Health Infrastructure Plan

Statement

My Lords, with permission, I shall now repeat an Oral Statement made by my honourable friend the Minister of State for Health in the other place on the health infrastructure plan.

“Health is the nation’s biggest asset and the NHS is the Government’s top domestic priority. We are backing our commitment to our NHS with record levels of funding. As part of this, today I am pleased to update the House on the biggest, boldest hospital building programme in a generation.

Through our new health infrastructure plan we are supporting more than 40 hospital building projects across the country, with six getting the go-ahead immediately—HIP 1. This includes £2.7 billion of investment that gives those six large hospitals the funding to press ahead with their plans now, alongside last Friday’s investment in technology to ensure that no CT scanner is more than 10 years old.

The six hospital trusts are Barts Health NHS Trust, Epsom and St Helier University Hospitals NHS Trust, West Hertfordshire Hospitals NHS Trust, Princess Alexandra Hospital NHS Trust, University Hospitals of Leicester NHS Trust and Leeds Teaching Hospitals NHS Trust. Under HIP 2, a further 21 schemes have been given the go-ahead, with £100 million of seed funding to go to the next stage of developing their plans, subject to business case development. The £2.8 billion of capital investment follows on from August’s £850 million for the new hospital upgrades. This included, for example, a £72.3 million investment in the Greater Manchester Mental Health NHS Foundation Trust. All this comes on top of the £33.9 billion cash increase in funding for the day-to-day running of our NHS.

The announcement represents another part of our long-term, strategic investment in the future of the NHS, properly funded and properly planned, to ensure that our world-class healthcare staff have world-class facilities to deliver cutting-edge care and meet the changing needs and rising demand that the NHS is going to face in the 2020s and beyond. Capital spend on NHS infrastructure is fundamental to high-quality patient care, from well-designed facilities that promote quicker recovery to staff being better able to care for patients using the equipment and technology that they need. It is also essential to the long-term sustainability of the NHS’s ability to meet healthcare need, unlocking efficiencies and helping manage demand.

The investment we are making in our buildings, technology and equipment is vital in itself, but it is most important because it gives our fantastic NHS staff the tools they need to do the job. Our staff are at the heart of the NHS, which is why we have invested in the NHS’s workforce. Our interim NHS people plan has set out immediate actions we will take to reduce vacancies and to secure the staff we need for the future, including addressing pension tax concerns, increasing university clinical placements by over 5,000 and bolstering the workforce.

It is only right that we invest in the buildings that staff work in and in which they provide first-class care for patients. For too long, Governments of all parties have taken a piecemeal and unco-ordinated approach to NHS buildings and infrastructure. The healthcare infrastructure plan is going to change that. In the future, every new hospital—built or upgraded—must deliver our priorities for the NHS and happen on time and in a planned way, not the current start/stop that we see.

But NHS infrastructure is more than just large hospitals. Pivotal to the delivery of more personalised, preventive healthcare in the NHS long-term plan is a more community and primary care setting from hospitals. That requires investment in the right buildings and facilities across the board, where staff can utilise technology such as genomics and artificial intelligence to deliver better care and empower people to manage their own health.

This, of course, is only the beginning. The full shape of the investment programme, including wider NHS infrastructure, digital infrastructure and wider capital investment to support the economy and the health system will be confirmed when the department receives a multi-year capital settlement at the next capital review.

This is a long-term strategic investment in the future of our NHS, properly funded and properly planned, to ensure that our world-class healthcare staff have world-class facilities to deliver care and to meet the changing need and rising demand, so the NHS can face the 2020s and beyond with confidence”.

I thank the Minister for repeating that Statement. He is getting a full range of ministerial experience today, including what I always regard as the most terrifying thing that you can ever do from a Government Front Bench—handle a Statement. I hope that we will make this as painless as it can be. However, I have to say that some clarifications need to be made and some context given.

