There are growing concerns about the availability of capital funding for NHS schemes.

A number of primary care trusts are reporting difficulties in confirming whether they have access to capital funding in 2009-10. PCTs reporting concerns include Wiltshire, Sutton and Merton, Oxfordshire and Portsmouth City.

The difficulties follow the chancellor’s £1bn cut to the NHS’s planned capital allocations between 2009 and 2011, which was set out in his pre-Budget report last November.

The government said then that the adjustment was due to an earlier overestimate of the cost of stockpiling pandemic flu medicine, but that is now being questioned by NHS finance experts who believe the move was at least partly due to the need to rein in spending.

Capital allocations have been further hit this year by new international financial reporting standards, which mean most private finance initiative-style schemes will need to be reported as NHS capital, rather than revenue spending.

Future allocations

That will eat into substantial chunks of the service’s current and future capital allocations, particularly schemes that do not become operational until after 31 March 2011, as the Treasury has said that it will only make adjustments to the NHS’s spending limits for schemes finished before then.

The recession has brought a further problem for PCTs. Many had planned to part-fund capital developments through the proceeds from land and asset sales. The dramatic fall in property values means that source of funding is sharply reduced.

Schemes hit include Sutton and Merton PCT’s plans to shut the last remaining long stay hospital for adults with learning disabilities.

The DH has pledged to shut all so-called “NHS campuses” or “NHS homes” by 2010.

Funding for Sutton and Merton’s plans to close its Orchard Hill home and provide alternative accommodation for its 46 residents was partly based on its ability to sell the redundant site for around £18m. Local valuers have now said the site is worth up to 40 per cent less.

PCT chief executive Bill Gillespie told HSJ the reduced valuation left the programme with a big shortfall and the PCT was now “looking at contingencies in other schemes” to see if it could make up the gap.

It is also waiting for confirmation of £6.8m of capital funding after the DH clawed back unspent funding last financial year.