Taking the Temperature of NHS Estates

David Pick
With a budget increase of only 2.4%, 2010 will bring significant challenges for the NHS. Capital expenditure on buildings and facilities is likely to shrink in favour of front-line services. Sustainability and 'using what you have' are the watchwords in shaping the future of the health sector's estates.

Annual health sector budgets in real terms have increased year on year since 2001 by an average of 7.0 - 7.5% (Kings Fund Chief Economist, Prof. John Appleby). The overall budget for 2010-11 will stand at £110 billion, an increase of only 2.4% against the previous year. Capital expenditure on buildings and facilities is likely to shrink in favour of front-line services. Sustainability and ‘using what you have' are the watchwords in shaping the future of the health sector's estates.

The Department of Health (DH) and HM Treasury have stressed the importance of making best use of the NHS's already huge existing assets. We therefore anticipate many more refurbishment and conversion schemes, rather than the PFI uber-builds of the last 10 years.

There are a variety of procurement routes open to Trusts, including OGC Buying Solutions, SCAPE, ProCure21/ProCure21+, LIFT, ExpressLIFT, the Scottish Executive's hub initiative, PFI, and Designed for Life Building for Wales Framework, offering tailored solutions to best deliver the service, to meet centrally set targets and to achieve value for money.

Key drivers:

  • Delivering service
  • Maintaining service
  • Keeping spending levels comparable with European counterparts
  • Making best use of assets
  • Working smarter in an ever more demanding environment

ProCure21 (Procurement for 21st Century) has been a great success for the DH with more than £4 billion of capital works delivered since 2005. The framework is now coming to an end and will be replaced with ProCure21+, a 4-year plus 2-year framework scheduled to start in September 2010.

LIFT (£1.4bn investment) and ExpressLIFT (expected £1bn budget) are alternative PPP JV investment routes, based on revenue rather than capital investment. This is aimed initially at the Primary Care sector although the scope can potentially be widened.

The sector is also maintaining integrity on the sustainable agenda. The CRC Energy Efficiency scheme is a major focus, and drivers include:

  • Identifying opportunities for energy savings and carbon reduction
  • Assessing the costs and carbon importance of investments in energy efficiency or low carbon fuels and life cycle costs
  • Understanding the cost benefits of investing in energy efficiency as the market price of allowances change
  • Considering the impact of future growth

The DH is under pressure by government to deliver, but how this will be achieved is not entirely clear. Andy Burnham (Health Secretary) has hinted that Practice Based Commissioning is floundering, and his Conservative counterpart Andrew Lansley has suggested they would look at reinvigorating this.

A change of government would bring continued commitment to current methods of procurement, although budget figures and potential efficiency savings have not yet been detailed as policy. However, the NHS's continually evolving service will remain a priority for any government. Capital expenditure will continue, with the emphasis on efficiency and maximising existing resources.

Faithful+Gould is at the forefront of shaping responses to the challenges facing the health sector. The evolving carbon management market is critical to future estates strategy and our specialist team is actively involved with these issues.