Since 2010-11, capital spending by the DHSC has declined in real terms, from £5.8 billion in 2010-11 to £5.3 billion in 2017-18—a fall of 7%. This means that the capital budget in 2017-18 was 4.2% of total NHS spending, compared with 5% in 2010-11. This fall is explained mostly by transfers by the DHSC from capital to the revenue budget to focus on more funding of day-to-day running costs. According to the Health Foundation, the fall in the DHSC’s capital budgets has contributed to the UK having a low level of capital investment in healthcare by international standards. The UK now spends about half the share of GDP on capital in healthcare compared with similar countries and is far behind countries in, for example, the number of MRI and CT scanners per capita. So, although capital to revenue transfers have reduced capital spending, the UK would still have very low capital spending by international standards had these transfers not occurred. That is the context in which this announcement is being made.

Yesterday, the Secretary of State—and, indeed, the Prime Minister—announced that they would build 40 hospitals. I heard it myself early in the morning on the news. It has to be said that that very quickly unravelled and it turned out that, in fact, there is the money for six hospitals. So will the Minister please confirm whether the plans for the 34 other hospitals will go ahead? If so, when is that likely to happen? Like many people, I saw the Secretary of State on television, answering questions about the plans for the NHS. I thought that he was vague, to put it mildly, about where the money for this infrastructure plan will come from. What source of government money tree or money forest will be plucked to provide this plan? Given the Government have repeatedly cut capital budgets, as I have already said—by more than £4 billion in recent years—to transfer money to the day-to-day running of the NHS, can the Minister confirm that this will not happen to this new money? Also, as a point of information, this is not the biggest hospital-building programme ever. That was actually done under the last Labour Government.

My Lords, I am not my noble friend Lady Jolly, as you might have noticed. She is on holiday, so I have the pleasure of responding to this Statement. Clearly, any additional funding is to be welcomed in our NHS and will be a huge relief to those hospital trusts seeking to deliver world-class care in wretched buildings.

However, it seems the funding is inadequate compared with the desperate need. The NHS England chair, the noble Lord, Lord Prior, said that £50 billion of capital investment is required to bring the NHS estate up to scratch. In comparison, this £2.7 billion is a drop in a very large ocean. In addition, as the noble Baroness, Lady Thornton, has said, an additional £6 billion-worth of urgent repairs have been identified on the NHS estate. They too need capital funding. It is no good having political headlines when basic needs are being neglected. In that context, this seems too little and too late. Further on the funding question, we ask where the money will come from. Presumably it will be government borrowing, which will therefore have a revenue consequence. I am sure the hospital trusts want to know whether that will be passed on to them to fund, as revenue consequences from capital investment.

The next area that I want to explore is the apparent ending of the PFI funding approach, which has put such a burden on too many hospital trusts that have PFI payments on their bottom line. The IPPR think-tank published a report on this—earlier this month, I think—in which it said that NHS hospital trusts have been crippled by the private finance initiative and will have to make another £55 billion in payments by the time the last contracts end in 2050. Those payments relate to an initial £13 billion of private sector-funded investment in new hospitals, so the approach will cost the NHS in England a staggering £80 billion by the time all contracts come to an end. Some trusts are having to spend as much as one-sixth of their entire budget—I stress, one-sixth—on repaying debts due as a result of the PFI scheme. Can the Minister supply the evidence that has resulted in such a U-turn on how capital builds are now being funded? Presumably, the Government are changing from a PFI approach to their own funding approach. Have they decided that PFI funding is not value for money? If such a conclusion has been reached, can the Minister assure the existing PFI hospitals that additional funding support will be provided to those hard-pressed trusts?

My Lords, I thank noble Lords for the warmth of my welcome to this initiation in the art of Statement-giving; I shall try my hardest to answer as many questions as were put. They were terrific questions.

I start by reiterating the point made by the noble Baroness, Lady Pinnock, which is that this is fabulously good news. An announcement of an investment such as this does not come often. It is a cause for celebration and something in which we should take pride as a country.

The question of new money is always important when there is a major spending announcement, so let me cut to that first of all. This is additional funding; it is not moving cups around, and it comes directly to the department’s capital budget, the CEDL, which is being increased accordingly. The vast majority of the funding will be in the form of public dividend capital, which is commonly understood as a grant, but the one caveat is that where schemes have related land disposals the proceeds from those land disposals will contribute to the scheme funding.

The funding for this investment is £2.8 billion; £2.7 billion is for the six schemes that I mentioned and £100 million is seed funding to assist the further 21 HIP schemes in developing their plans. That is very important money and I shall come back to it later in my response. Future funding will of course be agreed with the Treasury in due course.

