New plan for more NHS freedom and flexibility on vital capital investment

When Rachel Reeves lays out her plans for the economy later this month it will be another pivotal moment for the NHS.
 
The NHS has done well in recent budgets with billions of pounds going to day-to-day healthcare plus welcome cash to tackle dangerous reinforced autoclaved aerated concrete (RAAC) and a mounting repairs backlog. But almost £14billion is needed to plug that rocketing backlog and vital bits of the NHS are falling apart, putting quality of care and sometimes the safety of patients and staff at risk.

We welcome the government’s commitment to prioritise increasing capital investment across the NHS. Yet the capital regime is recognised widely to be out of date. Years of underinvestment and dysfunctional rules have left the NHS with facilities that are too often outdated and unfit for purpose.

Now a report by NHS Providers and PA Consulting - Investing in the NHS: Empowering the sector to drive productivity, renewal and growth - offers a way to renewal of the NHS estate with big benefits for regeneration and growth.  Improved capital investment is essential to achieving the government’s health goals including reducing waiting times. The proposed changes, all of which could be made by 2035 and many of them before the end of this Parliament, can be achieved by the NHS and government working hand-in-hand.

The NHS isn’t a museum, but some services are trying to provide 21st century healthcare in premises built in the 1800s. Lots of its buildings are much older than the NHS itself. For the NHS to be as sustainable, innovative and productive as possible requires long-term, cross-government support for capital investment in modern buildings, facilities and equipment - including the most up-to-date digital technology - which transform patient care and free staff from time-consuming admin. 

Our report offers solutions that can unlock billions of pounds of extra funding for the NHS at no overall cost to taxpayer while boosting local businesses and building homes for key workers Gradually increasing the overall share of health spending on capital to reach 10 per cent by 2035 from its current 6.5 per cent would raise capital budgets by an estimated £8billion. 

The case for reform of the capital spending regime is urgent and compelling.

Because capital budgets take only a small proportion of the overall health and social care budget, a relatively minor rebalancing of capital and day-to-day (revenue) spending would have a dramatic impact on the amount of capital available.  

Capital investment should be seen not as an expense but as a catalyst for improving productivity, stimulating innovation and generating better outcomes for patients. 

Take the Resource Departmental Expenditure Limit (RDEL) and Capital Departmental Expenditure Limit (CDEL). Under current rules, health ministers can convert non-ringfenced RDEL money to CDEL without Treasury approval. NHS trust leaders think that the current capital approval process is complex, slow and risk-averse, stifling innovation. We need a more streamlined approach that enables decisions to be made faster and aligned with regional and national objectives.

It has been difficult to carry out long term capital planning due to single-year budgeting, Making greater use of existing capital funding without impacting revenue budgets in the short term can drive the productivity improvements that allow the NHS to make additional revenue savings to drive more medium-term capital investment.

Without investment, the NHS will continue to place an increasing burden on its staff and operate from outdated facilities with outdated technology. A modern healthcare system deserves modern investment. 

By releasing more value from existing assets, reforming the capital regime and easing restrictive spending limits we could unlock billions in additional investment for the NHS which would bring substantial health, social and economic benefits for everyone. The NHS owns more than 751 hectares – roughly the size of 1,000 football pitches - of land not currently providing services and worth up to more than £9billlion. 

Local authorities have the potential to drive investment in the NHS. Greater investment with councils creates the opportunity for the NHS to help to revitalise high streets, provide housing and bring care closer to people.

Also the government could enable the NHS to establish its own investment bank which could support trusts to invest and realise benefits over several years. 

Investing in NHS capital is essential to the government’s 10-year health plan and its mission to modernise care, improve productivity and produce better outcomes for patients. Health is a crucial driver of economic productivity and growth. A healthier population is more able to work, increasing employment and bolstering the economy. 

This isn’t about asking for more taxpayers’ money. It is about having the freedom to spend money better to benefit patients and communities. There is huge potential in the power of NHS spending to make a difference in so many areas of society.

‘Futureproofing’ the NHS estate is a must if we are to meet the ambitions of the government’s plan. Backed by a clear national strategy, investing to eliminate the maintenance backlog and 10-year renew NHS facilities, technology and buildings will improve the quality and safety of patient care and give even greater value for money.

This article first appeared in Public Sector Focus.