Summer conference: capital decision necessary

04 July 2019 Seamus Ward

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The NHS England and NHS Improvement chief financial officer – who took up the post in March – said it was a tough way of introducing himself to the service. But challenges in the system made it necessary.Julian Kelly l

‘The Department of Health has not been given enough capital to fund everything that people want to do and, in some cases, need to do – and in some cases they don't have the cash to do.’

The maintenance backlog had grown year-on-year and the situation was exacerbated by the incentives that had been used recently to get trusts to improve their financial performance. The NHS had ‘doubled down’ by incentivising some trusts to increase their surplus with the promise this can be spent on capital in future years.

‘If we don't do something the Department of Health will have an affordability issue. There are some organisations that need to do some critical things to maintain patient services. It might be fire safety or water quality or the roof is about to fall in, but they don't have the cash to fund themselves.’

The Department would not be able to make these funds available because it would breach its capital spending limits.

Asked later by a delegate if an annual capital limit was fit for purpose for the NHS, Mr Kelly said he did not think it was ideal. However, he acknowledged that the Treasury – where he used to work – needed certainty on the amounts to be spent.

‘Ideally, you would have a capital investment system that allows for some movement, because, if you don't allow for some movement, you can end up taking some pretty crass decisions and approaches that end up as not value for money.'

Ideally, there would be a mechanism for carry forward of unspent capital funds, he added. ‘But the quid pro quo is that we would have to improve capital programme management and forecasting and improve the transparency about what is really going on in the capital programme.’