On the number count, the noble Baronesses, Lady Thornton and Lady Pinnock, raised questions about the 40. Let me explain. Six new hospitals are getting the full go-ahead now and 21 more schemes will get the green light at the next stage of developing their plans. Some of those schemes are multi-site: therefore, there are 30 hospitals within the 21 schemes. That is why we get to a number that is over 40.

Maintenance was brought up. It is critically important. We can invest all we can in the staff and the science but, if we do not have good infrastructure—clean, non-leaking hospitals with wi-fi and the latest technology—the system will not work properly. I think that the NHS acknowledges that its infrastructure has fallen behind. This investment is a recognition of that fact. There is a maintenance backlog: the Government have put in £3 billion in capital funding to fix the leaking roof. We provided an additional £1 billion in August, which will enable the NHS across the country to take forward existing plans for more investment and to address urgent capital issues in line with local priorities. The NHS’s full capital needs will be provided for as part of the DHSC’s settlement in the next capital review.

My Lords, I thank the Minister for presenting this important sum of money to the health service. I am a patron of Best Beginnings, a perinatal service supporting mothers around the births of their children. I will stretch a little beyond the Statement and ask him about the future for health visitors. Since health visiting was placed under local authority responsibility and taken out of direct health service responsibility in 2014-15, there has been a serious decline in health visitors. It seems as though the Government have their chequebook out at the moment so, as he begins his brief, will he consider looking at the future for health visitors and what might be done to stem their loss?

I thank the noble Earl for his helpful question. Members of my family have benefited from the work of health visitors and I share his concerns about their role and their funding. The decline of health visitors is not part of the Statement given by the Minister earlier, but I will be sure to pass on the noble Earl’s comments, as requested.

My Lords, the title of the Statement, “Health Infrastructure Plan”, is a slight exaggeration, but let us welcome it for what it is. The Government have a woeful record, so anything they bring forward on the health service has to be welcomed. Can I press the Minister on some of the figures? I accept that these are quite difficult. Is there agreement that six hospitals will be rebuilt, or modified to that extent, and that the cost will be somewhere in the region of £2.7 billion? I think that was the figure. If that is the case, what about the other 34 hospitals? If they were all found to be suitable, are the Government guaranteeing that they will be funded for the same level of rebuild as the six announced today? If I do the maths very quickly, I believe that will cost in excess of £20 billion. Will the Government give an assurance that the money is there? The Prime Minister has promised us 40 new or severely modified hospitals, so the House is justified in asking this.

My second question is about the interim people plan. We desperately need not an interim plan but a fully fledged work plan on people. We are short of not only nurses but doctors and almost every single profession in the health service. This means it is very difficult for the service to continue. Looking at the issue of nurses—

Come on!

There is plenty of time; there are 20 minutes. I want to ask this question. I know it is uncomfortable, but the Government are responsible for the reduction in and the shortage of nurses. Will the Minister apologise and say that they got it wrong when they cut the number of nurses in training by in excess of 10,000 after 2010? We have not made up for that. I finish by suggesting to the Minister that he reinstate the nurse training bursary scheme, so that we do not have to rely completely on the international recruitment of nurses but have our own nurses indigenous to this country.

My Lords, the noble Lord raises an important question about how infrastructure spending is approved and green lit. He is quite right that today’s announcement sees the final green light given to six hospitals and a further 21 projects—some of which are multisite projects—are on the runway but are not 100% green lit. That is because their plans are not yet ready, but there is a full intent by the Government to work with the trusts involved to develop those plans to final proposals and to have the money available to finance those plans in their current form. It has been publicly put out by NHS England that the rough current estimated cost of those projects is around £10 billion and that that money is put aside and allocated for those projects, as long as they meet the requirements of infrastructure scrutiny.

My Lords, I welcome what my noble friend said from the Dispatch Box in repeating the Statement. I say that as one who became Secretary of State in 2010. Although the noble Baroness, Lady Thornton, seemed to think that I had a large capital budget, it did not seem like it at the time. It was consistently underspent, because the spending of many of the trusts was determined by their resource. Capital and resource have to travel hand in hand. What is really important, as I hope my noble friend will confirm, is the commitment to future increases in resources for the NHS. The revenue alongside the capital is really important. It got to the point where, as we know, capital was raided to support revenue. Now we have a capital budget that will be supported by increases in the revenue budget.

