Much ado about not very much?

John Lister looks at the concrete proposals in Labour’s 10-year Capital Plan for the NHS

After two years’ consideration, the reality of the Labour plan to deal with crumbling buildings and the growing backlog of maintenance bills is a cash injection of just 1.5 billion per year – not enough to keep up with the growing maintenance bill and meaning it would take 20 years to bridge the 37 billion gap between England’s health investment and that of peer countries.

Over the past 16 years we have got used to the kind of vacuous “plans” that were issued by Tory health ministers that kept re-announcing already inadequate sums of money, even as the fabric of many of England’s hospitals began to visibly crumble.

Keir Starmer’s government was elected in 2024 promising change. And the NHS 10-year capital plan for health and social care, published almost two years after that election victory might have been expected to embody that change.

Instead, it is the last gasp of a failed government, published just before Starmer himself stepped down.

Underwhelming and overselling

It combines continuity of tight-fisted austerity with just enough criticism of the level of underfunding since 2010 to present a flimsy veneer of aspiring to do better. Where honesty and transparency should exist around impact and planning, there’s silence, evasion, obfuscation, and exaggerated bravado.

In the ministerial foreword Health Minister Karin argues:

“People voted for change in 2024 because they could see the consequences of this lost decade with their own eyes – crumbling buildings, faulty technology and mental health patients being accommodated in Victorian-era cells.”

She then hugely exaggerates what Labour has done so far to deal with these problems of under-investment:

“The Chancellor has provided for the most ambitious capital budget in the history of the NHS, and we are cutting the red tape to get spades in the ground while ensuring every penny of taxpayer money is well spent.”

The Executive Summary likewise gives a vastly inflated view of progress:

“We are rebuilding the physical backbone of the healthcare system – hospitals, neighbourhood health facilities, digital infrastructure, research capability and resilience – and reforming the way capital is planned and delivered so that patients and staff feel the benefits quicker.” (emphasis added)

Sizing a long-term problem

In the Plan itself, Section 1 (Why capital matters) also emphasises the extent to which investment has fallen behind – “amounting to a £37 billion shortfall compared with international peers since 2010.”

Of course, even larger estimates have been made of the level of under-funding since 2010, when David Cameron’s government slammed the brakes on funding.

So does the government intend to bridge this substantial gap through annual above-inflation increases, as the Blair and Brown governments did between 2000 and 2010?

No. The Plan highlights the shortfall’s scale, but plans to increase spending to £37 billion exceed the Starmer government’s limited goals. Without a new Capital Plan soon, this likely applies to the Burnham team too.

A growing backlog – solutions?

The Plan highlights a rising backlog of maintenance tasks in England, now £15.9 billion—over three times the 2015 figure of £4.9bn, though it claims it has “more than doubled.”

While exposing the budget gap is easy, taking concrete steps to bridge it is harder; the 10-year Plan doesn’t attempt this. It’s often simpler to inflate spending claims than to increase actual funding. From early on, the Plan reveals how far ministers are from addressing the issues raised. Table 2 shows NHS capital spending was flat from 2010/11 to 2018/19, then increased by 19% to £7 billion in 2019/20. After the Covid year in 2020/21, it rose from a new base of £9.1bn—up 30%. By July 2024, under Labour, it had increased another 26% to £11.5bn.By contrast Labour’s capital spending and plans up to 2030 increase by 16% to a nominal £13.3bn in 2025/25, by less than 4% to £13.8bn in 2026/27, goes DOWN next year to £13.7bn, then up 6.6% to £14.6bn in 2028/29, and up less than 3% to £15bn in 2030.

Undermining their own claims

If this seems underwhelming as a change of gear, the Plan’s own graph also shows the real terms value of the capital budgets to come – and by how much the real increase has been exaggerated.

Instead of the apparent rises, the real value of last year’s budget increased only 5% to £12.9bn: the graph then shows it flatlining and falling, until a rise of less than 5% to £13.2bn and then a minimal rise to £13.3 bn – well below the “record” £15bn.

The reality (unless Andy Burnham and Yvette Cooper persuade the Treasury to release significantly more money) is that over the five years the Labour Plan would increase capital budgets by £12.9 billion in cash, or just £7.4bn in real terms – an average of just £1.5bn per year: that’s not even enough to keep pace with the growing backlog bill for maintenance. At this rate of change, it would take over 20 years to bridge the £37bn gap between England’s health investment and peer countries.

