In recent years, the UK has fallen far behind most other OECD countries on capital spending in health care, and the current budget will not alter this trend. This is occurring at the same time as the workforce is increasing – although not as fast as demand for staff – resulting in large declines in the levels of capital per worker. Spending on plant and machinery by NHS trusts has fallen since 2010/11, leaving them with a 10% fall in the value of plant and machinery and a 28% fall in value per worker. Falls in capital per worker will place pressures on productivity. While the value of IT has increased, it still comprises a very small share of the overall capital value of trusts.

There is qualitative evidence that trusts are unable to afford the most modern technology, such as scanners, while many are also using equipment past their estimated useful lives. Low levels of diagnostic equipment threaten the ability of the NHS to improve care in line with commitments made in The NHS Long Term Plan (for example, new rapid diagnostic centres to improve early diagnosis of cancer). A lack of spending on IT means trusts are also using outdated computer systems, and this can have significant consequences, such as people missing breast screenings.

It is unrealistic to expect the UK to lead the world in health technology when its spending on plant and machinery (such as medical equipment) in trusts is declining, and when its overall capital spending is significantly lower than almost all other OECD countries and is budgeted to remain so. To bring the NHS up to the OECD average for MRI and CT scanners would cost approximately £1.5bn. Additionally, with a growing maintenance backlog, trusts will face pressure to spend more of their capital (and possibly revenue) budget on building maintenance, where most of the backlog is, rather than investing in equipment and IT.

Cash-flow problems are also affecting trusts, with the DHSC continuing to provide interim cash support for trusts to implement their capital-spending plans. If capital funding remains at similar levels to the previous 5 years, we can expect no growth in capital spending by NHS hospitals, continued declines in the value of plant and machinery, and an increasing maintenance backlog.

Future budgets will need to take into account that maintenance costs may come from both revenue and capital budgets and adjust spending accordingly, as well as recognising that this issue is not spread evenly across trusts. In addition to capital-funding commitments, the system for allocating capital funding needs to be reviewed to make it simpler for trusts to plan for and receive capital funding. With many trusts still seeing annual deficits, they will also struggle to generate surplus cash that could be used for capital. The autumn 2019 budget announced the end of PFI, which may place further strain on capital budgets, as additional funding will need to be found elsewhere.

Although the government has committed to a £20.5bn increase in funding for the NHS in England by 2023/24, this does not include the capital budget. Capital-to-revenue transfers are expected to continue for at least 1 more year, though they are now lower than they were in previous years. Most concerningly, the DHSC has not adequately investigated how continued capital-to-revenue transfers may be affecting trusts.

The 2019 Spending Review needs to set out a plan for capital investment in the NHS and the management of the maintenance backlog. In 2017, the Naylor review estimated that an additional £10bn in capital investment in the NHS in England was required, including £5bn for the maintenance backlog. But this is now £1bn less than the current backlog.

New technologies, such as genomics, artificial intelligence and digital medicine have the potential to improve productivity – including by freeing up staff time for patient care through automation – and transform how health care is delivered. To successfully implement and manage any new technologies, significant investment in the workforce is needed to make sure it can maximise the benefit in the future. Implementation must also take into account the complex social and organisational contexts in which new technologies are being introduced. While this briefing has mostly focused on capital in hospitals, The NHS Long Term Plan has also committed to improved technology throughout the NHS, including in community care.

Without a significant increase in the capital budget, NHS trusts will not be able to invest in modern technology, improve buildings and address the current and growing maintenance backlog. But any new investment needs to be carefully managed, and it is important to examine both successes and failures in recent times. Implementing large-scale investments in the NHS at a time of unprecedented demand on services is extremely challenging, and large-scale digital changes in the NHS do not have a successful track record.

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