A short-term funding boost is not the solution to NHS’s capital problems

28 Aug 19

To address concerns around NHS estates and equipment, and deliver on the NHS long-term plan, the NHS needs a long-term commitment to capital funding, says the Health Foundations’ Josh Kraindler. 

NHS, health


The recent announcement of £1.8bn in capital funding for the NHS is welcome news as the NHS’s infrastructure has suffered from multiple years of falls in the capital budget, between 2010-11 and 2016.

But while this funding will be welcomed by the areas receiving it, it will only scratch the surface of what is required to address the immediate and significant capital needs of the NHS.

Ultimately, one-off funding announcements like this continue a cycle of short-termism, underinvestment and uncertainty in NHS capital funding.

One issue is the scale of the funding.

The £1.8bn was announced, with £1bn for immediate use towards existing programmes and the most urgent infrastructure, and £850m for 20 specific upgrade projects.

Prior to the announcement, the 2019-20 capital budget was planned to be £5.9bn, which in real terms is about the same as it was in 2010-11.

With the new funding, the capital budget for the Department of Health & Social Care (DHSC) for 2019/20 is now expected to be £7bn – an increase of 19% on the previous plans.

While this is a significant increase, it comes after five consecutive years of transfers by the DHSC from the capital to revenue budget which totalled more than £5bn.

Compared to other OECD countries, England spends significantly less on capital in healthcare as a share of GDP – about 0.3%, compared to 0.5% in other countries.

We have previously estimated that to bring the England up to the OECD average would require at least an extra £4bn by 2023/24.

While this funding will close the gap slightly in 2019/20, as it is a one-off injection we expect spending in England to remain low by international standards.

Additionally, as the £850m is spread over a few years, this would have minimal impact on bringing capital spending in England up to international standards.

As a consequence of low capital spending, the UK has far fewer MRI and CT Scanners per capita than most OECD countries, about a third the rate of Germany. 

Concerningly, the maintenance backlog in NHS trusts has been rising about £400m a year since 2013-14 and now stands at £6bn, half of which is rated as high and significant risk.

The backlog is an estimate of what it would cost to bring the estates up to the necessary standards, such as for fire and patient safety.

Currently, we do not know how the £1bn of funding for urgent infrastructure will be allocated to address the backlog, which is not split evenly across trusts, and falls most heavily on the acute trust sector. It also does not include ageing primary care facilities, nor provide an assessment of whether ageing NHS estates are fit for purpose.

The NHS long-term plan identified the need for funding improvements to inpatient psychiatric care facilities. It is uncertain if any of this funding will go towards this goal. 

Another issue within the NHS capital funding environment is how trusts access the money. We recently funded research on this issue in which trusts reported significant uncertainty in capital budgets, leading some to abandon long-term transformation projects, which could improve productivity and patient care.

Many highlighted complexities and delays in the approvals process for capital funding and the limitations of the system of centralised decision making. Short-term and one-off capital funding announcements contribute to this environment, leaving trusts unsure about when they may be able to access capital funding. 

There is still some uncertainty about where the money to fund these projects will come from as the £1bn increase this year is not necessarily new money to NHS trusts but a relaxation of controls on spending incentive payments they had received in previous years.

A consequence receiving a funding announcement like this midway through a year, is that trusts may not now have the cash flow to be able to fund their projects.

And then there is the question of what will happen to trusts which did not receive any incentive payments in previous years. Will these trusts be excluded from using any of this allocation in the capital budget?

These are just some of the concerns with NHS capital.

There are many other issues which require urgent attention, such as the ageing IT infrastructure across the NHS and improving the facilities at mental health trusts.

What is clear from all of this is that problems with NHS capital will not be solved by short-term funding announcements around individually selected projects.

A long-term capital funding commitment, including a significant increase, is clearly required to give trusts and other NHS bodies the certainty to plan and commit to projects which can improve productivity and transform patient care.

Substantial funding is required to address the maintenance backlog and bring the NHS up to international standards on issues such as numbers of scanners.

Without this, we can expect serious challenges in meeting the ambitious goals of the long-term plan and addressing risks to patient care quality and safety. 

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