Purpose

 This paper aims to:

• Highlight the current challenges in capital investment in the NHS and its impacts on safety, productivity and sustainability.
• Outline potential options to increase capital investment in the NHS to support high-level discussion.

The basis of the options outlined are drawn from the roundtable hosted by NHS Providers with 24 NHS trusts and foundation trusts (FTs). The discussion covered a number of the existing challenges, across both policy and process, and concluded with some key actions and recommendations to address these, and increase capital investment in the NHS. 

This paper seeks to provide ideas and insight to help the government and policymakers support trusts to increase investment in the NHS. 

Audience

This paper is intended to support discussion with leaders across healthcare, including trusts and systems, NHS England, the Department of Health and Social Care (DHSC), and HM Treasury, as well as those engaged in wider public discussion on NHS capital investment.

Key terms

This report makes extensive reference to some key terms relevant to investment, specifically:

• DHSC departmental expenditure (DEL): DEL is the portion of public spending that is planned and controlled by DHSC, set during Spending Reviews. It includes funding for services and operations overseen by DHSC, such as hospitals, public health initiatives, and administrative costs.
• DHSC capital department expenditure limit (CDEL): CDEL is the capital component of DHSC's DEL. It covers long-term investments such as construction of new hospitals, purchase of medical equipment, and upgrades to digital infrastructure. Capital spending is intended to create assets or improve capacity and must stay within the limits set by HM Treasury. Most capital expenditure by DHSC and NHS bodies counts against this limit, regardless of how it is financed (the rules on this are governed by IFRS 16 and the Office of National Statistics).
• DHSC revenue departmental expenditure limit (RDEL): RDEL is the resource (or revenue) component of DHSC’s DEL. It includes day-to-day operational costs, such as salaries for NHS staff, purchase of medicines, and administrative expenses. This spending supports the ongoing delivery of health services and must also remain within the Treasury-set limits.
• IFRS 16: The International Financial Reporting Standard for leases, which governs the rules for how leases are accounted for. Under this, most leases are classified as being on trust balance sheets and are counted against DHSC CDEL, meaning leases are essentially considered investment.