Exclusive: Capital billions promised by ministers fail to reach ‘front line’

Research by HSJ suggests less than £100m has been distributed to local providers over the last two years – equating to just 3 per cent of the total funding listed in several headline-grabbing media announcements.

The findings are supported by data in published Department of Health and Social Care accounts.

Last week, prime minister Boris Johnson named “20 new hospital upgrades” among the early priorities for his government, although no detail has so far been provided.

HSJ’s findings reveal how the impression given by ministers’ announcements in recent years contrast with the reality of relatively small amounts actually being released.

For example, the announcement of a “first wave” of funding in July 2017 was headlined “£325m invested in NHS transformation projects”. Two years on, only around £48m of that money has so far been received by the bidders, with more than half the organisations still waiting for the money to be released.

Out of 145 schemes approved through all four “waves” of the £2.5bn, just 25 have started receiving the funding.

Some of the projects would not have expected to have received funding by this point, particularly in the latter tranches. But multiple sources in and around the NHS have expressed concern and frustration over the difficulties providers have faced in securing this “allocated” capital investment – for spending on buildings, beds, equipment and technology.

Sir Robert Naylor, the government’s own advisor on NHS estates, said he was “disappointed more money hasn’t got to the front line”.

It comes as the backlog of overdue maintenance work on buildings and infrastructure has dramatically increased in recent years, due to a lack of capital investment.

In 2017, the Department of Health and Social Care set up a new process in which trusts have to submit capital bids through their “sustainability and transformation partnership”.

Of the £2.5bn allocated in total, spread across the four “waves” of bidding, a total of around £92m has so far been released, according to responses from local organisations. See attached spreadsheet for the full list of schemes and payments.

Slow process raised by NHS ‘multiple times’

While some trusts are able to generate their own cash for capital projects, by saving up budget surpluses, many have to apply for central funding.

When money is allocated, the recipient organisations must submit two business cases to the centre, which then require approval from all the national bodies – NHS England, DHSC and the Treasury. The projects have typically been held up by delays in sign off and requests for further information from these agencies and, in some cases, local problems.

The process has been criticised by multiple NHS chiefs, including Jon Rouse, chief officer of Greater Manchester’s devolution team and former DHSC official, and Sir David Dalton, the former chief executive of Salford Royal FT.

Among the approved schemes still going through the sign-off processes are a major reconfiguration of emergency services in Greater Manchester (worth up to £80m), which is expected to save 300 lives per year.

A senior source in Greater Manchester told HSJ that project leaders have been frustrated by multiple requests for more information from various national bodies. They also said government officials were “less concerned about the lives being saved, and more concerned about the economic benefits”.

Other projects yet to receive money include;

• Reconfiguration of maternity services between Worcester Royal Hospital and Alexandra Hospital in Redditch, which is waiting for Treasury sign-off (£11m announced in July 2017)
• Major consolidation of services between Bournemouth and Poole hospitals, which is still in the business case process (£100m announced in July 2017)
• An information system for out of hospital care in South Warwickshire, which is waiting for Treasury sign-off (£9m announced in November 2017)

Ultimately, the problem comes back to the fact that any capital investment by NHS organisations scores against the department’s capital spending limit, which has been severely constrained for several years.

Sir Robert, the former University College London Hospitals FT chief executive who led a government review of capital in 2017, told HSJ: “Backlog maintenance is spiralling out of control and we have to really focus now on improving the quality of the estate.

“Obviously the spending limit needs to be increased, and the whole question of how it works needs to be very urgently revisited and taken up with the Treasury.

“It’s been raised by multiple parts of the NHS and on several occasions at the national property board with the minister. I’ve no doubt he will talk to the Treasury about it, but obviously other things have been going on.”

He said he was “delighted” Mr Johnson had talked about the need to accelerate plans for capital spending, and was optimistic about progress, “but we wait to see the detail”.

In a statement, the DHSC said it would consider proposals from the NHS for a multiyear capital plan in the next spending review – the timing of which is unknown.

Business case process ‘holding up projects’

Jonathan Stewart, chair of the Health Estates and Facilities Management Association, told HSJ he was “concerned about the apparent lack of funds made available to the first schemes announced in 2017”.

“You would expect some action on some of those schemes in the latter half of 2018… It seems like it is the business case process holding things up. HEFMA wants to see a robust business case process – that’s a necessary part of this – but it needs to be streamlined.”

He suggested developing a process where some projects can be approved by regional regulatory chiefs rather than requiring the green light from national leads.

Research by the Health Foundation recently showed that capital spending on healthcare services in the UK has been significantly lower than in most other developed nations.

The DHSC’s current capital budget is around £6bn, and the think tank said this would need to rise by between £3.5bn and £4.5bn each year to reach the Organisation for Economic Cooperation and Development average. This level of increase, when adjusted for the time period considered, would be broadly in line with the uplifts called for by NHS England chair Lord David Prior, and by Sir Robert in his review of NHS estates.

Capital budgets squeezed since 2010

In its statement, the DHSC said it has committed to invest £3.9bn of “new” capital by 2022-23. Its capital budget has increased by 30 per cent in the three years since 2016-17, which equates to £1.3bn in cash terms and £1bn in real terms. The current budget is lower in real terms than it was in 2010-11.

In its response to the Naylor Review, the government suggested more than £6bn of additional funding would come from private investment and land disposals over five years. But last year former chancellor Philip Hammond abolished the private finance initiative, while the relatively modest amounts raised trhough land sales have largely been diverted to revenue budgets.

For this analysis, HSJ looked at the £2.5bn that has so far been allocated and announced through the four waves of STP bidding.

Jonathan Ashworth, Labour’s shadow health secretary, told HSJ it was “seriously concerning that promised money hasn’t found its way to the front line”, and highlighted trusts’ backlog maintenance problems which are now reported to cost more than £6bn to fix.

Many hospitals in dire need of investment have not even had funding “allocated”: