A bold step forward
The need for new infrastructure in the health sector is no secret. Lord Darzi’s independent investigation back in September 2024 laid bare the scale of the challenge: a £37 billion shortfall in capital spending since 2010, driven by chronic ‘underinvestment’ in capital and a ‘dysfunctional’ capital regime. Hospitals have been left grappling with outdated estates, limited capacity, and mounting maintenance backlogs, now exceeding £16 billion.
Fast forward 16 months and we are now have a clearer idea of how the government proposes to solve this conundrum. The New Hospital Programme is only part of the answer. Hinted at in the 10-Year Infrastructure Strategy in June last year, it noted that government funding needs to be complemented by private investment, with the use of private finance helping to drive forward its infrastructure ambitions.
Confirmation of this approach finally came in the Autumn Budget in November, when the Chancellor announced plans for a new Public-Private Partnership (PPP) model – a bold step towards tackling NHS waiting times and modernising healthcare infrastructure. At its heart is the NHS Neighbourhood Rebuild Programme, which proposes to deliver several hundred new Neighbourhood Health Centres (NHCs) by upgrading and repurposing existing buildings, as well as developing new facilities through a combination of public sector investment and PPP.
The National Infrastructure and Service Transformation Authority (NISTA) has now been tasked with developing the new PPP model, with the support of the Department of Health and Social Care. While the new model is being fine-tuned by NISTA and the Department, questions undoubtedly remain about whether Public-Private Partnerships are the antidote to chronic infrastructure problems and whether they will deliver an NHS fit for the future.
Lessons to be learned
The Private Finance Initiative (PFI) has been historically controversial in some quarters, attracting criticism for high costs, poor value for taxpayers, inflexible contracts, and excessive private profits.
Whilst future models may well be able to drive better value, historically the cost of PFI has been unfairly compared to underinvestment in the wider NHS estate, as revealed by current levels of backlog maintenance.
It is also unfortunately the case that better headlines are grabbed by ‘bad’ stories about PFI, most recently the troubled handback and expiry of the Stoke Schools PFI project. For those active in the sector, it is a perennial frustration that the good news stories do not make the news, and also that the factors of risk transfer and locked-in maintenance budgets (and the level of backlog maintenance in the wider NHS estate) are not explained to the public. The two-tier estate (PFI vs non-PFI) is now routinely seen in the Health and Education sectors.
There’s no doubt that lessons can always be learned from what has come before, as well as newer models such as the Welsh government’s Mutual Investment Model (MIM) which centre on public sector equity, joint decision-making, and mandatory requirements for delivering wider community benefits, and which draws themes from PF2 and Scottish NPD. Features of NHS LIFT are also relevant. Lessons don’t just comes from mistakes of the past; we must also focus on examples of success if we are to make the PPP model work in future.
The new model must centre on strategic collaboration, robust governance, and a willingness to embrace models that prioritise value, efficiency, and patient care. As the Independent Healthcare Providers Network (IHPN) argues, partnerships must go beyond ‘bricks and mortar’. It’s not just about construction, it’s about fixing a ‘broken’ NHS capital regime that has constrained progress to date. At the same time, the operational PFI community need to strive to ensure that existing PFI projects achieve handback and expiry successfully, and that hearts and minds are won.
IHPN’s new report, Building Better Health, calls for a Strategic Council for Healthcare Infrastructure to be established to provide cross government support to accelerate private investment into the NHS, including the development of the Neighbourhood Health Centres. Group of infrastructure investors and proposed contractors and funders are also organised into supportive groups.
Other recommendations include updating the Treasury’s Green Book guidance, to clarify the off-balance sheet capital investment mechanisms available to senior NHS leaders to help stimulate PPPs.
What’s different
The key to getting this right is by taking a ‘less is more’ approach. Previously, private finance has been used to back large infrastructure projects where the risk and cost associated with it are naturally higher. By using the new PPP model to deliver community-based neighbourhood hubs, the chances of failure are significantly less.
But it’s not all about size. It’s about accountability, financial transparency, flexibility in contract agreements, as well as integrating technology where possible. Success also lies in the core purpose of the Fit for the Future: 10-Year Health Plan for England – a desire to deliver better patient outcomes. It’s this outcomes-based approach that will be vital if we are to make the new PPP model work. By shifting the focus away from simply the construction of buildings and looking at the wider implications of future patient care, then the chances of success are far greater.
Will it deliver?
The latest from the government (as of early January) is confirmation that 120 health centres will be operational by 2030 and 250 by 2035. Seventy of the 120 will be new build (rather than refurbished, existing facilities) with 80 per cent of them funded by way of a PPP funding model.
The Treasury has been clear: this new PPP approach will ‘learn lessons from past and current PPP models’, ensuring that private capital ‘only supplements public investment’ where it offers value for money. This marks a decisive shift from previous frameworks, prioritising transparency and fiscal prudence. This is about supplementing – not replacing – public investment, according to the government.
There’s no doubt that private sector groups of investors, contractors, service providers and funders are standing by and will be keen to bring their skills and experience to bear. The question now is whether the government can quickly create the conditions for partnerships to truly transform healthcare delivery.
It’s an ambitious plan, but it’s a direction that many wish to travel if we are to succeed in creating an NHS fit for the future.