The letter sent by the Department of Health in late December inviting bids for a £300m capital fund, favouring projects with greater spend in 2011-12, smacks of someone realising the potential for serious embarrassment.

(“All those cuts? All those savings? And look – they were awash with money…”)

It’s a reversion to a style of financial management we thought was left behind long ago.

And, yes, it’s annoying. It’s insensitive, like a relative buying electronic toys for the kids where the household’s struggling to afford dinner. A £300m of one-off bunce isn’t the same as £20bn of savings, but it would help.

But the money won’t really be frittered away on pet projects. For “capital” read “non-recurrent expenditure”.

There’s a formal definition of capital within the NHS accounting manuals, and a broader assumption that capital spending means spending on land, buildings and equipment: infrastructure rather than running costs. But the reality of such a ludicrously short lead time is that NHS bodies will accelerate as much pre-planned spending as can somehow be squeezed into the capital definition. Little will take the form of bricks and mortar, or even medical equipment; a lot will probably be the severance cost of losing long-serving staff. Not what you’d generally understand by “investment”.

Two serious strategic questions still need answering. 

The first is why NHS corporate information systems are so lumbering that only in December did the realisation of imminent embarrassment dawn. The July-September edition of The Quarter, the DH’s account of NHS performance, wasn’t published until 22 December. Even a week’s more notice would have allowed a much more considered response. It’s in nobody’s interest to delay such decisions.

The second is whether there’s something inherent in current structures that pushes more organisations into holding in-year reserves, and keeping them hidden. Could it be that a culture of competition and the devil take the hindmost, coupled with an unforgiving blame culture, encourages NHS boards to hold money back “just in case”? It is contributing to whole system failure to commit resource that’s entirely predictable… and not at all what Parliament intended.

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