While the pot’s money is worth less than ministers claim, the problems are bigger. Section 2 of the Plan shows Labour’s reforms involve extra costs in investment and running expenses, exposing the poor condition of many GP practices. “our primary and community care infrastructure is not currently well equipped to accommodate this shift. Half of GPs regard their own practice as not fit for purpose and nearly a quarter of buildings pre-date the foundation of the NHS itself.”

Very big “Neighbourhoods”

Last autumn, the Royal College of General Practitioners (RCGP) reported over 6,200 active GP practices, some sharing premises. GPs are the most local NHS service. Concentrating them in fewer, larger Neighbourhood Health Centres (NHCs) won’t make care more local, despite claims from ministers and NHS leaders.

The government plans just 120 NHCs by 2030 and 130 more by 203, after the next election. While some deprived areas may see improved access, claiming that a few hundred new centres across England by 2035 are more local and accessible than over 6,000 GP practices is ridiculous. The RCGP warns that when surgeries close or practices move into NHCs, patients may need to travel further, which can be difficult for vulnerable or elderly patients, worsening health inequalities. Herding GPs into NHCs risks increasing list sizes and reducing access to familiar GPs.

Since 2017, the average number of patients per GP has risen by 11% to 2,257, despite an ageing, sicker population. The 10-year Capital Plan allocates minimal funds for NHC premises and primary care, with additional undisclosed private capital meant to cover costs. This has triggered widespread fears of a rerun of the hugely expensive Private Finance Initiative (PFI), which was the key funding mechanism for New Labour’s hospital-building spree from 1997.

If there was going to be a time and a place to set out the government’s latest plans on how to avoid all of the pitfalls of the various previous incarnations of PFI, the 10-year Capital Plan should obviously have been it. But no such clarification is provided.

Long wait for replacements for RAAC hospitals

A DHSC report, New Hospital Programme: plan for implementation in January 2025, revealed a lack of credible plans to fund the rebuilding of hospitals with the worst problems with RAAC (reinforced autoclaved aerated concrete).

It noted that in May 2023, the previous government announced that 5 additional hospitals constructed primarily using RAAC would be brought into the New Hospitals Programme, to be rebuilt by 2030, in addition to the 2 RAAC schemes already in the programme.

Tory governments ‘prioritised’ the RAAC schemes (due to risks these buildings pose to patients and staff) and it was recognised that construction of new hospitals was “the most beneficial and cost-effective option to remove and mitigate fully the RAAC risks.” However, no clear funding commitment was made:

“At this announcement the previous government said the programme would be backed by over £20 billion of investment. However, this amount was never formally agreed through the required programme business case process, a Spending Review or Budget.”

So, despite all the promises, there is no money in the pot for even the most urgent rebuilds, and the Capital Plan makes clear that allocations averaging £3bn per year for the New Hospital Programme will not commence until 2030 (after the next election).

The 10-year Capital Plan also contradicts the NHP’s implementation programme (which also committed to beginning work on six medium sized hospital schemes (Poole, Plymouth, Cambridge, Shotley Bridge, Milton Keynes and Truro) at up to £500m each, and two larger ones (Hillingdon and North Manchester at £1bn – £1.5bn each) as well as an uncosted Brighton hospital (total projected cost up to £5bn or £6bn) between 2025 and 2030.

Moreover, it also contradicts the 10-year Infrastructure Strategy, published just over a year ago, which committed to spend £70bn on capital projects for the NHS by 2030:

“Health: £70 billion from 2025-26 to 2029-30 for targeted infrastructure replacement, maintenance, critical safety and the wider DHSC portfolio, and allocating up to an additional £49 billion from 2030-31 to 2034-35 for the New Hospital Programme, wider repair of hospital infrastructure, and the eradication of reinforced autoclaved aerated concrete (RAAC) from the NHS estate by 2035. This includes over £6 billion per year from 2025-26 to 2034-35 for maintenance and repair of the NHS estate.” (p12)

As we can see from Table 2 above, the Capital Plan commits to just under half of the initial promised amount by 2030 and less than a third of the promised allocation for New Hospitals for 2030-35.

PFI to make a comeback?

