Budget 2024: Capital projects - More checks than balances?

The 2024 Budget brings welcome capital investment to the NHS, but at what price to timely delivery?

With a headline commitment of an additional £3.1 billion in capital spending, the budget was a welcome boost to NHS Capital resources, even when Health Service Journal discovered that the prior year’s capital-to-revenue transfer, means the boost is actually closer to £2.2 billion. This additional funding underscores the government’s recognition of the critical need for modernisation across NHS infrastructure. Yet, despite the clear need for ambitious and significant infrastructure investments, the budget may also signal an unwelcome increase in governance measures surrounding capital project delivery.

The Governance Burden: Approval layering in the NHS

The Budget announcement states:

“The government is reforming how it plans, assures, delivers, and evaluates capital spending and will underpin these reforms with new and strengthened institutions. These changes will provide greater certainty and greater assurance that investment is high-quality and well delivered, including by:

• Publishing a 10-year infrastructure strategy alongside Phase 2 of the Spending Review, outlining the government’s long-term approach.

• Setting five-year capital budgets and extending them every two years at regular spending reviews to avoid funding ‘cliff edges’ and give more certainty.

• Increasing the transparency of investment decisions by publishing business cases for major projects and programmes.

• Establishing the National Infrastructure and Service Transformation Authority (NISTA) to drive more effective delivery of infrastructure across the country. Alongside existing assurance mechanisms, NISTA will have an enhanced role in supporting major projects, including validating business cases prior to HM Treasury funding approval.

• Formally launching the Office for Value for Money (OVfM), with the appointment of an independent chair.

• Working with the NAO to benefit from their scrutiny of capital projects and learn lessons which can be applied to future projects.”

Source: HM Treasury, Autumn Budget 2024, paragraph 1.30, my emphasis

These reforms may appear to be helpful, yet, by adding the NISTA and OVfM, the process risks becoming slower and more cumbersome in practice. It's already clear that NISTA will have a role in "validating business cases prior to HM Treasury funding approval". Will they also add yet another set of guidance to follow (and which we will need to conform to all the other guidance). Maybe they will aggressively shepherd good projects through the system, accelerating progress - but in my 30 years of working on infrastructure projects, I've rarely seen government bodies achieve this even if they intend to. A rare contrary example is the Queensland Office of the Coordinator-General.

Meanwhile (para 3.22) the OVfM will offer "scrutiny of investment proposals to ensure they offer value for money". Does that include capital projects?

NHS capital projects are already subject to a multi-layered approvals process that requires navigating up to eight bodies or sets of bodies for approvals across multiple stages. Typically, NHS capital projects require endorsement or approval from the sponsoring Trust Board, Commissioners, Integrated Care Boards (ICBs), other local providers (in practice), Regional and National NHS England, and, for large projects, the Department of Health and Social Care (DHSC) and HM Treasury. This sequence is repeated across the three to five formal stages of business case development ([PCBC, DMBC,] SOC/PBC, OBC, and FBC). Each layer and each body involved in this process brings its own set of requirements, often extending the timeline for approvals to between seven and ten years — even for projects that have significant support. And as I've pointed out before, if your job is to review business cases, isn't it an implicit, unstated part of your job to find problems with them?

Source: Burrum River Advisory

Increased Governance: A Benefit or a Barrier?

In this context, we have to ask: Is further governance is really needed? NHS Trusts routinely face delays while waiting for approvals from various levels of oversight, which hampers their ability to advance critical projects and modernise facilities. For an NHS hospital project, every additional layer of governance can mean years of delay, during which business cases risk becoming outdated, construction costs can increase, and infrastructure remains inadequate. The introduction of NISTA and the OVfM with a role covering how Government "plans, assures, delivers, and evaluates" investment raises critical questions about whether these bodies will add genuine value to NHS capital spending or merely exacerbate existing barriers.

Distinguishing NHS Oversight from the COVID-19 Procurement Experience

The drive for more governance in capital spending, particularly through new institutions, appears to me to be at least partially informed by the controversy around COVID-19 procurement practices. However, the fast-track COVID-19 response was managed at a national level and bypassed the conventional NHS approval channels, which are designed specifically to safeguard resource allocation for local Trust projects. We should separate lessons from this crisis response from the reality of NHS capital procurement, where Trusts are subject to gruelling reviews from multiple levels of governance at every stage of a project. Introducing further layers of assurance, if in fact that is the proposal, might provide ‘greater certainty’ on paper, yet it risks stalling projects in approvals inertia when NHS sites are in dire need of immediate action.

Focus on Action: Meeting the Infrastructure Challenge Head-On

The reality of NHS infrastructure needs could not be more urgent. The RAAC risk in hospital buildings, coupled with an escalating maintenance backlog, poses real safety risks, and delays in infrastructure improvement have meant that clinical incidents, linked to infrastructure failure are not unusual. To attract top clinical talent, drive excellence in patient care, and remain competitive in life sciences, the NHS needs world-class infrastructure, not more procedural delays.

I'd argue that we have too much scrutiny and review by too many layers of approval. Meanwhile, those reviews are too focused on finding problems, not getting projects done. That's not the fault of the people involved. If I'm asked to review a business case, I too look for the weaknesses that might trip a project up - it's part of the brief. But perhaps the brief for our approvals bodies needs to be reframed?

Conclusion: The Case for Streamlined Oversight

While the Budget’s capital investment commitments are indeed welcome, streamlining the oversight process for NHS capital projects, and not adding to it, could help the NHS to actually deliver the investment it desperately needs. In a system already dense with approval layers, adding the NISTA and OVfM, if that's the proposal, could slow down rather than support NHS infrastructure goals. For capital investment to truly translate into improved facilities and care, governance should enable progress, not stand in its way.