2021/22 capital funding outlined

Guidance issued by NHS England and NHS Improvement placed capital funding totalling £6.2bn in three categories – system-level allocations, nationally allocated funds and other national capital investment.

In total, system operational capital will be £3.9bn. This includes £3.7bn to fund day-to-day capital spending, and £200m to buy new diagnostic equipment (£52m), particularly MRI and CT scanners, and address safety concerns. 

The day-to-day system capital will be self-financed by organisations in the system or by the Department of Health and Social Care through emergency loans. Systems must fund Covid response capital from this allocation, with the Department not anticipating making any further Covid capital available within integrated care system (ICS) or sustainability and transformation partnership (STP) capital envelopes.

The safety concerns focus on the need to tackle high and severe risks from reinforced autoclaved aerated concrete (RAAC), which is a key priority for 2021/22. The limited durability of RAAC, which was often used in roofs between the 1950s and 1980s, has been known for some time, but has become a more pressing issue following the collapse of roofs at a school and a shop.

Systems and trusts must also demonstrate they are appropriately prioritising critical infrastructure risk (CIR) by providing at least a proportionate increase in investment compared with the last five years. While CIR capital has generally increased capital funding envelopes overall, it will not be separately identified, the guidance said. No additional CIR or backlog maintenance funding will be available in 2021/22. However, RAAC funds will be identified separately.

Investment to improve digital maturity should also increase.

Some national programmes, such as the health infrastructure plan (Hip), are not included in system operational capital funding. Nationally allocated funds of £1.2bn will cover strategic projects that have already been announced or are under development, including hospital upgrades through STP schemes and new hospitals.

A further £1.1bn has been allocated to other national capital investments, to spend on programmes such as community diagnostic hubs, technology funding and the ongoing replacement of mental health dormitory wards.

Enhanced reporting will be introduced to glean more information on the deployment of capital at local level, for example to understand the impact on backlog maintenance levels and the age of diagnostic machinery. ICSs and STPs will be asked to explain variances against plan for key spending categories.

Delivery reporting will be implemented for categories such as RAAC and diagnostics, allowing the NHS and government to assess unmet capital needs and so target future resources. ‘It is a step towards better linking of spend and delivery, as well as maximising the use of the overall NHS capital envelope,’ the guidance said.

System performance will be monitored monthly, and the guidance stressed the importance of accurate and realistic forecasts for capital spending in-year. Systems will be expected to agree local action to address potential overspends against plan, where indicated in the monthly reports. The centre expects a flatter profile to the spending with less ‘end-loaded spend’.

Trusts have been warned against local capital overspends, which could reduce the spending pot available to other providers, and funding available nationally via the Department. As in 2020/21, spending above the allocated capital envelope will be considered when calculating future years’ envelopes – system overspends in 2021/22 will be deducted from 2022/23 capital funding. NHS trusts will remain subject to the process of issuing capital resource limits, with subsequent adjustments made to ensure overall ICS/STP spending limits are not breached.

Monitoring will be more granular, with the current nine capital spending categories replaced with 26. For example, the current single IT category will make way for six IT categories, including clinical systems; telephony; cybersecurity, infrastructure and networking; other software; other; and hardware. The centre will report this information using these categories, and expenditure will be subject to increased performance management and monitoring of delivery.