Is There a Maintenance Funding Problem for the Government’s New Hospitals Programme?
At Curshaw, we have spoken extensively in the past about the inclusion of ring-fenced funding for maintenance of a built asset being a core benefit of the PPP model, both in writing and at various industry events. By the same token, we have also spoken about the pitfalls of maintenance budgets being exposed to short-term decision-making, and the consequential eye-watering backlog maintenance that arises.
It was with these thoughts in mind that we set out to understand in greater detail the government’s plan for ongoing maintenance of the assets being constructed under the New Hospitals Programme. We wanted to know:
Had ‘whole life cost’ been considered?
Within the whole life cost, how had adequate maintenance budgets been determined for each of the new hospitals?
Had funding been set aside accordingly from within the programme’s budget, to enable NHS Trusts taking on responsibility for these assets to discharge their obligations effectively?
Seeking Answers
We submitted the following Freedom of Information (FOI) request to the Department of Health and Social Care (DHSC) back in June:
Under the Freedom of Information Act 2000, I would like to know the value of any additional funding, on an annual basis, being provided to NHS Trusts to spend on maintenance of the hospitals being built under the New Hospitals Programme, and over what period that additional funding is currently planned to be provided.
I would also like to know the methodology for calculating the appropriate level of funding for any given hospital being built under the programme.
We then received the following response:
Currently, NHS trusts are not provided with specific additional maintenance funding for hospitals in the New Hospital Programme (NHP) by DHSC.
Any funding allocations for future years (2026/27 onwards) will be confirmed following planning, allocation and approval processes following the 2025 Spending Review.
The response goes on to provide details of how funding allocations are determined across the NHS now, demonstrating that NHP assets will be provided funding in the same way as the existing estate. Please see the full response here.
Analysing DHSC’s response
This implies that despite plans for a significant volume of new healthcare infrastructure, there is no planned additional funding for their ongoing maintenance as part of the programme itself. Given Labour’s self-imposed fiscal constraints, it is difficult to see that the Spending Review is going to provide a material level of additional funding over and above broadly extrapolating the existing NHS budget.
The well-documented problems with the NHP began shortly after the initial announcement was made by Boris Johnson’s government, with the National Audit Office (NAO) stating that at the time of the announcement, ‘for most of the schemes the issue of affordability had not yet been considered’.
This led to the newly elected government reviewing the programme shortly after gaining power in July 2024, with the aim of putting it on a ‘realistic, deliverable and affordable footing’. Fundamentally, this review reduced the scope and extended the timeline of delivery, with the Health Secretary Wes Streeting stating in January this year that ‘the plan that we have laid out today is honest, funded and can actually be delivered’.
However, given this FOI request response, it is obvious that the programme is not ‘funded’, if considering whole life cost. While one would not expect to see a multi-decade commitment to funding at this point, the fact no consideration at all has been given for maintenance even in the period immediately after completion is astounding.
Contrasting with PPP models
Following the publication of the government’s 10 year infrastructure strategy, work is underway to explore a potential new Public Private Partnership (PPP) model for the provision of healthcare infrastructure.
Critics of the introduction of any new PPP model might argue that while PPP helps with the provision of capital, it creates an ongoing resource funding liability for the commissioning public sector entity. However, this is no different to what is being envisaged for the non-PPP delivered NHP. The important thing, regardless of the model, is to consider whole life cost, and to budget accordingly. It is not hard to see why it may be politically expedient to not from the outset estimate and communicate the whole life cost of an asset, because it will present the public with a larger figure than if only the initial construction cost is considered. This has undoubtedly contributed to accusations that PFI has been expensive in comparison to non-PFI assets, because the whole life cost, for the duration of the contract term at least, is incorporated. This also plays a role in incentivising shorter term thinking on projects, where lower upfront costs mean materials with higher maintenance costs are used, as opposed to more expensive materials that have less onerous and costly maintenance requirements.
Moreover, given the programme is already delayed and the review has pushed delivery back further, it is not clear the level of confidence anyone can have that these hospitals will be delivered on time and on budget, something the recent NAO report, ‘Lessons Learned: Private Finance for Infrastructure’, acknowledged that OECD research found was usually the case for assets constructed using PPP models.
Conclusion
Whatever the model or route chosen to procure and deliver infrastructure, honest and realistic conversations are required around the whole life cost of the asset. Too much focus is on the cost of construction, which risks diminishing the enduring value and functionality of the assets constructed, as can be seen writ large on the non-PFI public estate, the extent of the maintenance backlog, and the stories of compromised public services.
In order for the NHP to be a success, urgent consideration is required of the full funding requirement for these hospitals - without it, we risk repeating the mistakes of the past.
The exercise examining a prospective new PPP model should take heed, ensuring the benefits seen under the PFI portfolio of ringfencing maintenance over the long term are retained, which will ensure high quality and highly functioning public assets for decades to come.
Funding period
Whilst the government has indicated that this is a 10 year plan, as elaborated above, a closer examination (albeit with assumptions and in the absence of the soon to be published pipeline) indicates that this is rather a plan mostly for this parliament. See Figure 2 for the profile.
Whilst the urgency to deliver this is commendable, and it is understandable that plans become less certain as the temporal horizon expands, it is questionable whether supporting industries will examine this pipeline and feel confident to fully commit to supporting it, especially as the funding curve drops off post-2030.
If you are interested in how to start handback the right way and in how Curshaw has successfully facilitated joint handback workshops and plans on an independent and joint appointment basis that is designed to deliver efficient, effective and equitable outcomes then speak to us.