The raid on the NHS capital budget has been ramped up by the Department of Health for the second year running, starving the service of funds to modernise and find a firm financial footing.
Recently released Treasury papers reveal that £1.2bn was switched from the DH’s £4.8bn capital budget to revenue in 2016/17, in a practice criticised by its own auditors.
The NAO (National Audit Office), which keeps tabs on Whitehall’s finances, warned that a similar but smaller capital-to-revenue switch of £950m in 2015/16 could have ‘significant consequences’ for public services in a report last year.
It means capital funding for infrastructure, building projects and new community facilities is instead siphoned off to prop up day-to-day spending.
The NHS already needs £9.5bn of capital funding – double the annual budget prior to the raid – to meet the capital requirements of England’s 44 sustainability and transformation plans.
Ministers are pinning their hopes on STPs to meet the NHS England target of making £22bn in efficiency savings by 2020. Without investment in reshaping hospitals and health centres, it makes the target even more distant.
This year’s £1.2bn capital-to-revenue switch is the third one in as many years and is double the £640m transfer agreed by officials in 2014/15.
And official figures show hospitals need at least £2bn for repairs classified as ‘significant’ or ‘high risk’.
The King’s Fund last year raised concerns about the ‘growing tendency’ for such switches, which they said were ‘storing up problems for the future’ of the NHS.
Its report on STP plans this week warned that the lack of access to capital expenditure risked being ‘a brake’ on their ambitions.
BMA council chair Mark Porter said three years of raids on capital budgets had even failed to bring the service’s finances back into balance.
‘Despite this year’s £1.2bn raid, the NHS still faces a financial black hole approaching £900m,’ he said.
The latest check on NHS finances found hospitals were on track for an £886m deficit, despite hopes it would be reduced to £580m.
Dr Porter added: ‘Ministers were called out for switching capital to revenue budgets by the NAO last year. But they are drawing even more heavily on capital funds to prop up running costs, starving the NHS of resources to fix, modernise and build the hospitals and health centres it needs.
‘Plugging gaps in running costs with funding to fix and build new hospitals and health centres will just store up problems for the future.
‘We’re still seeing hospitals without enough beds, waiting times too high, crushing pressure on mental health services and cuts to the public health budget.
‘The Government must wake up to the fact that the NHS doesn’t have enough staff or resources to meet demands. Patients deserve more than sticking plaster measures to help the worsening financial situation.’
The DH has been approached for comment.
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