A DAMNING REPORT from the governmental spending watchdog, the National Audit Office (NAO), has found the plan to build new hospitals is delayed and will miss its targets.

The government’s New Hospital Programme (NHP) is expected to deliver 32 of the target 40 new hospitals by 2030. When the NAO asked for evidence of how the hospitals to be built were chosen, the Department of Health and Social Care could not produce it.

With a £10.2 billion maintenance backlog, almost half of the NHS estate is over 40 years old. Seven entire hospitals are structurally unsound and in need of urgent replacement owing to the use of reinforced autoclaved aerated concrete (RAAC). Surveys have found 41 buildings at 23 hospital trusts contain the material.

The Department of Health and Social Care (DHSC) created a Health Infrastructure Plan (HIP) in 2019 to address this and build 40 new hospitals by 2030. It created a plan of work for 32 of the new hospitals, while 8 were to be selected later. There were another 8 hospitals that DHSC had already approved for construction, giving a total of 48 hospital planned for by 2030.

New Hospital Programme

In October 2020, DHSC set up the New Hospital Programme (NHP) to deliver this commitment. The programme was also tasked with improving efficiency, quality and standardisation in hospital construction – using modern methods of construction (MMC) – and a centralised approach to contracting.

31 of the 32 new hospital schemes in the new plan had already been announced under the HIP, but DHSC was unable to document fully the process originally used to select HIP schemes.

When asked by the NAO, DHSC could not show how or why its original shortlist of hospitals to be re-built was changed. For big spending programmes, the NAO expects government to use clear, defensible criteria to select schemes and to keep records of its decisions.

The NAO says just 11 of the 32 new hospitals announced in October 2020 represented whole new hospitals.The NAO says DHSC uses a “broad definition” of a ‘new hospital’, including: completely new hospitals; rebuilds of existing hospitals; buildings on existing sites; and major refurbishments.

Financing the Build

Financing the hospital re-building programme has also not been transparent. In 2020, DHSC estimated it needed between £19.8 billion and £29.7 billion to build 48 hospitals by 2030. However, in the 2020 Spending Review the Treasury allocated just £3.7 billion up to 2025. It meant most of the larger hospitals will not be built until the end of the decade – ‘bunching’ the construction plan. DHSC admits this is “maximum risk and policy compromises”, and likely to result in many schemes being simultaneously under construction, making it harder to find builders and potentially increasing costs.

The October 2020 announcement stated that all 40 named new hospitals would be ‘fully funded’. Yet the £3.7 billion allocated will only fund the first half. Government has still not made funding decisions about the rest as DHSC has not yet developed its new centralised, standardised approach to hospital construction.

Forecast costs increased by 41% between 2020 and 2023 adding to the uncertainty about whether building all the hospitals will be affordable and achievable. NHP has been planning that later construction of hospitals will be 25% cheaper and 20% quicker using MMC but this remains unproven.

Standardised Hospital Design

The design for a standardised hospital is also delayed. There have been shortages of technical staff and it will not now be completed until May 2024. The delays have hampered NHP’s ability to engage with industry. Furthermore, the NAO finds that NHP’s “minimum viable product” version of Hospital 2.0, which is intended to achieve key objectives at the lowest possible cost, may result in hospitals that are too small. This is because NHP is currently modelling hospital sizes using assumptions that may be unrealistic about how much care will be provided outside of hospitals in future and about the transformational benefits of switching to wards with single rooms only.

NHP has also faced difficulties in hiring skilled staff. By February 2023, the team had only filled 109 posts with full time staff, compared to 223 posts filled by consultants. The NAO says relying on consultants, particularly in a long-term programme, brings risks of a lack of continuity and loss of knowledge.

DHSC reset the programme in May 2023, to include another five hospitals made of RAAC that will now be rebuilt by 2030. DHSC will also count three mental health hospital schemes approved outside of NHP towards the target. However, completion of 8 of the schemes announced in 2020 will now be delayed until the 2030s. This means that DHSC now plans 32 new hospitals by 2030.

Recommendations

Government has not achieved good value for money with NHP so far, the NAO report says. NHP had spent £1.1 billion by March 2023. Progress has been slower than expected on individual schemes and central activities, including developing Hospital 2.0. It can improve value for money through to 2030 but needs to manage substantial risks, including the risk of building hospitals that are too small and rising costs resulting from hospitals being built simultaneously.

NAO recommendations to DHSC, NHS England and government more widely include:

Announcements about major capital programmes extending over more than one spending review period should fully reflect known uncertainties.
DHSC should choose future hospital construction projects transparently and keep full records.
Further bunching of construction schemes should be avoided.
NHP should reconsider assumptions that may result in ‘minimum viable product’ future hospitals being too small.

Gareth Davies, the head of the NAO said: “The programme has innovative plans to standardise hospital construction, delivering efficiencies and quality improvements. However, by the definition the government used in 2020 it will now deliver 32 rather than 40 new hospitals by 2030.

“Delivery so far has been slower than expected, both on individual schemes and in developing the Hospital 2.0 template, which has delayed programme funding decisions.

“There are some important lessons to be drawn for major programmes from the experience of the New Hospital Programme so far. These include strengthening the business case process to improve confidence on affordability and delivery dates, and improving transparency for key decisions.”

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