PAC inquiry: HFMA calls for capital funding changes

In a written submission to the Commons Public Accounts Committee’s (PAC) inquiry into NHS financial sustainability, the association said that uncertainty around future levels of capital funding made planning for the future difficult.

The HFMA has highlighted the complexity of the capital system before – publishing NHS capital – a system in distress last October, in which it made recommendations for improving the system. In its written evidence to the PAC, the association said that the Department of Health and Social Care’s need to keep spending within departmental spending limits had slowed capital expenditure for all bodies other than those with sufficient internal resources to cover spending.

‘This means that NHS bodies are struggling to plan their capital programmes and are focusing simply on the immediate problems rather than transformational programmes,’ it said. ‘NHS bodies are reporting that patient care is now being affected by the increasing levels of backlog maintenance and slippage in capital programmes.’

There have been concerns raised recently by NHS Improvement about the accuracy of NHS bodies’ capital spending forecasts. But according to the association, NHS bodies’ ability to forecast was compromised by the lack of certainty over access to funds and because they are asked to spend funds within unrealistic timescales. At the same time, the capital allocation for future years is still unknown.

‘Any future capital funding system needs to be open, transparent, fair equitable, clear, cooperative, timely, streamlined, consistent and take a long-term view,’ the association said. ‘It also needs to work to meet system-wide population health objectives.’

The association also called for issues connected to the historic debt owed by some trusts to be addressed. In some cases, financial difficulties have forced NHS bodies to borrow to pay bills and senior management time and resource is spent on working capital management rather than on transformational change to improve patient experience.

The association said it supported the aim to get all NHS bodies into financial balance within the next five years, but it warned that the levels of historic debt could not be repaid within that timeframe. ‘We are concerned that those bodies with that debt will never be able to achieve financial stability and will always be paying interest on historic debt, which may be better used on patient care,’ it said.

In other points, the HFMA said that the scale of the challenge to return the system to financial sustainability must not be under estimated, despite the welcome additional funding and vision set out in the NHS long-term plan. And it added that the contradiction between integrated system working and individual statutory accountability for NHS organisations need to be addressed.