There is a change at Number 10. We now wait to see what infrastructure-related initiatives Labour will roll out to help improve years of under investment in the NHS estate. Looking at its manifesto promises you'd be forgiven for thinking that not much will change, particularly in the short-term. Yes, it commits to the New Hospital Programme – a programme to build 40 new hospitals by 2030, already up and running under the previous government – but it stops short of outlining any new investment in hospital buildings and stays silent on the use of the private sector to help modernise the NHS estate.
Yet despite this silence, the new health secretary, Wes Streeting, has come out fighting in Labour's first few days in office with plans to fix the 'broken NHS' within its fiscally constrained environment. Part of that plan involves drawing on the use of the private sector to help cut the NHS care back log; it is anticipated that this may extend to the NHS being given the green light to partner with the private sector to build new hospitals.
Lord Hutton, a Labour peer – who oversaw a wave of private finance building projects (PFIs) in the NHS in his time as a Labour health minister – has recently commented on the important role public and private partnerships (PPPs) play in the role of modernising Britain's public infrastructure. The use of PFIs – a long-term contract between a private party and the public sector where the private sector designs, builds, finances, and operates a public asset and related services for a monthly charge (like a mortgage if you will; but with operational services included) – was scrapped by the Conservative Government back in 2018. It became the main source of capital funds for major investment in the NHS but was widely criticised due to its excessive cost (and profit for the private sector) and perceived lack of flexibility.
No one can pretend PFI was perfect but if one accepts that private finance is needed to assist regenerate the NHS estate then there are other models for doing that. The Welsh Mutual Investment Model (MIM) used by the Welsh Government to finance major capital projects, such as the Velindre Cancer Centre in Cardiff, is one possible option. It draws on learnings from the original PFI and its replacement PF2 – it enables the Welsh Government to become a minority equity investor in the project; provides greater transparency; removes 'soft' services, such as cleaning and catering, which were always problematic and expensive in the PFI model; and requires the private sector partner to create apprenticeships and training places for Welsh workers.
It remains to be seen, however, whether the MIM model will be considered too closely aligned to PFIs to be adopted more widely. Julian Hartley - head of NHS Providers – has recently said in support of private sector involvement, "It doesn't have to be PFI Two"; Hartley has called for a relaxation of Treasury rules around the use of the private sector and a review of the Department of Health and Social Care's new capital expenditure limit (CDEL), which has severely curtailed how much NHS Trusts can spend on projects regardless of where the money comes from.
One of Labour's key manifesto pledges is to create a National Infrastructure and Service Transformation Authority (NISTA) - a merger of the Infrastructure and Projects Authority and the National Infrastructure Commission – to better support the planning, design and delivery of major capital projects. Whilst it remains to be seen what delivery powers the NISTA will have, its creation (combined with Labour's promised new 10-year infrastructure strategy) must provide the NHS – and investors into it - with cautious optimism that a new pipeline of hospital build projects and funding models is potentially on its way and that PPP in some for or other is back on the table.
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