• Trusts warned inaccurate forecasts could lead to future funding bids being deprioritised 
  • NHSI has again raised concerns over providers’ latest capital spending forecasts
  • Regulator warns of possible repeat of last year’s £250m underspend
  • Non-urgent projects to be deferred to next year

Regulators have warned NHS trusts their future bids for capital funding could be deprioritised if they submit inaccurate spending forecasts for the remainder of 2018-19.

NHS Improvement has written to trusts’ finance directors to raise concerns about their latest spending forecasts for capital projects. It warned of a possible repeat of last year, when a £250m underspend was returned to the Treasury.

The letter, seen by HSJ, said: “Inaccurate forecasting is likely to result in the sector underspending on capital. Any unspent capital cannot be carried forward into the new financial [year] and would be lost to the service. This would be particularly concerning when there is so much pressure on the capital budget.”

The document sought further assurance from trusts that their forecasts are “accurate and deliverable” and warned: “The quarter 3 capital forecast will be fixed and you will be measured against this forecast for the remainder of the year.

“Going forward we will consider performance against the quarter 3 capital forecast when making financing and capital prioritisation decisions.”

Frustration is likely developing at NHSI that a similar situation to last year appears to be emerging. 

There are various issues with the current regime for NHS capital funding, which make it difficult for budgets not to be significantly overspent or underspent.

Following a squeeze on the Department of Health and Social Care’s capital departmental expenditure limit in recent years, the trust sector has often submitted spending forecasts that would breach the CDEL. The latest forecasts for 2018-19 imply spending of close to £4.5bn, which would breach the sector’s limit by around £1bn.

Because of the overspending risk, HSJ understands the DHSC has often refused or delayed funding approvals for projects that require government sign-off. This subsequently creates the opposite risk of budgets being underspent.

The ability of surplus trusts to freely invest in capital projects make it difficult for national leaders to control the overall spend.

The NHSI letter, sent by chief finance officer Elizabeth O’Mahony, said: “Significantly, the month 9 capital forecast informs the [DHSC] when considering if any further capital financing (capital loans) can be afforded in this financial year…

“Capital forecasts should be supported by secured or approved funding sources. Providers should not assume that capital financing will be made available in 2018-19 when preparing forecasts unless written confirmation has been received and/or loan documentation from the DHSC.”

NHS Providers, which represents trusts’ leaders, criticised the deprioritisation warning. Policy advisor David Williams said: “Rather than penalise trusts, we should look for a longer term solution that prioritises funding based on need…

“Underspending is a symptom of the complexity of the current system for allocating capital funding. Delays in the central sign-off process often leave trusts unsure on how much they will be able to spend, and on what, and increases the risk of funding being lost if the timescales for projects are pushed back for reasons beyond trusts’ control.”

He said the spending review later this year should “reset” the current approach to capital funding, adding: “It must become normal again for trusts to be in surplus and therefore able to generate their own capital funds.”

Various local and regional chiefs have criticised the complexity and slowness of the capital regime, including Greater Manchester’s integrated care system leader Jon Rouse, who is a former DHSC official.

The NHSI letter also requested that non-urgent capital spend is deferred into 2019-20.