Providers warn of 'mutiny' over capital spending curbs

A letter seen by HSJ suggested that, in some cases, providers have cash available to spend on capital schemes to address “significant” patient safety risks, but are prevented from doing so by Treasury accounting rules and the government’s national spending limit.

Following years of constrained budgets and projects being delayed, there is said to be significant “pent up” need for capital investment.

But, earlier this month, NHS England and NHS Improvement told providers to scale back their spending plans for 2019-20 to fit within the national limit. It is unclear exactly what the limit is, but it is thought to have increased slightly from £3.33bn in 2017-18 and £3.46bn in 2018-19.

Chief financial officer Julian Kelly outlined a series of “collective” measures that would be taken to reduce spending, but warned new “in-year control measures” could be imposed if the voluntary efforts did not work at a “rapid pace”.

Legally, national bodies do not have powers to restrict the spending of foundation trusts with healthy finances, so the warning has raised concerns that any new controls would hit struggling providers which are most in need of capital investment. 

Chris Hopson, chief executive of NHS Providers, told HSJ: “This issue is now very high on the list of current concerns – every chair and CEO we speak to is really worried about it, as are NHSE/I.

“Trust boards… are accountable for providing high quality, safe care, and the right amount of capital spending is central to that. If NHSE/I try and impose the wrong top down solution, there’s a definite whiff of mutiny in the air.”

Multiple local leaders have expressed their frustration privately to HSJ, with some suggesting a mutiny could involve the “nuclear option” of going public with concerns over patient safety.

Meanwhile, a letter from NHSP to trust chief executives and finance directors last week, seen by HSJ, said: “There is considerable reputational risk for trusts and the NHS here. One description of the current situation is that trusts are facing significant patient safety and operational risks and, often, have the cash to address them but are being prevented from doing so by Treasury accounting rules.”

Mr Hopson said the capital spending limit for 2019-20 was too low, and “national and local leaders must work together rapidly to create an agreed, voluntary, solution”.

There is also significant frustration among trusts which have hit their centrally imposed financial targets in recent years, and therefore received non-recurrent monies from the “provider sustainability fund”. These providers have been expecting to be able to spend this cash on capital schemes, but, because any spending would score against the national limit, they are now being heavily encouraged or prevented from doing so.

The Naylor Review of NHS estates in 2017 called for an “additional” £10bn to be invested in transformation projects and maintenance backlogs. The government accepted this, and suggested a third would come from public spending, a third from private investment, and a third from sales of existing estate.

However, there has so far been no significant uplift to the Department of Health and Social Care capital spending limit, and no significant rise in land sale receipts. The government has also abolished the private finance initiative and launched a wide-ranging review of private finance.

A DHSC spokeswoman said the government would consider proposals from the NHS for a multiyear capital plan in the spending review, which is due later this year. She said the government has committed £3.9bn of new capital investment by 2022-23, which represented the commitment to fund a third of the Naylor Review requirement. However, it is unclear whether this funding will be in addition to typical capital budgets, as those budgets have yet to be set.