Over half of £1.8bn NHS cash boost 'not new money', experts say

Written by Beckie Smith on 7 August 2019 in News
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Experts say hospitals had already earned £1bn of cash announced by Boris Johnson by making spending cuts

Photo: Darren Staples/PA

Experts have said more than half of the £1.8bn cash injection announced for NHS capital spending and facilities this week is not "new money".

Boris Johnson announced this week that 20 hospitals would share £850m of extra cash to improve facilities and equipment, while a further tranche of around £1bn would be used for capital spending across the country. The prime minister said the commitment was "new money" on top of a five-year settlement for the NHS announced last year.

However, experts have said around £1bn of the total is money that hospitals had already earned by making efficiencies, but had been blocked from spending over concerns it could lead to the health department breaching its capital spending limits.


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But following the announcement, several experts contended this claim.

Sally Gainsbury, senior policy analyst at the Nuffield Trust, a think tank, said on Twitter that £1bn of the funding was “cash hospitals and other NHS trusts already have but have been forbidden to spend”.

"They earned it last year in incentive payments for cutting their costs," she said.

According to Gainsbury, the Department for Health and Social Care had offered cash incentives to hospital trusts that could demonstrate they had cut day-to-day spending to run a surplus, under an agreement known as the Provider Sustainability Fund scheme.

“The 'PSF' incentive deal was this: cut your costs and report a surplus in your accounts, and the government will give you a big fat cash reward in return that you can spend on new kit and building repairs,” Gainsbury said.

Trusts have build up cash pots totalling around £1bn over the last year but have been blocked from spending it by the Department for Health and Social Care over concerns that doing so could breach the department's capital spending limits, she said.

She added that Johnson’s announcement this week therefore meant trusts will be able to spend the cash incentives they already hold.

Chris Hopson, the chief executive of NHS Providers, the membership organisation for NHS trusts, said that while some of the £1.8bn was genuine, new, extra, money”, some of it would come from “cash surpluses currently sitting on provider balance sheets”.

“That spending can legitimately be described as money that trusts already had, but were told they couldn’t spend and are now able to spend,” he said.

And Eleanor Roy, health and social care policy manager at the Chartered Institute of Public Finance and Accountancy, added: “More than half of this ‘boost’ to the NHS represents cash that many NHS providers already have”.

“The prime minister’s announcement merely raises the capital Departmental Expenditure Limit (DEL) threshold for the health service overall. In practical terms, this means that NHS Trusts can now spend the money they have, rather than having to scale back their capital plans to meet the departmental limits that were decided last year,” she said.

Responding to the claims, a No.10 spokesperson said: "Our position is that this is new money".

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Beckie Smith
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Beckie Smith is a reporter for CSW who tweets @Beckie__Smith.

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