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Further capital to revenue transfer revealed

Capital to revenue transfers have hit the headlines again this week, as HSJ (Health Service Journal) reports that the spending increase for the NHS Long Term Plan is to be partly funded by an additional raid on capital budgets. 


HSJ reports that a 2019-20 budget estimates document from the DHSC says: “Capital to revenue transfers – £250m was agreed as part of the 2015 spending review and an additional £221m was agreed to fund part of the first year of the NHS’s long-term settlement.”


Independent government advisor, Sir Robert Naylor, who completed a review of NHS Estates in 2017, told HSJ: “I was very critical of these transfers in my report and recommended that they stop, and the government agreed to stop them at the end of this year.


“So I personally find it very disappointing that the NHS is going to increase the amount of capital to revenue transfer in 2019-20. I think it’s in conflict with the government response to my report because they said they were going to stop doing it. This will just make matters worse.


“We simply have to stop doing this because we’ve been starving the NHS of capital funding for decades.”


HEFMA strongly supports the requirement for capital to improve the NHS Estate and make it safe and fit for purpose. 


The Health Foundation was also critical of the practice of transferring capital to revenue budgets in its briefing, ‘Failing to Capitalise’, published earlier this year:  It points out that the real-term decline in capital spending by the Department of Health and Social Care (DHSC) between 2010/11 and 2017/18 of 7% is mostly attributable to such transfers. 


Furthermore, ‘Failing to Capitalise’ cautions that without increased capital funding there is a risk that Trusts will be unable to plan for the transformation of services set out in the Long Term Plan, and ongoing maintenance issues could risk the quality and safety of patient care.


The Health Foundation points out that the fall in the DHSC’s capital budget has contributed to the UK having a low level of capital investment in healthcare by international standards. It stresses that substantial increases in capital budgets are necessary to bring the NHS in England in line with the OECD average and alongside this, an end to the regular transfers from capital to revenue budgets is necessary to enable NHS Trusts to invest and plan for the future.


The full HSJ story is paywalled.