The below content looks at capital funding for health in the UK and in England. Capital budgets are used to invest in long-term fixed assets, such as hospital buildings and equipment. They are different from resource budgets, which are for current, day-to-day costs such as salaries and administration costs. This page focuses on capital budgets only.
For more detailed analysis of day-to-day funding, see our Health funding data analysis page.
Nominal terms vs real-terms budgets
Budgets can be expressed in nominal terms (the cash or ‘face’ value of the budget at the time it was announced) or in real terms (the value of the budget adjusted for inflation). This page uses the real-terms value of budgets in 2023/24 prices, using March 2024 GDP Deflators.
Health spending can be measured in different ways, from government departmental budgets to health expenditure. Our analysis below uses two different measures:
- Health Expenditure. Beyond the spending of the DHSC, other departments do have expenditure that can be classified as health spending – such as the Department for Science, Innovation and Technology spending on health research. Departmental spending is broken down by the Treasury according to its function, including health. This allows for standardised cross-country comparators. This is the measure used in the ‘Capital funding in the UK’ section.
- Department of Health budgets. HM Treasury statistical data sets out annual information on government spending and provides long-term historical data on departmental capital budgets and the amount allocated to the DHSC (Department of Health and Social Care). This is the measure used in the ‘Capital funding in England’ section.
Capital funding is vital for safe and effective healthcare
Healthcare systems require capital investment into fixed assets such as new facilities, medical equipment and IT systems. Underinvestment in this area can result in worse working conditions for doctors, worse patient outcomes, and higher costs in the future as maintenance and repairs are postponed. Capital investment is also key for improving productivity as purpose-built areas and well-functioning equipment and IT make the work of healthcare staff swifter and more efficient. For example, more than 13.5 million clinical working hours are lost every year in England alone due to poor IT. Yet productivity improvements are a key part of keeping up with growing demand for healthcare whilst keeping costs down.
It is normal for capital funding to fluctuate
Whilst day-to-day spending typically increases in real terms every year, capital spending tends to be more irregular. This is because capital spending goes to one-off investments, and will be temporarily higher when large capital projects are commissioned. However, in the UK in general and in England specifically, capital funding has been insufficient for years, which has resulted in huge maintenance backlogs, and an inadequate health infrastructure which is affecting patient care.
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Capital funding in the UK
This section sets out capital expenditure for health within the UK and its constituent nations. It looks at current and past funding in real terms, the estimated cost of eradicating maintenance backlogs across the UK, and compares capital spending in the UK to other countries.
There have been years of capital underspending in the UK
Though it is normal for capital funding to fluctuate, capital health spending in the UK has been too low for several years. Since 2010, day-to-day spending has typically grown at a faster rate than capital spending. Moreover, capital spending plummeted after being uplifted during the pandemic, unlike resource budgets.
According to the Health Foundation, health capital investment in the UK between 2010 and 2019 should have been around 55% - or £33bn – higher to match the EU14 average.
There is a mounting maintenance backlog in the UK
One very tangible consequence of capital underinvestment are spiralling maintenance backlogs. These refer to the cost of repairing healthcare buildings to an acceptable standard, and refers only to work that should have already taken place. High backlog costs across the UK show that healthcare providers often lack the funds to keep their estates up to scratch, let alone invest in new developments or other infrastructure.
For more information about the state of healthcare buildings and infrastructure in the UK, read the BMA’s Health Infrastructure Reports.
Capital spending in the UK is low compared to other countries
Capital spending in the UK is also low compared to that of many other OECD nations, which typically spend a higher proportion of their GDP on fixed assets for healthcare systems. As a result, spending in the UK is well below the OECD average.
Capital funding in England
In England, the Department of Health and Social care receives an allocated capital budget yearly. This section sets out current and past capital budgets for the Department in real terms, the cost of eradicating the maintenance backlog in the NHS, and the additional capital funding the BMA is asking for.
Capital budgets have been too low historically
Though it is normal for capital spending to fluctuate, in the decade preceding the pandemic, capital funding in England was exceptionally low for a sustained period of time. During the period of economic austerity following the 2008 financial crash, revenue and running costs often took precedence over longer-term capital investment – and £4.3bn was explicitly transferred out of capital budgets between 2014/15 and 2018/19. Recently, capital budgets have once more been raided (by £1bn) to top up day-to-day spending.
The NHS is facing a huge maintenance backlog
When there is not enough capital investment, some essential repairs to the healthcare estate cannot be carried out. In England, as in other nations, this has resulted in a substantial maintenance backlog. This refers to the cost of repairing healthcare buildings to an acceptable standard, and refers only to work that should have already taken place.
For the last few years, the cost of eradicating the maintenance backlog has been higher than the total capital budget for the Department of Health and Social Care – except when health budgets received additional COVID funding in 2020/21.
As a result, investment to reduce this backlog remains extremely low, covering a mere fraction of the overall cost.
The BMA is asking for additional capital investment
More capital funding is required to clear the maintenance and invest in the future sustainability of health services in the UK.
Following the NHS Confederation, the BMA is asking for a 39% increase in capital budgets plus funding to address the maintenance backlog. For 2024/25, this would require a top-up of around £8bn in England. We are calling for commensurate increases in Barnett consequentials for the devolved nations.
What the BMA is doing
The need for continued and increased investment into healthcare infrastructure is vital for doctors and patients.
The BMA continues to lobby the Government on this issue, for example through submitting regular representations to the Treasury in advance of fiscal events. Submissions can be accessed on our website.