The capital budget of the Department of Health and Social Care (DHSC) is used to finance long-term spending in the NHS, such as new buildings, equipment and technology, addressing some of the maintenance of NHS estates and equipment, and research and development (R&D). Capital spending is a critical input in health care, with new technology able to transform services and improve workforce productivity.

The DHSC has proposed a more technology- and data-driven NHS. New technology and IT could improve patient services and increase productivity, but both currently make up a small proportion of capital spending. The UK spends significantly less on capital, such as buildings and equipment, than most other Organisation for Economic Co-operation and Development (OECD) countries. This may contribute to its poor performance on outcomes compared with similar countries. However, although modern health

technology can lead to better health from improved quality and service, it is not generally associated with cost savings in health care. The Topol Review into how technology will influence the NHS workforce has highlighted that significant investment in the workforce will be needed to ensure it can realise the potential benefits of new technologies.

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. Capital investment is crucial for the long-term future of the NHS. In recent years, there have been repeated, significant transfers from the capital budget to fund day-to-day operating expenses, which has left NHS trusts with both planning and funding issues in their capital plans. This short-termism is only delaying issues, when long-term planning and a long-term funding settlement are what is really needed.

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 then analyse the implications of recent capital spending, with a specific focus on NHS trusts’ maintenance backlog. We conclude with a discussion of the trends in capital spending and capital levels, and implications and recommendations for future health care funding.

* Capital spending comparable with other OECD countries is only at the UK-wide level.

All numbers in this briefing are 2018/19 prices using January 2019 GDP deflators.

Unless otherwise stated, 'NHS trusts' refers to both NHS trusts and NHS foundation trusts.

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