Cowper’s Cut 445: Building up estates problems
An interesting thing happened in English health policy this week, which is by no means a given in August. It relates to buildings, capital and infrastructure: one of my three selected upcoming themes that I expect to determine any meaningful attempts at improving health policy that we may see in the next few years.
That improvement is hoped for, rather than guaranteed. English health policy and politics has been a failing endeavour for the past five years, which is a long time.
The Boris Johnson era and its succession was frankly a shower of shit: its conclusion led to a knee-jerk desire for optimism, up to which the Starmer administration’s efforts conspicuously failed to live. Team Milburn-Streeting’s tenure in charge of the Department For Health But Social Care were both memorable and remarkable: neither in a good way.
Jack Serle
Health Service Journal reports that Mid and South Essex NHS FT’s proposed use of an off-balance-sheet funding model to finance the expansion of a new building project with a private sector partner has been rejected by NHS England.
These are interestingly weird times.
Current interim chief executive of NHS England, Interim Jim Mackey was the man who in 2014, way back when he was chief executive of Northumbria Healthcare NHS FT, got approval from the Treasury and foundation trust regulator Monitor to buy out its private finance initiative contract with a loan from Northumberland County Council.
Northumbria Healthcare FT terminated their PFI contract (which paid for the construction of Hexham General Hospital) by borrowing £114.2 million from Northumberland County Council. At that time, Northumbria also announced a separate £25 million loan agreed with the council to fund a new hospital for Berwick-upon-Tweed. Both loans were to be repaid over 25 years, so they run until 2039.
The trust claimed that it would save around £3.5 million a year by ending its contract with the Hexham PFI operating company (Hexham General Hospital SPC), and agreeing new repayment terms with the council. Northumberland County Council made the funds available by using its powers as a local authority to borrow from the Public Works Loan Board.
So, if I have understood this correctly:
NHS borrowing off the local council to fund infrastructure = good;
NHS borrowing off-balance-sheet to fund infrastructure = bad.
Mmmmmmmmmmm.
That’ll be ‘good innovation’ and ‘bad innovation’, then.
Everything happens in a context. The supply-side context of this is an NHS capital and maintenance backlog of £16 billion and rising, as shown by the Estates Return Information Collection. There is not remotely enough capital funding available.
The demand-side context matters, too. To be fair to Interim Jim, he had the unrewarding task of wrestling an English NHS system accustomed for some years to default to deficits back into broad belief that it must and may no longer spend money that it does not have.
As the HSJ report notes, the statutory cancellation notice from NHSE has been served on the trust despite attempts by a certain Jim Mackey and others to make the Treasury more comfortable with off-balance-sheet investments. [coughs].
It is, moreover, slightly late, given that the trust had already moved forward with design and preparation work for the planned new unit, including relocating services and demolishing buildings. Mid and South Essex’s proposed new £94 million, 20-year managed service contract with their preferred bidder Medical and Diagnostics Care Group has now been cancelled. Doubtless, there will be compensation to be paid.
And what is the word sent down from the mountain on tablets of stone? NHSE’s East of England region said, “NHS England supports and encourages providers to explore innovative funding models where appropriate. However, the proposed ‘off-balance sheet’ approach to this scheme was not expected to secure the required approvals, and so the trust was advised to pause procurement while other potential alternative funding options for the DSU are explored.”
Issuing a cancellation notice is an innovative way of supporting and encouraging providers to explore innovative funding models, I have to say.
Jesuitical discussions about what is or is not ‘on balance sheet’ may add little value, given that current mainstream accounting conventions would probably deem a long-term lease commitment as a capital expense in Mid and South Essex’s financial accounts regardless.
There is no solution on offer from the national perspective: none. Zip. Nada. Zilch. In the absence of any such, providers will simply feel themselves obliged to make shit up, as Mid and South Essex tried to do here.
NHS England’s ‘Capital Guidance 2026/27 to 2029/30’ goes long on the fact of capital being a four-year settlement, but without the capital being sufficient, this is homeopathy - not remedy. And one must have a heart of stone not to laugh at its bid that it “sets out a capital framework that is more transparent, devolved and integrated than before. The SR25 settlement provides the NHS with over £44 billion of capital over the 4-year Spending Review period, including real terms protection of operational capital, £750 million annually for estates safety”.
Where to even start? The £44 billion breaks down to an annual £11 billion on average, which is less than the ERIC backlog maintenance total from December 2025 (it will be about 12% higher by now). It makes the promise of “£750 million annually for estates safety” look a bit silly.
And “real-terms protection of operational capital” is a deeply ugly thing to be claiming. For fans of bathos, ‘Maintaining The NHS Estate’ from NHS Property Services is a yet-to-be-acknowledged classic of baroque humour.
Still-new SOS Yvette Cooper probably has not yet been frightened by just how bad and dangerous the backlog maintenance situation actually is.
Somebody ought to brief her about it. I wonder who’s feeling brave.
Recommended and required reading
Powerful article by Professor Tania Byron, previewing her book ‘You Are Not a Diagnosis: The Therapy-Speak Trap and the Lost Art of Listening to Ourselves’. Another recent book about the downsides of therapy culture (this one US-based) is reviewed here. Feels like a theme …
NICE blog on their move to using the EQ-5D-5L value set as the basis for valuing health-related quality of life in its medicine appraisals and guidelines, replacing the EQ-5D-3L value set, which had been in use since 2012.
Carer and Liberal Democrat leader Ed Davey writes for the Financial Times on social care reform.
The current shingles vaccine appears to significantly lower the risk of heart attack and stroke.
Rich American idiots are being sold dangerous and unproven longevity stem cell treatments by cowboy ‘clinics’, the FT reports. Orange US health secretary Robert F Kennedy Jr. has said a stem cell treatment in Antigua “enormously” helped him and pledged to end the Federal Drug Administration’s “war” against alternative medicines, including “the war on stem cells”.