Key points

  • The capital budget of the Department of Health and Social Care (DHSC) 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.
  • Since 2010/11, capital spending by the DHSC has declined in real terms – from £5.8bn in 2010/11 to £5.3bn in 2017/18, a fall of 7%. This means the capital budget in 2017/18 was 4.2% of total NHS spending, compared with 5% in 2010/11. 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. The UK now spends about half the share of GDP on capital in health care compared with similar countries, and is far behind other countries in the number of MRI and CT scanners per capita. 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.
  • Around 60% of the DHSC’s capital budget is spent by NHS trusts in England. Capital spending in NHS trusts has fallen 21% between 2010/11 and 2017/18, from £3.9bn to £3.1bn – a larger fall than in the overall capital budget.
  • Most capital spending (55%) in NHS trusts is on buildings, with ‘plant and machinery’ (eg MRI and CT scanners, clinical equipment) and IT spending representing 22% and 10%, respectively.
  • The value of capital in NHS trusts has risen by 4% since 2010/11. At the same time, the workforce has increased by 26%. This has meant a 17% fall in the value of capital per worker since 2010/11.
  • Sales of NHS capital have risen significantly since 2015/16, with over £400m in sales in 2017/18 (compared with £175m in 2010/11). Although sales of capital are meant to be re-invested, this has not been the case, with significant amounts of money from sales of land being used for the revenue budget, which covers the day-to-day costs of delivering care.
  • 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. Over £3bn of this backlog is 'high' and 'significant' risk, the two highest risk categories. At the current rate of growth, investment in reducing the backlog needs to rise by approximately three-quarters just to stop it from growing further.
  • 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. Although IT investment has increased, it still makes up a very small portion of total capital in NHS Trusts.
  • Qualitative research commissioned by the Health Foundation finds that many trusts are seeing capital-funding constraints have a direct, negative impact on their ability to deliver optimal care. Staff have reported negative effects on productivity from issues such as equipment shortages and failure. Hospitals are using ageing diagnostic equipment, which is negatively affecting the ability of clinical staff to perform their work. The research also identifies the built environment as having negative effects on patient care and safety.
  • Although a funding increase of 3.4% was announced by the government in 2018 for the NHS England budget for the next 5 years, no commitment to long-term funding for capital has been set out. This will need to be addressed in the 2019 Spending Review, along with clarity on the approach to managing the maintenance backlog. Without increased capital funding, there is a risk that NHS trusts will be unable to plan for the transformation of services set out in The NHS Long Term Plan, and ongoing maintenance issues could risk the quality and safety of patient care.
  • To bring the UK up to the capital-spending average share of GDP of Organisation for Economic Co-operation and Development (OECD) countries in 2016 would have required an extra £5bn (based on the latest OECD data).
  • If capital funding were to be increased in line with the OECD average, this would require capital funding for the NHS in England of £9.5bn in 2019/20. This would be a £3.5bn increase 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.