HSJ’s expert briefing on NHS finances, savings and efforts to get the health service back in the black. This week by correspondent Nick Carding.
Quest for capital
In Homer’s Odyssey it took Odysseus 10 years to achieve his quest to return home from Troy.
NHS estates’ teams could be forgiven for feeling they have waited a similar length of time for their moment, yet their climax still looks a way off.
In the four months since chancellor Philip Hammond pulled the plug on PF2, the uncertainty over what role the private sector can play in helping deliver much-needed capital projects has grown.
Everyone agrees something needs to be done to deliver the Herculean estates’ transformation required in some parts of the NHS – not least to avoid further tragic tales of MRI scanners failing or other diagnostic equipment breaking.
But it seems no one can work out a way of doing it without breaching the Department of Health and Social Care’s capital spending limit.
Calls for more investment into the crumbling NHS estate have intensified since chief protagonist Sir Robert Naylor published his review in 2017, yet meaningful progress remains as elusive as Godot in Samuel Beckett’s famously absurd play.
With this curtain of uncertainty draped across HSJ’s Strategic Estates Forum last week, all eyes were therefore on Oliver Clarke – a senior policy advisor to the Treasury, who took to the stage for what proved to be a good test of his rhetoric skills.
The Treasury view
Asked how the Treasury rated the NHS’ credibility in making the best use of its available resource, Mr Clarke said the recent process of sustainability and transformation partnerships submitting bids on behalf of their health economy was an important and valuable step in the right direction.
But, he acknowledged, sustainability and transformation partnerships are at “different levels of development, as is the strength of their governance and joint decision-making”.
Mr Clarke was quick to dispel any suggestions of the Treasury antagonistically denying funds to the NHS due to concerns over the service’s efficiency, stating: “The Treasury has the job of sharing out CDEL among lots of competing services.
“The scrutiny and challenge that comes from the Treasury is not based on a view about the NHS – it’s the need to share money out the best way as possible.”
Asked what the commonest mistake was by NHS trusts bidding for money, Mr Clarke said it is “helpful to the Treasury” if the bidders show they have “thought as hard as possible” about other ways of raising the money required.
He also indicated that when assessing business cases, the Treasury does not “as a rule” take much notice of “speculative benefits” that will supposedly improve the wider community’s productivity or growth.
“These things are difficult to monetise in business cases,” Mr Clarke said.
The defenestration of PF2 was bad news for supporters of the Regional Health Infrastructure Company model, which has been developed by DHSC-owned Community Health Partnerships.
Despite CHP’s initial beliefs that the model could be delivered without affecting the government’s balance sheet, Mr Clarke confirmed the abolishment of PF2 “potentially had a bearing on the model”.
This has resulted in the Treasury, DHSC and CHP working through “difficult sets of questions”, although the “blueprint” of that work will be made public “very imminently”, Mr Clarke said.
Asked if there were any other schemes that could be delivered off-balance sheet, Mr Clarke vaguely hinted at models currently used elsewhere in the public sector such as other types of joint ventures and land disposals.
He also added: “I think the chancellor made clear that his position on PF2 was about the symptoms he had observed around inflexibility and value for money, rather than an attitude towards the private sector or private investment generally.”
Mr Clarke’s comments at the forum were followed up the next day by Philip Hammond’s spring statement, in which the chancellor launched a consultation into the financing of public infrastructure.
Within the 44-page document, the most pertinent words to the NHS were: “The government will not be seeking a like-for-like replacement for either PFI or PF2 and will therefore no longer procure off-balance sheet projects using a design, build, finance and maintain/operate contracting structure where the taxpayer directly pays for the project.”
Exactly what is meant here is not quite clear, as it does not appear to rule out off-balance sheet financing in its entirety, while the government states it continues to support a “wide range of vehicles for delivering private investment”.
All considered, the current uncertainty over private sector involvement in the NHS estate is a scene Harold Pinter would have been proud to construct.