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.

Treasury delivers on NHS capital

“The Treasury has come up trumps”.

That was Sir Robert Naylor’s assessment of the extra capital funding awarded to the NHS by the government in the last two years, during which trusts have been able to bid for much-needed estates and IT projects.

On average, the NHS spends around £3.3bn annually on capital schemes, but sustainability and transformation partnerships had the chance to bid for funds from an extra £3.9bn pot during 2017-18 and 2018-19.

This £3.9bn was an improvement on the £3.3bn Sir Robert asked for from the government in his 2017 review of the NHS estate.

But, despite the extra money, many STPs and trusts have been left disappointed by the allocation process.

HSJ has obtained details of nearly every scheme proposed by NHS providers (excluding ambulance trusts), most of which were then submitted by the STP to the centre as a bid for funding.

Full details will be published shortly, but this column has taken a sneak peak at some of the findings.

West Midlands wins - South East suffers

When comparing the amount requested to the amount received, the West Midlands was the biggest winner – after being allocated £610.1m (45.19 per cent) from a wish list worth £1.35bn.

However, more than half the allocation (£312m) will go to Shrewsbury and Telford Hospital Trust towards their acute services reconfiguration.

Other big winners in the West Midlands were the Black Country (£89.6m) and Derbyshire STPs (£74.1m), which both got more than 50 per cent of the funds they had requested.

On average, each STP asked for around £209m and was awarded £53.8m (25.74 per cent). Fifteen of the 42 STPs received more than £53.8m.

The region which received the least amount in proportion to its request was the South East, which was given £81.6m (9.53 per cent) of its £855.8m target.

Staff in Kent and Medway have particular cause to feel cheesed off, after being awarded just £1m of the £571.4m it requested – predominantly for large acute reconfigurations in East Kent and Dartford.

The only silver lining for the county was the £25m awarded to the region’s ambulance trust and three clinical commissioning groups for projects aimed at integrating primary and community care.

Little capital for the capital

Meanwhile in London, the north of the capital was the only region to get a significant amount of money, after long-standing plans to redevelop St Pancras Hospital and build a new eye facility for Moorfields Eye Hospital Foundation Trust were given the necessary funds.

Both East London and South East London STP were given paltry amounts, despite submitting business cases for projects costing hundreds of millions of pounds (redevelopment of Whipps Cross Hospital and work on Evelina Hospital respectively).

Over in South West London, the DHSC’s snub of St George’s University Hospitals (which bid for £22m to replace MRI equipment and refurbish its A&E) led chief finance officer Andrew Grimshaw writing a letter to NHS Improvement boss Ian Dalton explaining the “patient safety risks” caused by further delays in approving his trust’s capital bid.

The STP received £26.4m, but bid for more than £145m. 

The impact of bid failure

One real-time example of the impact of trusts not getting the funding they bid for can be found at Torbay and South Devon Foundation Trust, which has recently lost 20 per cent of its inpatient surgery capacity due to estates problems.

In July 2018, the trust asked for £14m to refurbish several of its 10 operating theatres. During the wait for the outcome, the air handling system in two of the theatres failed, causing both to be closed until spring this year. A third theatre was closed for more than two weeks for the same reason.

To the disappointment of the trust, its capital bid was not successful, and the organisation’s forecast for patients waiting more than a year for treatment increased from 66 in November to 97 in January. Orthopaedic work is particularly affected.

The closures have also impacted on the trust’s finances. The trust now forecasts a deficit of £6.2m against its plan for a £1.7m deficit.

Trust bosses will feel aggrieved by the fact that their bid last July was not even their first attempt to address the maintenance issues in the theatres, as a £10m application was also turned down by the Department of Health in 2016.

A new air handling unit for the two theatres has been commissioned, but the facilities are not expected to open again until May at the earliest.

For all the trusts which missed out on the Treasury’s investment, this spring’s spending review – in which a new capital settlement for the NHS is expected – will be extremely important.

Estates chiefs will also be watching closely for signs of change promised in the NHS long-term plan, which stated “a number of reforms” are being considered to “remove the existing fragmentation of funding sources, short-termism of capital decision making, and uncertainty for local health economies”.

It is hoped this will eliminate the “haphazard approach” to capital funding allocation – a description offered by the body which represents NHS trusts.

Article updated at 3.17pm on 19 February as the author had incorrectly written that St George’s University Hospitals FT was in South East London STP. The trust is in the South West London STP.