Infrastructure report: Rebuilding the health service

Play a word association game with the term “infrastructure” and it’s a fair bet that the NHS will not be the first thing that springs to mind. The remit of the National Infrastructure Commission, which advises the government, covers transport, energy, water and sewerage, flood defences, digital and communications and waste. Indeed, infrastructure investments in the March Budget included boosts for roads and flood defences.

The Budget was a clear signal of intent. Quite rightly, a package of support was announced to help the country cope with the coronavirus outbreak—now an all-consuming threat. While welcome investment in England’s hospitals was also reaffirmed, this fell short of what is needed. The NHS is as much a crucial part of Britain’s infrastructure as the rail and road network, and the health service’s own infrastructure is in a pretty sorry state.

Compared to other developed countries, the UK spends much less on healthcare capital, which includes spending on new buildings, equipment and IT, maintenance and research and development. Just 0.3 per cent of GDP goes on health infrastructure compared with an average of 0.5 per cent in similar industrial countries. The impact of this lower investment is felt daily in the physical capacity of our services. The UK has just 2.5 hospital beds per 1,000 of the population—13 per cent fewer than in 2010 and less than two-thirds the average of the EU14 group of countries that joined the EU before the 2004 expansion.

Beyond its buildings and beds, access to diagnostic equipment is also low by international standards. The UK has fewer MRI and CT scanners per head than comparable countries; and less than a quarter of the number in Germany.

Through the last decade of austerity, the NHS prioritised day-to-day spending pressures and capital investment budgets were raided. Pressures on government capital funding have been compounded by changing attitudes to private finance. Over recent decades major infrastructure projects in the NHS were largely funded by the Private Finance Initiative (PFI) rather than public sector capital investment. Use of PFI declined sharply after 2010 and in 2018 was formally discontinued. This had a significant impact. Between 1999 and 2010, PFI funded 101 completed projects providing around £1bn a year of extra infrastructure investment for the NHS.

The National Audit Office reports that too much of the NHS estate doesn’t meet the demands of a modern health service (14 per cent predates 1948). The £6.5bn backlog of maintenance is large and growing. Research from membership body NHS Providers gives a sense of the impact of this backlog—power failures leading to cancelled outpatient appointments and operations, wards closed due to subsidence, mental health trusts worried about dangerous ligature points across their facilities that put patients at risk.

The NHS also needs more capacity. After decades of declining numbers of hospital beds, the head of the NHS, Simon Stevens, has acknowledged that the health service now needs more beds.

A long-term infrastructure investment plan for the NHS can’t come quickly enough. So far, the government has earmarked £2.7bn towards six new hospital schemes, which will be invested over several years. The current commitment falls well short of what would be needed for UK investment to reach the average of other comparable countries. To match the international average in England, capital spending would need to rise by at least £2bn a year over the rest of this parliament.

The ambition is for 40 major hospital schemes to proceed over this decade. It’s difficult to provide robust estimates of the cost of 40 hospitals, as the cost of building any individual hospital varies enormously. The average cost of the current six hospital schemes is £450m—if the average cost of the remaining 34 were the same, building 40 hospitals would require around £18bn of dedicated capital investment, phased over the decade. Of course 40 new and improved hospitals would be hugely welcomed, but this needs to be seen in context. It would be a significant increase in NHS infrastructure investment, but still much less than in previous times; in the first three years of the 1962 NHS Hospital Plan, 95 major schemes were completed, while 66 new or substantially remodelled hospitals and 84 other major schemes had been started.

The NHS needs to modernise its hospitals and expand its capacity; but this alone would not be sufficient to deliver effective health care for the 21st century. Alongside the hospital upgrades, the NHS needs major investment in IT infrastructure and more diagnostic equipment. Health Secretary Matt Hancock has made using digital technology and artificial intelligence to transform health and care a priority. But NHSX (the new body responsible for technology) is clear that the NHS has “hopelessly old laptops and clunky hardware.” “A quarter of NHS providers still have no electronic patient records.”

"A quarter of NHS providers still have no electronic patient records" 

The NHS infrastructure plan also needs to go beyond hospitals and kit and include funding for GP services. The government has agreed hugely ambitious plans to transform general practice, creating new primary care networks employing 26,000 more physiotherapists, pharmacists, paramedics and social prescribers. Without this change the government won’t meet its manifesto commitments to improve access to GP services. But in much of the country, particularly in more deprived areas, this will require funding to expand and modernise the primary care estate. Historically the GP estate has been largely privately funded—as GPs are independent contractors—but it is hard to see a predominately privately financed route working today. Extra public funding will be needed.

Modernising the NHS’s creaking infrastructure is vitally important if the health service is to continue to deliver effective and efficient care, but it also has a wider impact. There is a growing recognition that NHS infrastructure plays a vital role in shaping employment and economic activity. If NHS services move from a small town to the nearby city centre hospital, this can have a substantial effect on the footfall for local shops and businesses. In employment, around one in eight of us work in health and social care—rates that are even higher in more deprived communities. Where those jobs are located, how people from local communities are recruited and how the NHS behaves as an employer all shape life chances and affect local labour markets.

After over a decade of underinvestment in NHS infrastructure, the government’s focus on modernising and upgrading England’s hospitals is welcome. However, the commitments made so far fall short of a comprehensive plan. The funding announced is a modest down payment on the NHS’s infrastructure needs. Expectations for July’s spending review are high.