The first page of the Conservative Party manifesto for the 2019 general election promised “20 hospital upgrades and 40 new hospitals”, while the Labour...
The first page of the Conservative Party manifesto for the 2019 general election promised “20 hospital upgrades and 40 new hospitals”, while the Labour Party pledged to commit £2bn “to modernise hospital facilities” … and then COVID-19 hit. Although the precise implications of the pandemic for the health system are still unclear, it has not reduced the financial resources available to the NHS or the conviction that new hospitals are required.
At least 27 NHS trusts currently have specific plans to build new hospitals. The two waves of construction are known as Health Infrastructure Plan (HIP) 1 and HIP2. HIP1 trusts are expected to be spending money building new hospitals between now and 2025; HIP2, between 2025 and 2030.
Alongside – and maybe because of – this enthusiasm for new hospitals, there is increasing public-sector scrutiny to make sure taxpayers get good value for money. If this is a once-in-a-generation chance to modernise the NHS, HM Treasury (HMT), the National Audit Office, civil servants and politicians want to be certain that the money is spent wisely on the right things.
That brings business planning to the forefront. Hospitals that are officially on the HIP1 and HIP2 lists still need to prove they are worthy of the money that has been allocated – but not given – to them. Some that are not on the lists have been told they could jump the queue if they developed a more convincing case. Ultimately, NHS England, the Department of Health and Social Care (DHSC) and HMT will decide how to prioritise spending. Which business cases will be chosen?
At a minimum, a good business case will be developed in line with the Treasury’s Green Book and Five Case Model. But this guidance is necessarily framed at a very high level: it applies to everything from hospitals to flood defences to a new visitor centre at Stonehenge. In order to help, DHSC has provided more-specific pointers in the form of the Comprehensive Investment Appraisal Model and guidance. It says:
The importance of the economic dimension of business cases is often overlooked – and is a common reason why they fail when exposed to scrutiny by HMT and others.
Confusion often arises over the differences between financial and economic cases. In light of government policies aimed at reducing regional inequalities and promoting individual opportunity (levelling up), achieving net zero carbon emissions (climate commitments) and promoting the UK on the world stage after Brexit (Global Britain), it is clear that addressing economic outcomes alongside robust financial outcomes will be an important factor in deciding which businesses cases are approved, and which fall down the queue.
At Frontier we have authored many business cases – ensuring that the economic dimension is the solid foundation on which the rest of the dossier is built. In 2019 we helped obtain Treasury approval for one of the largest recent capital spending projects outside defence – a £1.4bn investment in new animal health facilities near Weybridge. Over the past decade we have helped put together over 20 NHS business cases for everything from new hospitals and extensions to existing facilities to new ways of treating illness or preventing ill-health in the first place.
Here are some of the lessons we have learned.