12 Jan, 12 | by BMJ Group
The Department of Health is sitting on hundreds of millions of pounds it doesn’t know how to spend.
As the Health Service Journal revealed last week, the DH has suddenly started scrabbling around for ways to use £300 million of capital budget. Some trusts have been given only seven working days to apply, others don’t even know about it.
The DH told the BMJ that “thanks to good management of central capital budgets, we have identified capital funding which could be made available to the NHS. We are now in discussions with the NHS to see how it could best be spent.”
This is a counter-intuitive use of the term “best,” as cobbling multi-million pound bids together in barely a week is not usually regarded as financial best practice.
It appears that, after health secretary Andrew Lansley gave the go-ahead, the DH contacted the strategic health authorities to see if they could find a use for the money. NHS London believes it could get £75 million, but again the DH refuses to discuss whether the money is being divided up by region.
Capital funding for health in England is already down this year – from £5.1 billion to £4.4 billion. This means the funds which have suddenly materialised amount to around 6.8 per cent of this year’s total spend, hardly a trifling amount.
The claim that the money has been found thanks to good management is undermined by the fact that the DH refused to explain where it had come from. It would not even be drawn on who had been invited to bid.
The DH has years of form when it comes to underspending its capital allocations. It improved its performance in 2010-11, but even then it underspent by more than £400 million. Underspending of any sort on health has attracted flak in past years, and in the present climate, with the NHS looking for £20bn of productivity gains and about 20 trusts struggling to remain viable, leaving £300m kicking around would be asking for trouble.
The alternative of hanging on to the money to help pay off the government deficit is less appealing than it might appear. The Treasury is desperate for economic growth, and capital projects eventually translate into jobs, which is why public funding for road, rail, and school projects featured prominently in last November’s autumn statement from chancellor George Osborne. Leaving capital money in the kitty would be bad economics as well as bad politics.
The DH is looking for projects costing at least £5 million. These are expected to finish in 2012-13 but need to start this year – so within barely 12 weeks of Whitehall receiving the bids. This means civil servants will have to rush assessment and approval through in a matter of days, not an intelligent way to spend scarce money. And the more money you can pile into this financial year the better.
Trusts who bid will probably pull a plan off the shelf that they had pencilled in for the next financial year—with such a short timescale there is little alternative. This means the £300 million is likely to ease the funding of schemes already in play rather than stimulate anything additional or innovative, as might have been the case with better planning.
Capital investment is a crucial if little discussed aspect of achieving the £20 billion productivity target by 2014-15. It is needed to move services out of hospitals into the community, for example. With trusts fighting to cut costs, manage demand, and transform services, seeing the DH make such poor use of so much money will exacerbate already strained relations between the government and doctors.
Richard Vize is a journalist and communications consultant. He was the editor of the HSJ 2007-2010. He edited the Guardian supplement for the NHS Confederation conference.