The case for capital funding

Saffron Cordery profile picture

23 September 2021

Saffron Cordery
Deputy Chief Executive
NHS Providers

With the 2021 comprehensive spending review (CSR) fast approaching, there is an opportunity to secure, at long last, a properly funded and well-designed system of capital funding for the NHS. The government has committed a welcome £5.4bn to the NHS for the remainder of this financial year, and a further £15.8bn revenue investment over the next three years, funded by the health and care levy. However, there is a risk that this funding will not deliver the desired improvements, such as clearing the mounting care backlog, without an appropriate, multi-year capital settlement alongside it.

Over the past 18 months, various government funding commitments have acknowledged the need for additional investment in the NHS estate. But that has not yet come good. The NHS faces a maintenance backlog of £9bn and there is a growing clamour for vital, capital investment across ambulance, community and mental health services.  It has also become increasingly apparent that building '40 new hospitals' by 2030 is going to cost far more than the £3.7bn currently committed.

Investment would also enable trusts to play an even greater role in supporting the government's 'levelling up' and 'net-zero' ambitions.

Saffron Cordery    Deputy Chief Executive

Our survey of trust finance directors highlights the undeniable benefits of capital investment within the NHS. With sufficient funds, trusts could reduce their maintenance backlog, improve their estate and invest in digital infrastructure. They could expand wards and service capacity to help reduce waiting lists and improve pathways, vital in reducing the record care backlog. Critically, investment in the mental health estate would create safer, more therapeutic environments which aid recovery and reduce length of stay and treatment times. Investment would also enable trusts to play an even greater role in supporting the government's 'levelling up' and 'net-zero' ambitions.

Our survey also highlights the challenges caused by insufficient capital funding. It is deeply worrying that most finance directors said they were "very unconfident" or "unconfident" that they would have access to sufficient capital funding over the next three years to transform in line with the ambitions of the NHS long term plan (78%), address their total maintenance backlog (67%) or improve digital infrastructure (67%). We know investment in facilities is essential to keep staff and patients safe, provide the best quality of care, and adapt to meet changing population needs and we need the government to acknowledge this too.

Then there is the issue of national and local system capital spending limits, which can significantly hinder trusts' ability to invest in their estates. Most finance directors (67%) told us they had funds to invest in capital projects, but capital limits restricted their ability to do so.  The dilemma facing an acute trust in the south west epitomises this challenge. They had to cut their capital programme by 20% in 2021/22 to stay within their system capital spending limit, even though they had funds to invest. This meant investment in extra capacity and reconfiguration for service recovery was reduced and they were unable to pursue accommodation for overseas staff, making it much more difficult to resolve significant staffing pressures at a time when the need has never been greater. Given the money is there, trusts should not be faced with these impossible decisions.

The government's announcement of £500m extra capital funding for the second half of this financial year will help trusts make a start on tackling the care backlog – but recurrent funding is needed.

Saffron Cordery    Deputy Chief Executive

The government's announcement of £500m extra capital funding for the second half of this financial year will help trusts make a start on tackling the care backlog – but recurrent funding is needed. To protect patient care, support recovery from the pandemic and ensure staff work in safe environments, the CSR must address the following points. First, the NHS needs a multiyear capital settlement and ideally at least 10 years of indicative budgets. Long term planning is essential for most industries to be able to use resources effectively. The NHS is no different, and cannot go from year to year not knowing how much capital it can invest.

Second, the NHS needs a capital budget appropriate for a world-leading health service – estimates suggest an additional funding requirement of £1.5bn by 2024/25, although this figure should be seen as an absolute minimum as it does not account for the direct costs of COVID-19, nor the total funding required for national strategic projects such as new hospitals, facilities and upgrades.

Third, the system for accessing and allocating capital should be reformed in consultation with those planning and delivering services. Wherever possible, capital spending decisions should be devolved to the level where service accountability for delivering the service sits.

The simple fact is that without appropriate capital funding, patients will be at risk and efforts to transform and modernise the way NHS services are delivered will fall short. This is why a strong capital settlement for the NHS in next month's CSR is so important.

This blog was first published by the HSJ.

About the author

Saffron Cordery profile picture

Saffron Cordery
Deputy Chief Executive

Saffron is NHS Providers deputy chief executive, part of the senior management team and sits on our board. She has extensive experience in policy development, influencing and communications and has worked in the healthcare sector since 2007. Before moving into healthcare, Saffron was head of public affairs at the Local Government Association, the voice of local councils in England. Her early career focused on influencing EU legislation and policy development, and she started working life in adult and community education.

She has a degree in Modern Languages from the University in Manchester, for ten years was a board member and then chair of a 16–19 college in Hampshire and is a trustee of GambleAware, a leading charity committed to minimising gambling-related harm. Read more

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