Failing to capitalise Capital spending in the NHS
March 2019
Key points
- Since 2010/11, capital spending by the DHSC has declined in real terms. This fall is mostly explained by transfers by the DHSC from the capital to the revenue budget, to focus more funding on day-to-day running costs.
- The fall in the DHSC's capital budget has contributed to the UK having a low level of capital investment in health care by international standards. Although capital-to-revenue transfers have reduced capital spending, the UK would still have very low capital spending, by international standards, had these transfers not occurred.
- The maintenance backlog in NHS trusts has been rising, from £4.4bn in 2013/14 to over £6bn by 2017/18. This is around double the amount of annual capital spending in NHS trusts.
- The DHSC has outlined a vision for a world-leading technology- and data-driven health and social care system. The current capital budget will be insufficient, as current capital spending levels are leading to declining values in plant and machinery in trusts and a substantial, growing maintenance backlog.
- Many trusts are seeing capital-funding constraints have a direct, negative impact on their ability to deliver optimal care.
- Although the government has committed an extra £20.5bn for NHS England by 2023/24, this does not include any funding for the capital budget.
- If capital funding were to be increased in line with the OECD average, this would require an additional £3.5bn of capital funding for the NHS in England, on top of the current capital budget in 2018/19, rising to £4.1bn by 2023/24. Alongside this, an end to the regular transfers from capital to revenue budgets is needed so that NHS trusts can invest and plan for the future.
The capital budget of the Department of Health and Social Care is used to finance long-term investments in the NHS in England. This includes spending on new buildings, equipment and IT, improvements to and some maintenance of NHS trusts, and research and development.
Read the full list of key points
Watch: capital spending on health care in England explained
In this briefing, we analyse trends in the capital budget, comparing the UK with international averages. Using annual data from all NHS trusts in England, we then focus on trends in the capital spending of NHS trusts to analyse where money has been spent and where there are areas of need.
We also analyse the implications of recent capital spending, with a specific focus on NHS trusts’ maintenance backlog, and conclude with a discussion of the trends in capital spending and capital levels, and implications and recommendations for future health care.
This report was updated on 3 April 2019 to correct the key in Figure 5.
Related research
Health Foundation-funded research by Health Services Management Centre (HSMC) at the University of Birmingham, referenced in the report, interviewed directors and managers at NHS trusts, revealing serious concerns that spending restrictions are impacting service efficiency, and in several cases, the quality of patient care. The research highlights the impact of equipment shortages and failures, and reliance on ageing diagnostic equipment.
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