We need a reset on the NHS’s haphazard approach to allocating capital funding

The £1bn of capital funding allocated to providers this month will provide vital improvements to facilities all over the country. Trusts whose bids have been approved tell us they are delighted with the allocations they have received.

The investment, which comes on top of the winter capital funding announced earlier this autumn, will make a real difference to patients. For example, it will pay for extra mental health inpatient beds to reduce out of area placements. Elsewhere, it will expand critical care units, build new operating theatres and will provide new breast screening infrastructure.

But, there are also trusts with equally deserving projects which received nothing. These providers have to face ongoing problems coping with inadequate facilities. But they also need to know why their bids failed and what they need to do next time to ensure their patients can also benefit from the capital funding that is available.

How were the winners picked?

The fundamental issue is that there are many competing calls on the capital budget: repairs; expanding existing services; building brand new facilities; technology; and providing the infrastructure for new models of care. All are important – but trusts do not feel they have clear enough guidance on which sorts of bids they should be prioritising, or how which trusts receive investment will be picked.

This month 75 bids were successful, distributed across around three quarters of all sustainability and transformation partnerships. But there is no clear geographic pattern to the investment, and no obvious prioritisation for the type of work being funded. As a result, the allocations look piecemeal and random.

Unsuccessful trust leaders have spent time filling out paperwork for capital bids that have been rejected, for reasons that they could not have known about in advance, and which remain obscure. Should they have bid for something else? Did they not make their case well? Is their STP not regarded as deserving or needy enough? Was it just not their turn? And will they ever get their share?

Time to reset

Next year presents an opportunity to improve how capital is allocated in the English NHS. The forthcoming comprehensive spending review is expected to set out how a £10bn capital funding increase, which the government has already committed to, will be sourced and allocated.

At the same time, there will be changes to the control totals and provider sustainability fund regimes, and potentially the beginning of a shift towards system based financial incentives. A parallel reset for capital funding would be timely, and NHS Providers has already begun making the case to NHS Improvement for a better way of allocating funding.

Trusts need:

• A capital investment strategy that has a plausible plan for investing in each of the following: maintenance; improved facilities; better technology; new forms of community based preventive care.

• Clarity on what the priorities for investment will be, so efforts can be focused on bids that are most likely to be approved.

• A streamlined, light touch bidding process. Applications for the £1bn allocated this month were originally submitted in July. Quicker turnarounds would give greater certainty and would help trusts plan capital spending more effectively than they are currently able to. Plus, any opportunity to ease the administrative burden on trusts must be taken. 

• Transparent decision making for allocating capital funds. Trusts currently do not know how successful bids are chosen. To restore confidence in the system, national leaders should ensure the criteria being used to judge capital bids are widely available to trusts, and fully understood.

• Robust central governance. Just as we need transparency over how bids are judged, we also need openness over the mechanisms being used to take decisions over allocations. As NHS Improvement and NHS England are brought together, national leaders should set out who will take capital allocation decisions and how they will be signed off by NHSI or NHSE’s boards. 

Together, the forthcoming new capital settlement, the long-term plan and the changes to NHSI and NHSE present a rare opportunity to reset the NHS’s haphazard and often baffling approach to allocating capital. Hopefully, this month’s allocations will be the last made under the current system and will represent the end of the old way of doing things.