Challenges and opportunities for the NHS estate

24 Sep 24

Lord Darzi’s report highlighted the importance of how money is being spent in the NHS. This chimes loudly with CIPFA’s recent work on the NHS estate, writes health and integration policy manager Dr Eleanor Roy. She argues that although under-investment and the availability of capital funding clearly pose a challenge, this is compounded by the mechanics of the regime itself, which might be stifling transformation.

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The state of the NHS estate is well recognised: crumbling buildings, service failures and an eye-watering maintenance backlog. The contributing factors are clearly historic under-investment, and under-spent capital budgets being used as a ‘reserve’ to plug in-year deficits.

These and other challenges loom large in CIPFA’s report ‘Exploring challenges and solutions for the NHS estate’. However, one thing is crystal clear. Despite the scale of these challenges, those who contributed to our work, the  NHS finance and estates professionals, and their potential partners from local government and beyond, remain passionate and enthusiastic about finding solutions. Some of these are reflected below.

Capital availability restricts ambition

The elephant in the NHS estate is the fact that more investment is needed. In constructing infrastructure plans, affordability and the current state of the estate are front and centre. In practice, this means the ambition to transform services in line with national policy and local priorities is quelled by the need to keep the rain off – literally, in some cases.

More money would be great, but this seems unlikely anytime soon. In the absence of a magic money tree, there are ideas that could be explored.

Capital, and how it is allocated, could be re-balanced to be more clearly aligned with local and national priorities. The long-term planning horizon for infrastructure planning could be matched with a multi-year capital settlement. Additional flexibilities for NHS bodies could be built in, such as the ability to shift capital across years and/or between partners. 

Such changes could have a significant impact on estate planning and delivery. Rather than the ambition to transform being constrained by inputs, it should have a laser-like focus on how to improve the desired outcomes for people, communities and the wider economy.

Collaboration is key 

When it comes to maximising the public estate, improving health and wellbeing across communities, and acting as an anchor institution, the NHS cannot – and should not – stand alone.

Reliance on the ‘traditional’ model of NHS capital funding in the face of the estate challenges is unrealistic. Alternate models need to be considered.

This may be with other public sector partners on a One Public Estate basis, or the freedom to explore new models of working with the private sector.

Such partnerships need not focus on ‘new’ facilities. Rationalisation and optimisation of the existing estate, within the NHS and beyond, are crucial to achieving the aims of shifting services closer to the community and contributing to net zero ambitions. 

There are many examples from existing partnerships between the NHS and local government, other government departments, devolved nations and even international examples from which learning could be harnessed and shared.

Time for a regime change

As Lord Darzi recognised, how money is spent is all-important. Many of the challenges we identified related to the mechanics of the capital regime itself, from controls on capital spend, the process of approvals and contract management, through to capital budgeting and accounting rules. 

While individual elements of the regime are there for good reason, as a whole it has become an intricate and arcane labyrinth, in which worthy proposals get lost, and which damages the credibility of the NHS as a partner, because collaborators are frustrated by the complexity.

In recent years we have seen changes in structures, organisations, standards and policy, but the capital regime itself has failed to keep pace. Like Darzi, and Hewitt before him, we propose an end-to-end review of the capital regime, stripping out complexity and perverse consequences, to ensure the system is lean and focused on driving those desired outcomes.

To achieve this will require a truly cross-government approach, involving the Treasury, DHSC and NHS England, as well as potential partners.

The prime minister has stated that there would be “no money without reform”. The NHS is in the tightest financial position it has ever experienced and achieving the mission to build an ‘NHS fit for the future’ will be a tough ask without further investment.

What money is available needs to be used to best effect. As Darzi highlights, financial flows are crucial to locking in desired change. Reviewing these financial flows and the wider regime, to ensure they support the desired reforms and the broader mission seems a sensible place to start?

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