The gap in the figures and the insistence on finding room for the private sector to play a role in the Capital Plan suggest some form of Public-Private Partnership (aka a revamp of PFI) might be proposed – but there is no detail given here on the total size or shape of such deals.

All the Plan states is that:

“This new PPP model is being developed by NISTA and supported by DHSC, and will ensure private sector expertise is harnessed to deliver these assets on time and on budget.”

Past experience again warns us that such schemes generally take many years to hatch up, on a project-by-project basis, so a project “started” in 2027 could easily face delays that mean the first spades don’t hit the ground until the following decade.

Moreover, if new hospital projects rest, like previous PFI schemes have done, on the private sector borrowing money to ensure projects take place, the government can always borrow more cheaply than the private sector, and thus ensure that any new buildings begin life as public sector assets rather than long-term liabilities leeching cash from the NHS into private wallets for 25 years or more.

The Treasury Committee in 2011 warned that, despite its extensive trawl for information from all of the government departments making use of PFI, it had seen

“no convincing evidence to suggest that PFI projects are delivered more quickly and at a lower out-turn cost than projects using conventional procurement methods. On the contrary, the lengthy procurement process makes it likely that a PFI building will take longer to deliver, if the length of the whole process is considered.

It also noted:

“The main benefit highlighted to us by PFI providers was the transfer of construction risk. However a PFI contract which lasts for 30 years is not necessary to transfer this risk.”

And the Committee 15 years ago highlighted the inflexibility and inflated borrowing costs of PFI, concluding:

“Evidence we have seen suggests that the high cost of finance in PFI has not been offset by operational efficiencies.”

The Committee got PFI expert Mark Hellowell to calculate the additional cost of a sample NHS hospital project, which demonstrated that PFI was 70% more expensive than government funding (or, alternatively, that a government loan could be paid off far more quickly and affordably than a PFI contract).

The Capital Plan dismisses past PFI failures, claiming lessons are learned from costly hospital building that will drain NHS funds into the mid-2040s, without detailing any fundamental reforms.

“The new model will build on other models currently in use and will draw on lessons learned, including the National Audit Office’s 2025 Lessons learned: private finance for infrastructure report on private finance.” (emphasis added)

Ministers seem eager to focus on the one softer and most recent (2025) NAO report on PFI, rather than the much harder and more scathing 2018 NAO report on PFI and PF2 that was “prepared prior to the announcement on 15 January 2018 that the construction company Carillion was in liquidation,” but published almost immediately afterwards.

The collapse of Carillion (and subsequent revelations of poor quality construction on its partially completed Royal Liverpool Hospital and Midland Metropolitan Hospital sites, which had to be substantially rebuilt and completed – all at increased public expense) was the key factor that persuaded then Tory Chancellor Philip Hammond to announce in November 2018 that the government would sign no more PFI deals.

It’s not clear if any amount of evidence would be enough to persuade Labour ministers that PFI is not a clever wheeze to get new buildings built without the borrowing counting on government balance sheets, but a system that takes far more out the public purse for a generation to come.

project, which demonstrated it was 70% more expensive to use PFI than government funding (or alternatively that a government loan could be paid off far more quickly and affordably than a PFI

Which promises will Labour choose to keep?

Labour’s 2024 manifesto focused strongly on a pledge to reduce NHS waiting lists. Subsequently, Wes Streeting, as Health and Social Care Secretary, promised at the end of last year to eradicate “corridor care” – prolonged trolley waits for patients in inappropriate areas – by 2029.

While some waiting list patients with simple needs can be treated as day cases or in private clinics, many, especially older and from deprived backgrounds, require NHS beds, ICU access, and multidisciplinary teams unique to NHS. Emergency admissions need prompt hospital access; neighbourhood health centres lack the capacity for this. The question is whether Labour will fund and maintain hospitals properly or focus on vague NHC proposals, risking hospital and mental health cutbacks. Will Andy Burnham’s team believe trimming waiting lists boosts voter confidence enough to ignore winter emergency crises? Will Yvette Cooper highlight a few NHCs as the government’s only visible change when most see no difference? Will the cabinet accept that minimal social care funding won’t improve hospital discharge wait times? The Capital Plan, a leftover from Starmer’s leadership, may be a poisoned chalice. Will Burnham and allies recognize the need to abandon it and properly fund the NHS, which is underfunded?

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