Maintenance in NHS trusts

Each year, NHS trusts estimate the size of their maintenance backlog, as well as categorising the necessary repairs by risk level according to the potential impact on clinical service and safety. This data is self-reported by the trusts. ‘High risk’ is where repairs or replacement must be addressed with urgent priority to prevent catastrophic failure, major disruption to clinical services or deficiencies in safety that are liable to cause serious injury and/or prosecution.

The maintenance backlog across the NHS now stands at £6bn, with over half made up of ‘high’ and ‘significant’ risk, the two highest risk categories. From 2010/11 to 2013/14,

the backlog decreased slightly each year in real terms. However, since 2013/14 it has increased each year. The backlog is now larger than the annual DHSC capital budget, and the value of the ‘high’ and ‘significant’ risk backlogs combined – £3.1bn – is similar to the total annual capital spending in all trusts.

In 2017/18, £412m was spent on reducing the maintenance backlog, an increase of 23% on 2016/17. Figure 8 shows that this investment is well below the level required to reduce, or even stabilise, the backlog. Investment would have needed to be 76% (£314m) higher in 2017/18 for the backlog to remain at the same level as in 2016/17.

Figure 8: Investment in maintenance backlog compared with total maintenance backlog by risk type, 2010/11 to 2017/18 at 2018/19 prices

Source: Estates Returns Information Collection.

The occupied floor area of NHS trusts has not increased since 2010/11. Therefore, the increase in the backlog is not driven by an increase in size, but rather an increasing density of maintenance backlog – that is, a larger backlog per square metre.

The acute and specialist hospital sector is over-represented in the backlog figures, making up almost all the recent increases and 93% of the backlog in 2017/18. This is equivalent to making up 79% of the total income of NHS trusts. The size of the backlog will be driven by the larger size of acute and specialist trusts, however the backlog per square metre in acute and specialist trusts was more than double those of community, mental health and ambulance trusts in 2017/18. Acute and specialist trusts also have a far larger ‘high’ and ‘significant’ risk backlog per square metre than other types of trusts. This has coincided with significant short-term financial pressures in acute trusts, with large deficits since 2013/14.

At current levels of investment, the backlog as it stands would take about 15 years to pay off, and 8 years just to pay off the ‘high’ and ‘significant’ risk portions. Investment would have to rise by about three-quarters just to keep the current backlog at the same level going forward. Although one trust has contributed significantly to the rise in the total ‘high’ and ‘significant’ risk backlog in recent years, excluding it from the calculation does not change the overall picture.

It is noticeable that the maintenance backlog began to rise significantly in 2014/15, as transfers from the capital budget started to grow. However, as Figure 8 shows, investment in the backlog did not significantly change during this period. Although low levels of investment in directly addressing the backlog have contributed to its rise, it is likely that the backlog has also been rising from a lack of spending in other areas, such as regular maintenance. Addressing the backlog will need both capital and revenue funds, as maintenance can be classified as either depending on the type of maintenance needed.

It is critical that funding be focused on directly addressing the backlog, especially ‘high’ and ‘significant’ risk. But a better understanding of the drivers of the increase in the backlog is also required. Age is a key factor, as it is expected that older estates will accumulate a larger backlog over time.

Additional funding and a more robust policy for managing maintenance is required to address an issue that cannot be delayed – it will only create additional and more severe problems in future years if the trends of the last 4 years continue.

Are trusts able to reduce their maintenance backlog?

We looked at whether there is a relationship between investment in the backlog and the size of the backlog in acute trusts. We found a slight positive correlation, meaning a larger maintenance backlog was associated with larger investment in the backlog, though much smaller than the size of the backlog. Figure 9 plots investment in the maintenance backlog in NHS trusts in 2017/18 against the total backlog of each trust in the previous year. We only selected 1 year to avoid the issue of serial correlation.

Although there is a slight positive correlation, there are many trusts with large backlog levels but average or below-average levels of investment in the backlog (Figure 9). If trusts were able to increase their spending as the backlog increased, we would expect to see a sharper gradient, to reflect that an increasing backlog is associated with larger increases in investment. When the same correlation was estimated for 2011/12, we found a similar result, suggesting the relationship has not changed much over time. Only a quarter of trusts invested more than 20% of the value of their backlog in addressing it, highlighting the fact that most trusts do not have sufficient capital to invest in the backlog.

Figure 9: Investment in maintenance backlog in 2017/18 and total maintenance backlog in 2016/17, at 2018/19 prices

Source: Estates Returns Information Collection, 2016/17 and 2017/18.

Note: The trust with the largest backlog was removed.

These results don’t prove a causal relationship – that is, they don’t prove that a large backlog prohibits a trust from substantially increasing investment, or vice versa – as there could be other factors causing this issue. However, the results do highlight an issue: as the backlog in NHS trusts increases, there isn’t an associated increase in investment to reduce it. This is also consistent with findings from the qualitative research we commissioned, in which one trust noted its ‘high’ risk maintenance backlog was almost four times the size of the capital funding available to address the issue.

Trends in capital and maintenance backlog by area

Future capital-funding allocations must consider the specific needs of each trust. Although clinical commissioning groups receive revenue funding based on local need, this is not the same for the capital budget, which is often selected on a case-by-case basis. To examine capital-funding needs across England, we grouped the total capital and the maintenance backlog by area. We then compared this with the operating income of the trusts in this area to take into account the area size.

As a percentage of operating income, the total value of capital shows some variation across areas, with north-central and east London having the highest relative amount of capital. Differences between these areas will be caused by multiple factors, including the type of trusts that are in each area.

The backlog is relatively similar across the different areas, except north-west London, which has a far larger backlog (mostly due to one trust having almost 10% of the entire NHS maintenance backlog). South London, Yorkshire and the Humber, and the Thames Valley also had slightly higher maintenance backlogs, adjusted for size, compared with the other areas.

Future capital-funding decisions will need to take into account the need for capital in each area, which will include the current capital levels and maintenance backlog. Funding decisions will also be allocated through sustainability and transformation partnerships. These are groups of NHS and local council bodies, and are not as well developed in all parts of the country.

¶¶¶ Although other factors may contribute to the reduction of the backlog, we based this calculation on the investment in the backlog that is reported by NHS trusts.

**** Regular servicing of buildings and equipment would probably be classified as expenses charged to revenue. However, large investment that improves an asset would probably be classified as capital expenditure, with the value depreciated over time.

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