This presentation was made by William Lockwood & Alex Munn, United Kingdom, at the 7th meeting of the Joint OECD DELSA/GOV Network on Fiscal Sustainability of Health Systems held at the OECD Conference Centre, Paris, on 14-15 February 2019

1. Healthcare Capital in the UK
Will Lockwood – Capital and Land Strategy – Department of
Health & Social Care (DHSC)
Alex Munn – Health Spending Team – HM Treasury

2. 1. Context of DHSC Capital
2. Challenges
3. Assurance
4. Monitoring Major Projects
Plan for this Session
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3. DHSC Capital - Context
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• Proportion of total DHSC budget spent on capital has decreased from c. 8%
to c. 4% over the last 50 years.
• Recent fiscal events project capital to grow to 5% of total expenditure by
2019/20.
• In 2017/18 capital spend was £5.6bn, and revenue spend was £121.3bn.

4. DHSC Capital – Overview
• Majority of DHSC capital is spent by
NHS Providers, as well as a
significant proportion on research
and development
• Most decisions on providers’ capital
expenditure are taken by providers
themselves i.e. no DHSC assurance
(£2.4bn of £3bn)
• Disposal/sale of assets contributed
£0.3bn towards capital expenditure
• Capital budgets have been
underspent in recent years (in
2017/18 the underspend was
£360m, 6.4%)
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NHS Providers
59%
R&D
21%
Informatics
2%
DHSC
central
14%
NHS England
4%
DHSC CAPITAL

5. DHSC Capital Challenges
• Budgeting cycle – long-term view of capital against short-term view of financial position (incentive
to sell assets earlier than optimal)
• Accountability challenges:
• Move towards integration of health economies (STPs) – capital may be allocated to meet
STP-wide priorities but the STP does not exist as a legal body so is not formally accountable
• Monitoring challenges:
• Difficult to monitor benefits when they are different for providers and commissioners in the
same STP
• Lack of Departmental control over local expenditure and monitoring – move towards local
autonomy
• This has also been a driving factor in recent underspends of the capital budget
• Performance challenges:
• Prioritisation is difficult when decision making is taken at local level with limited links to
national priorities
• Recent move towards central programme capital – allocated to providers or commissioners
to work across STPs
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6. • To provide assurance over VFM, DHSC
must approve provider capital expenditure
when it is greater than £15m; HMT must
approve expenditure greater than £50m
• Requirement for capital investment
business cases to follow HM Treasury’s
guidance – the Green Book and the Five
Case Model
 Strategic Case
 Economic Case
 Commercial Case
 Financial Case
 Management Case
DHSC Capital – Assurance
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7. • The Government Major
Projects Portfolio (GMPP)
comprises the most
complex and strategically
significant projects and
programmes across
government
• GMPP projects are
typically those where
approval is required from
HM Treasury
• DHSC has the third
biggest portfolio across
Government, but the sixth
biggest value
Infrastructure and Projects Authority – Major
Projects
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8. • Delivery Confidence across the DHSC GMPP Portfolio is similar to the
spread across all of GMPP
• If a project is red rated, it will receive additional scrutiny. This could mean being
reviewed by the Major Projects Board
• DCAs are a ‘blunt instrument’, but can change the narrative
• ‘The number and proportion of red and amber/red ratings has risen over
the past year, from 38 in 2016/17 to 46 in 2017/18’ - IPA Annual Report on
Major Projects 2017-18
Infrastructure and Projects Authority – Monitoring
Projects
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