 34 sites, across 21 trusts, to begin preparing business cases for rebuilds between 2025-30. They also reiterated their plans to invest in cancer diagnostics: £200m was announced for CT and MRI scanners in September.
  • Labour has promised to match the Conservatives’ plans, and publish an infrastructure plan to return NHS England to the international average level of capital investment. They have also said they will invest more in primary care facilities, technology, and equipment including scanners.
  • The Liberal Democrats plan to use £10bn of a £50bn national capital fund to invest in equipment, hospitals, and community, ambulance and mental health services buildings.

 

Some of the most tangible impacts of under-investment in health can be seen in the state of the NHS’ buildings and equipment. The effects of underfunding confront patients and their families when they see buckets catching drips from the ceiling, when procedures are cancelled due to equipment failure, or when people in distress can only be accommodated on a dormitory ward when they have a serious mental health condition.

Some of the most tangible impacts of under-investment in health can be seen in the state of the NHS’ buildings and equipment. The effects of underfunding confront patients and their families when they see buckets catching drips from the ceiling, when procedures are cancelled due to equipment failure, or when people in distress can only be accommodated on a dormitory ward when they have a serious mental health condition.

   

Last year the value of repair works needing to be carried out rose £500m, to £6.5bn, the highest recorded level. There is a clear link between the deteriorating state of NHS facilities and the restrictions on capital budgets which have been in place for nearly a decade. Although the “NHS budget” has been protected from real terms spending cuts since 2010, this has only applied to day-to-day spending: the capital budget has not been spared. Analysis by the Health Foundation found that the capital budget fell in real terms between 2010/11 and 2017/18, while £4.5bn was transferred from capital resources to prop up the revenue budget over a five year period starting in 2014/15.

At the same time as capital budgets were being cut, the private finance initiative, which provided around £13bn of capital works for the NHS between 2000 and 2010, fell out of favour, finally being scrapped in 2018. This means the main method for building health infrastructure at scale is no longer available, and has not been replaced. It is only in the past few months that publicly funding major building works has been openly considered by ministers.

Nearly all trust leaders have serious concerns about the impact this has had on the services they run. According to a survey of trust board members we conducted over the summer, 97% are worried about their trust’s requirement for capital investment, while 94% are concerned that it is affecting patients’ experience of care. Meanwhile 92% think the restricted capital environment is impacting on staff wellbeing and recruitment. We launched our Rebuild Our NHS campaign in August to make the case for a new capital settlement for the NHS.

Nearly all trust leaders have serious concerns about the impact this has had on the services they run. According to a survey of trust board members we conducted over the summer, 97% are worried about their trust’s requirement for capital investment, while 94% are concerned that it is affecting patients’ experience of care. Meanwhile 92% think the restricted capital environment is impacting on staff wellbeing and recruitment.

   

One of the first big jobs facing the new government after the election will be to conduct a comprehensive spending review (CSR), taking decisions about funding for the duration of the next parliament, and possibly beyond. This will probably be the moment that any long term capital settlement for the NHS is set. We believe the following are essential for the NHS:

  • A multi-year capital funding settlement that allows the service to plan for the long term and transform its facilities. Ideally, this would go beyond the typical five-year CSR period and match the ten year horizon captured by the long term plan.
  • A commitment to bringing the NHS’ capital budget into line with comparable economies, allowing the NHS to pay for essential maintenance work while also investing in long-term, transformational capital projects. OECD data shows the UK spends 0.3% of gross domestic product on health infrastructure: for countries like Belgium, Germany, France and Spain, it’s 0.6%. We should therefore be aiming to at least double the NHS provider current capital spend and sustain that growth for the foreseeable future.
  • Establishing an efficient and effective mechanism for prioritising, accessing and spending NHS capital based on need, in consultation with those planning and delivering services. There is currently a severe mismatch between trusts’ ability to access capital and their need to improve facilities: the next government needs to understand and address the factors causing this mismatch.

For the NHS to thrive, all three of those elements must be fully in place. NHS Providers has been developing its recommendations over the autumn, based on feedback from the sector, and will be calling on the new government to give the NHS the capital settlement it needs. In our view, continuing with the status quo is not an option if the NHS is to be able to transform services, improve outcomes and keep pace with accelerating demand for care. Providers cannot be asked to deliver without adequate tools for the job. How ministers respond will be a test of their seriousness and commitment to the health service.

 

This blog was also published in Public Finance.

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David Williams profile picture

David Williams
Senior Policy Advisor - Finances
@DavidProviders

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