NHS Confederation submission to Public Accounts Committee inquiry on government’s use of private finance for infrastructure

The government’s 10-year infrastructure strategy offers an opportunity to address the historical underinvestment in NHS capital. NHS leaders estimate the NHS needs an additional £3.3 billion per year over the five-year capital window at Spending Review. Such investment is essential to bridging the funding gap and achieving the 2 per cent annual productivity growth required by the NHS Long Term Workforce Plan.

Critical to this strategy is enabling Integrated Care Systems (ICSs) and provider trusts to access private investment. We call for the government to change national guidance to allow new routes for private investment and support an attractive investment market. 

Private investment models used in appropriate circumstances can streamline the investment process by transferring risk to the private sector, enabling faster project initiation which brings projects into service early and avoids higher construction costs due to inflation. The National Audit Office’s legitimate concerns with the negotiation and management of Private Finance Initiatives (PFI) do not preclude future private models but rather offer valuable lessons.

The New Hospital Programme (NHP) shows its own version of poor value for money, as projects have continued to rise in cost due to delays and concerns from HM Treasury. A well-negotiated private contract can compete with public procurement and also free up public funds for urgent but overlooked needs such as the huge maintenance backlog.