If the noble Baroness, Lady Pinnock, had spent 10 years visiting hospitals as I did as shadow Secretary of State and then as Secretary of State, she would not ask, “How do you know which hospitals need rebuilding?” I stood in many of these hospitals, such as Epsom and St Helier, and looked at them. Why not Huddersfield Royal Infirmary? I went to Huddersfield and the truth is that it has never agreed what it wants to build, whether at Huddersfield or elsewhere. Some decisions have to be made before putting forward a capital project.

May I ask my noble friend a key question? We are abandoning PFI. The largest capital building programme that Labour talked about is a bit of an own goal, because it was all PFI and that is no good, but we must not throw the baby out with the bathwater. What was proven before the PFI project was extended and went wrong was that fixed-priced contracts deliver greater efficiency and that the NHS is not necessarily very good at building new hospitals. Can we make sure that we get some really good fixed-price contracts for these projects? They are funded through PDC and land sales, which is great, but can we make sure the NHS brings in additional expertise to make sure we have good designs and cost-effective delivery? In my experience, that was not available within the NHS. We do want not to go back to the days when every hospital invented for itself how to build a hospital. We want to go beyond that.

My noble friend makes powerful points. His point on income over capital is extremely well met. If it were the case that the income of the NHS had been driven down last year and we plonked a large amount of capital on top there would be a really big problem, but this capital announcement is on top of a record cash increase up to £33.9 billion a year by 2023-24 to the NHS budget. It feels, to the Government at least, that this is the right balance between income and capital.

However, the implementation of this infrastructure plan is definitely challenging and it is worth stepping back and thinking about how we will implement a massive step change in the capital infrastructure of our hospitals. The Government are aware of two areas where there is a need to focus resources. The first, as I referred to earlier, is on the actual design and planning of hospitals to ensure that they are to the highest standards and take into account the long-term needs of the community. Secondly, as my noble friend mentioned, NHS trusts will need greater capability in the management of contracts and the building of the hospitals. We will put aside money and expertise to ensure that those resources are in place.

I declare an interest as the CEO of the Energy Managers Association. Many of my members are energy managers of hospitals. I echo the points made about backlog maintenance, which is a massive problem in hospitals. I urge the Minister to look at the work done by Modern Energy Partners looking at the public estate and how we can make hospitals more energy efficient. The major problem raised by many noble Lords is that an MRI scanner uses enormous amounts of energy and it is very much easier to get money for replacing an MRI scanner than for a pumping or heating system. Hospitals are incredibly complicated structures and many are made up of buildings of many ages, from the Victorian period through to the present—some of the worst are PFI, obviously. Will the Minister say what money will be reserved for dealing with backlog maintenance of energy? If we are to meet our climate change commitments as set out in the Net Zero report by the committee chaired by the noble Lord, Lord Deben, we have to look at the public estate and how we are going to make it more energy efficient. The energy budget is often overlooked in these calculations.

The noble Lord makes a powerful point which opens up one’s thoughts about how this infrastructure build is going to be implemented and the opportunities for applying the latest technology not just in energy, but in the way the employment environment can be shaped for NHS employees, travel, biodiversity and the range of challenges we face as a society. This infrastructure plan will be a massive opportunity to put to work ideas such as those that he talked about. I do not know the work of Modern Energy Partners, but I will be sure to pass it on to the Minister.

My Lords, existing capital budgets cover not just equipment and buildings but research and development so, every time capital budgets are raided to bring revenue budgets into balance, we see not only a further backlog in buildings, equipment and maintenance but less for research and development. If the Government are now so assured that the amount going into both revenue and capital is better, what accountancy rules will they bring about to ensure that there will not be mass raiding of capital budgets to prop up revenue budgets? If there are not going to be changes, how can we have any guarantee that capital is not going to be raided for revenue in future?

I thank the noble Lord for a detailed question. I cannot possibly pretend to know the details of the accounting rules that govern these kinds of arrangements, but I will be glad to write to reassure him on this matter. All I can say is that by designing and publishing a detailed long-term plan, the scope for fiddling around and moving money from one bucket to another is greatly diminished.