New Hospital Programme: Inquiry finds no confidence Government will deliver on promises
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- PAC report calls for swifter action to address crumbling concrete
in hospitals - Warns that future hospitals are at risk of being too
small, risking long-term disruption The Public Accounts Committee
(PAC) has no confidence that Government will deliver the new
hospitals it promised. In a highly critical report published today,
the PAC voices extreme concern at the New Hospital Programme’s
(NHP) lack of progress, given the prominence and importance of the
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- PAC report calls for swifter action to address crumbling concrete in hospitals - Warns that future hospitals are at risk of being too small, risking long-term disruption The Public Accounts Committee (PAC) has no confidence that Government will deliver the new hospitals it promised. In a highly critical report published today, the PAC voices extreme concern at the New Hospital Programme’s (NHP) lack of progress, given the prominence and importance of the 2020 commitment to build 40 new hospitals by 2030. Very little has happened from the perspective of patients since the Government’s original commitment. The report warns that it is highly unlikely even to construct the 32 new hospitals that it is now aiming to complete by 2030, after the commitment to build all 40 by then was abandoned in May. The PAC is calling for the Department for Health and Social Care (DHSC) to urgently examine how the NHP can be made to deliver some tangible results for patients. The report also makes a number of recommendations to support swifter action to tackle reinforced autoclaved aerated concrete (RAAC) in hospital buildings. By early 2023, DHSC had identified 41 NHS buildings with RAAC. If rebuilding of the seven hospitals constructed entirely of RAAC is not sped up, some hospitals may have to close before replacements are ready. The NHS had a record maintenance backlog of £10.2bn in 2021-22, and the report finds that the underlying cause of this crisis is the raiding of capital budgets for day-to-day spending. The Government has failed to consider the long-term consequences for services and patient care of diverting billions of pounds in this way. Under-investment in the NHS estate has now resulted in a situation that requires urgent action, and DHSC should not reduce planned capital investment to meet day-to-day needs in future. There is a risk that future hospitals are being designed to be too small. Current plans assume increasing demand for care from a growing and ageing population can be tackled by high levels of bed occupancy (95%), large reductions in patients’ average length of hospital stay, and a significant, recurring 1.8% per annum transfer of patient care out of hospitals into the community. These assumptions are unrealistic, given the NHS’ high levels of bed occupancy, relatively short average lengths of stay, and great strain on primary and social care. Making these assumptions more realistic is likely to increase the cost of new hospitals and require a further reset of the NHP. But the report finds that there currently appears to be insufficient funding for DHSC to build all the hospitals it plans, to an adequate size, by 2030. Dame Meg Hillier MP, Chair of the Committee, said: “The physical edifice that is the NHS is quite literally crumbling before our eyes. There was nothing inevitable about this heartbreaking crisis. It can be laid squarely at the door of the decision to raid budgets reserved for maintenance and investment in favour of day-to-day spending. The sharp distinction between capital and revenue budgets exists for a reason. We are now seeing the consequences of this short-termism visited on patients and services. “In such circumstances, then, it is bitterly disappointing to report on the current state of the NHP. Quite aside from the fact that the planned new hospitals risk being too small for future purposes, funding does not even appear to be in place to construct them in time, all underpinned by failures of basic record-keeping and fresh and urgent concerns over RAAC. Though we have no confidence that the NHP will deliver on its current promises, we hope that the recommendations in our report help to get it back on track - for the sake of all citizens who desperately need the NHS to get well soon.” PAC report conclusions and recommendations We are extremely concerned by the lack of progress the New Hospital Programme has made in the three years since its creation. In 2020, when government committed to build 40 new hospitals by 2030, DHSC named 32 of the sites and provided details of what patients could expect in each place. From the perspective of patients, however, very little has happened since. By October 2023, no new hospitals had yet opened, and, in May 2023, DHSC abandoned the idea of building all 40 by 2030. Given the prominence and importance of this commitment, progress has been worryingly slow. Furthermore, with a very large number of hospitals planned to be in construction simultaneously in the last years of the decade, we have no confidence that even the reduced target of 32 new hospitals is achievable by 2030. Recommendation 1: DHSC should urgently examine how the programme can be made to deliver some tangible results for patients. This should include considering:
DHSC has failed in one of its most basic duties by keeping no proper record to justify its final selection of schemes for the programme. DHSC and NHS England officials carried out an assessment exercise which recommended 20 schemes for inclusion in the Health Infrastructure Plan (HIP), a 2019 programme that became the main basis for selecting schemes for NHP. In finalising the schemes for announcement, DHSC removed seven of the 20 schemes from the shortlist for HIP and added another 14 that had not been recommended. DHSC told us it was satisfied that those decisions were made on an appropriate basis, but it admitted that no documentation whatsoever existed to explain the decisions. We are troubled that a gap like this can occur regarding such an important investment, particularly since at least some of the seven excluded schemes are known to have an urgent need for major investment or rebuilding. This Committee has previously expressed concern about a lack of evidence to justify scheme selection, and a lack of transparency in selection processes, for the Towns Fund in 2020 and for levelling-up funding in 2022. Recommendation 2: For major programmes that involve the selection of schemes from a long list of potential candidates, government should always publish information on selection criteria before decisions are taken and should always be able to provide transparent written evidence to demonstrate why successful schemes were selected. Recent events have shown that DHSC will need to go faster with its efforts to deal with reinforced autoclaved aerated concrete (RAAC) in hospitals. The hospitals named in the government’s October 2020 announcement of NHP included only two entirely constructed from RAAC. Five other RAAC hospitals that DHSC knew about were not included then, only to have to be added later. By early 2023, DHSC had identified a total of 41 NHS buildings with RAAC. Removing or mitigating the risk of RAAC is disruptive, complex and expensive. DHSC has set aside a total of £685 million to fund RAAC works up to 2024-25 and has committed to removing all RAAC from the NHS estate by 2035. After the scale and impact of RAAC problems in schools escalated in August 2023, NHS England contacted trusts to determine whether there was more RAAC than it previously knew about. After our evidence session DHSC reported that, as at 17 October 2023, there were 42 hospital sites (at 39 NHS trusts) where RAAC needs to be removed. Rebuilding the seven RAAC hospitals by 2030 will be extremely challenging, yet there is a serious risk, if these projects are not accelerated and prioritised, that some hospitals may have to close before replacements are ready. Recommendation 3: DHSC should revise its plans for managing the RAAC crisis, including:
DHSC must quickly complete and test its standardised hospital design to avert further delays to hospital construction, and to reduce the current high risk of cost and quality issues in years to come. DHSC has taken too long to get its Hospital 2.0 design off the drawing board. It continues to be optimistic that the design and a related new commercial model will reduce future construction costs by 25% and could even reduce the total time taken to develop new hospitals from 11 years to six. Yet, until the design is complete and has been tested, these claims are at risk of being just pipe dreams. Unlike Denmark’s programme for building ‘super hospitals’, DHSC has not allowed time for proper piloting of its new standard hospital. Failure to pilot thoroughly could store up problems for future generations because of defective or poorly thought through standardisation. Recommendation 4: For the twin purposes of piloting and making progress, DHSC should aim to be ready to start construction during 2024 of at least one early scheme that uses its standardised hospital design, with a particular focus on trialling new clinical infrastructure such as standardised operating theatres. DHSC is at risk of locking in a standard design that will result in future hospitals being too small, which could lead to significantly greater expenditure and disruption in the long run. The version of Hospital 2.0 that DHSC used in its business case for NHP, and the basis on which HM Treasury has provided indicative future funding, is founded on unrealistic assumptions. It assumes that increasing demand for hospital care from a growing and ageing population can be mitigated by a very high level of bed occupancy (95%), substantial reductions in patients’ average length of stay in hospital, and a significant, recurring 1.8% per annum transfer of patient care out of hospitals into community settings. The NHS already has very high levels of bed occupancy and short average lengths of stay relative to the health services of other advanced nations. It is common knowledge that many parts of the primary and social care sectors are under great strain. Making these assumptions more realistic, at either a programme or scheme level, is likely to increase the cost of new hospitals and make the programme more expensive, meaning this is an issue that needs urgent attention and may well require a further reset of NHP. Recommendation 5a: DHSC should amend its Minimum Viable Product version of Hospital 2.0 so it does not result in future hospitals that are too small, and should set out clearly how these future hospitals fit into its assessment of total required hospital capacity nationally and by region.
There appears to be insufficient funding for DHSC to build all the hospitals it plans, and to an adequate size, by 2030. HM Treasury initially allocated £3.7 billion to NHP for the period up to the end of 2024-25 with no indication of what further money it would give up to 2030. In early 2023, it finally set an indicative maximum for capital funding of £18.5 billion for the following six years, making a total of £22.2 billion. Funding is needed for the schemes to be completed by 2030, as well as for early works on the eight schemes that will now complete after 2030. Long experience suggests that many schemes in NHP will come in over budget. Schemes in NHP’s cohorts 1 and 2 have already seen forecast costs increase by 41%. Getting the standard design of future hospitals right may also have the effect of increasing estimated costs. Other factors such as high inflation, insufficient capacity in the construction industry, and the need for many more factories to manufacture modular units offsite could drive up costs further. Recommendation 6: DHSC should be realistic about the likely cost of schemes and what can be afforded by 2030. As well as addressing the shortcomings in its Minimum Viable Product version of Hospital 2.0, it should engage further with the construction industry to understand and manage likely capacity constraints. It and HM Treasury should agree explicitly and in writing whether the pre-2030 costs of eight delayed cohort 4 schemes are to be met from the current agreed funding envelope. The Programme is over-reliant on consultancy services. NHP has depended heavily on external consultants since its creation, with 62% of posts filled using consultancy services in February 2023. DHSC estimates it will spend a further £842 million on consultancy services between 2023-24 and 2030 31. Some use of consultancy is to be expected on major construction programmes, but, as well as being expensive, over-reliance risks a lack of continuity and failure to build in-house capability. NHP aspires to be a long-term programme of hospital improvement well beyond 2030, so it is vital that the public sector itself acquires and retains the right skills. Recommendation 7: DHSC should work with HM Treasury and the Cabinet Office to develop a strategy for attracting into the civil service and retaining there the skills it needs to run a rolling programme of hospital construction; it should write to the Committee by March 2024 setting out what it will do differently in future. The raiding of capital budgets in the recent past is an underlying cause of the estates crisis the NHS is now in. As this Committee has highlighted several times, DHSC has for some years focused on short-term financial viability in ways that failed to consider the long-term consequences for services and patient care. DHSC diverted £4.3 billion of NHS capital funding from planned capital spending to day-to-day spending between 2014-15 and 2018-19; and by 2021-22 there was a record maintenance backlog of £10.2 billion. Under-investment in the estate has resulted in a situation that now requires urgent action. This includes but is not limited to the crisis with RAAC. Working in out-of-date buildings that have not been well maintained also makes it hard for the NHS to modernise and recover its performance to the standards required in the NHS Constitution, and is only likely to exacerbate problems in attracting and retaining staff. Recommendation 8: DHSC should not reduce planned capital investment to meet day-to-day spending needs in future; if officials were to consider doing this again we would expect the Permanent Secretary to write to Ministers explaining the likely real-life consequences of such a course of action. |