15 The capital allocation process for 2019-20 was particularly challenging for the Department. At the start of 2019-20, NHS providers' capital spending plans exceeded the budget by around £1.7 billion. NHSE&I approached NHS providers twice in the following months requesting them to reduce their capital spending plans. However, in August 2019, the government announced a further £1.8 billion (£1.1 billion for 2019-20) for capital investment to include 20 specific capital projects. Effectively, this left a gap of £600 million between the NHS provider capital spending plans and their limit for 2019-20 (paragraphs 4.4 to 4.6 and Appendix Two).
16 Political events have delayed the announcement of a long-term capital strategy. The Department had intended to announce its capital strategy for 2020-21 to 2024-25 in the (now postponed) 2019 Spending Review. The original plan expected this five-year settlement to support the strategic direction of The NHS Long Term Plan and the revenue settlement for NHS England, agreed to 2023-24. Instead, a one-year spending round was delivered in September 2019 to allow government to focus on exiting the EU, with a full spending review postponed to 2020 (paragraphs 4.10 and 4.11).
17 Proposed legislative changes to improve capital planning by NHS England may disincentivise some NHS providers. There are proposals to limit the amount of capital spend of some individually named NHS foundation trusts, similar to the limits placed on NHS trusts. This may ease some of the challenges in managing the national capital budget and, in turn, improve the capital planning process. The individually named NHS foundation trusts would change each year, upon review from NHSE&I. However, some NHS foundation trusts have benefited from the greater freedom and autonomy in their capital planning since they have been able to generate surpluses and invest in service and facilities improvement. This was intended to act as one of the incentives for NHS providers to seek efficiencies and reinvest budget surpluses in current and new services. The Department aims to ensure there continues to be a benefit for those systems that have delivered and maintained overall financial balance (paragraphs 2.7 and 4.14).