Equity and security

The focus of media coverage of the new Health Infrastructure Plan (HIP), unveiled at the start of October, was the money. A £13bn programme would see 40 new hospitals built over the next decade, with £2.7bn supporting six hospitals given an immediate go-ahead.

However, the attempt to introduce a more strategic approach to capital allocation is arguably the bigger story.

This new approach attempts to give certainty to organisations and systems over their capital plans going forward. And it also attempts to provide a fairer approach to the allocation of capital – not influenced by the legal status of the bodies involved (foundation trust vs trust) or their financial position.

There are lots of questions about how the new system will work in practice – questions that will hopefully be answered when full technical guidance on the capital systems for 2020/21 is published before the end of this calendar year.

The proposed approach will break capital down into three discrete pots – one for providers (system driven), one for major hospital builds and one for centrally funded programmes such as technology capital.

The problem for the centre has been that it doesn’t have control over all organisations’ capital spending. As health secretary Matt Hancock put it to the health and social care committee in October, foundation trusts in surplus are able to ‘spend my national budget without my say-so’.

The new system will not give foundation trusts formal capital spending limits – although a limited reserve power could be created in future as part of legislative proposals. But each integrated care system or sustainability and transformation partnership will be given its own ‘capital envelope’ and be expected to ‘ensure organisational plans are consistent with these’.

The HIP makes it clear that staying within this envelope will be linked to the system’s eligibility to continue receiving central funding for strategic investments.

One of the key outstanding questions is how system envelopes will be set – how much account will be taken of systems’ capital needs and how will equity between systems be delivered?

However, the system will only work if there is sufficient funding in overall terms to meet the capital needs of the NHS as a whole. With insufficient funds, the service will continue to firefight and funding will have to flow to deliver emergency fixes at the expense of planned developments that will support transformation.

The government has made a welcome start to addressing the funding shortage after years of underfunded budgets exacerbated by capital to revenue transfers. It has published a bewildering set of headline figures for new funding over the past few months: £13bn, with £2.7bn immediately, to support HIP; a £1bn increase in this year’s CDEL;  £850m to support the redevelopment of 20 hospitals outside of the HIP; and £200m for diagnostics.

The timescales for this funding are often over different periods. The £1bn increase to CDEL was for the current year. The £850m covers capital that will be drawn down over five years. And some additional funding for artificial intelligence will be made available over three years.

The bulk of the funding for the HIP is not even in place yet, although the government says that the Treasury is committed to the funding despite not yet having held its spending review.

In the meantime, the government continues to announce successful loan funding for new trusts – not new money, but just a step in the approval process from resources already earmarked. It creates an impression of capital largesse, but it is far from transparent.

The NHS continues to need a significant boost to capital budgets for both backlog maintenance and more strategic projects. And it needs visibility on how those budgets will change over time.

A fairer, more transparent allocation process might have been overlooked in the coverage of the HIP. It appears to be a good step forward, but if the new process is not underpinned with the right level of funding, it will simply break down.