Does Boris Johnson’s NHS funding boost add up?

Talk about ungrateful. For months, a chorus of voices in the NHS policy world have been calling for urgent funding for NHS buildings, equipment and IT. Capital funding was not included in last year’s five-year funding settlement, which only covered day-to-day running costs for the NHS in England. The funding settlement was followed by the NHS Long Term Plan, which set out bold ideas to improve a broad range of services. But many of them, such as boosting cancer survival rates by catching the disease earlier, hinged on substantial capital investment in, for example, diagnostic equipment like CT and MRI scanners.

At the weekend, the prime minister announced some much-needed capital investment: £1.8bn—£1bn of which for this year—and a list of 20 NHS organisations in England which will get new wards, operating theatres, diagnostic kit, mental health inpatient units and even entire new hospitals. And the response of the NHS policy world? A good start, but not enough, not going on the right things, and a lot of debate about whether it is even new money.

Are the complaints justified? First, let’s take the “new money or not” point. From the perspective of hospital managers, it matters a lot. The NHS has been able to keep afloat financially since 2010/11 by choking its capital budget, drawing on funding for assets to pay for operational expenses. As a result, capital spending declined in real terms by 7 per cent between 2010/11 and 2017/18, but to make matters worse, some of this was due to capital money being siphoned off into revenue budgets to pay for staff and medicines, to the tune of £4bn between 2014/15 and 2017/18.

Hospitals coped by not investing in new equipment and putting off maintenance. This year, an end to the capital drought was promised for thrifty hospitals: substantial bids for new capital projects were put forward in return for their spending restraint. Last month, some of these plans were knocked back by ministers, concerned about overspending. So, although the expectation is that the overall capital budget will be increased from £6bn to £7bn for this year, meaning it technically is “new money,” some will see this as giving back money that was already “saved” by NHS hospitals. At any rate, it will need to be spent fast, as we are now well into the financial year.

The second complaint, that this is not enough money, is even more serious. Before the financial cutbacks, the NHS was already on the stingy end of the capital investment spectrum compared to other rich countries, who spend a greater proportion of their national budgets (0.5 per cent of GDP) on assets such as buildings and scanners. In 2016 the UK spent a little over half that on health care capital, and we calculate that catching up with OECD average would require capital funding of £10bn annually by 2023/24, £4bn more than the current budget for this year.

Forgetting other countries for a moment, even by the standards of what NHS hospital managers think is essential, there is a deep financial hole. Every year hospitals estimate the size of their maintenance backlog. It was £6bn in 2017/18, half of which (more than £3bn) is high or significant risk, where replacements or repairs are urgently needed to avoid catastrophic failure and major disruption to services. Those working in hospitals describe the backlog in terms of having to work with older, slower and less precise equipment which is at risk of breaking down (such as scanners), and hand-to-mouth prioritisation within hospitals, choosing between fixing rotting windows or keeping a ten-year-old ambulance on the road for another 12 months. Immediate, safety-related problems tend to win out, but dilapidated premises are depressing for patients and staff alike, can impede patient recovery, and will eventually cost more if left unfixed.

As for the money going to the wrong places, this is tougher to assess. While the criteria for choosing the 20 sites for upgrades is opaque, those improvements will be much welcomed by their communities. But a lot of badly-needed upgrades will have to wait, and there are wider funding shortages that must be addressed to shore up the future of the health service.

The challenge for any politician fortunate enough to cut a ribbon at the front door of any shiny new facility, is to also visit the back door, and talk to patients waiting to go home about what lies ahead. How confident do they feel, after their state-of-the-art scan or surgical procedure, about getting the social care they need to go to the loo, have a bath, or a hot meal on their own? About getting an appointment with the GP or district nurse? Or even about the future of good quality employment, housing and education that could help keep the next generation away from hospitals for good stretches of their lives?

Short-term funding boosts are popular, no doubt. But they shouldn’t be at the expense of proper forward planning, both for NHS and care services, and for wider government investment in other public services that keep people well.