The UK spends significantly less on health care capital – which includes buildings, machinery, equipment and IT – as a share of GDP than most other comparable countries.
As a result of low capital spending, from 2000 to 2017 the total value of health care capital in the UK has fallen by 3% in real terms. Over this period, most other countries have seen significant increases in the value of their health care capital driven by higher spending.
In the UK, the value of capital per health worker – which provides an estimate of the resources available to staff to deliver care to patients – has fallen by 35% since 2000. Many other countries have seen significant and consistent rises in capital per worker over this period. Of the countries analysed, the UK has the second lowest value of health care capital per health care worker (at just over half the average).
The value of machinery and equipment per health care worker in the UK is the lowest of all countries analysed and continues to fall – countries such as Austria and Denmark have more than five times the value per worker.
The data raise questions about why the UK is lagging so far behind other countries and concerns about what the implications might be for staff and patients. This reinforces our view that there is a clear need for a long-term capital settlement for the NHS in England – including a substantial funding increase – to address problems such as ageing estates and infrastructure, and to invest in new medical technology in the future.
Despite government announcements of new funding, we estimate an extra £2.5bn would be required in 2019/20 to bring capital spending in England up to the average of comparable countries.
Capital is a critical component of health care. It includes the buildings, machinery, equipment and IT that allow staff to deliver services. As technology continues to advance, capital investment can help transform services for patients and improve the productivity of staff.
With the Prime Minister’s promises in August and September 2019 to provide funding for new hospital buildings and improved facilities, funding for capital in the NHS is now in the spotlight. However, while the new money is much needed following years of underinvestment, the amount pledged falls well short of the scale of the challenge.
For the NHS in England, funding for capital is mostly allocated through the capital budget of the Department of Health and Social Care (DHSC). Following years of decline, since 2016/17 the capital budget for the DHSC in England has increased. The capital budget in England will be £7.1bn in 2019/20 and 2020/21 – over £2bn more than in 2016/17. This includes the funding announced by the government earlier this year
Our previous analysis found that the UK has had historically low levels of investment in capital compared to similar countries. This has been made worse in recent years by transfers from the capital budget to the revenue budget, which pays for the day-to-day running of the NHS. NHS Improvement has also noted that the capital spending by NHS trusts in England, as a share of revenue spending, is about half that of comparable countries.
The falling value of health care capital in the UK
Our new analysis has found that between 2000 and 2017, the total value of capital in health care in the UK has fallen by 3%. Over this period, most other countries have seen significant increases in the value of their health care capital, driven by higher spending.
This long read presents new analysis exploring these trends in full. It covers how the amount spent on health care capital has contributed to the total value of health care capital in the UK, as well as how this compares to other countries.
It also raises questions about why the UK is lagging far behind other countries and concerns about the possible implications for staff and patients.
Next section: What is health care capital and why does it matter?
Due to the availability of data, all the figures are presented at a UK level. At times, we relate this to the DHSC and NHS in England, as we know that the DHSC and NHS in England are by far the biggest contributors to aggregate health care spending in the UK. Additionally, any increases in spending in England will have consequences for the rest of the UK due to the Barnett Formula for government spending.
Also, in our analysis we use different definitions of health care based on data availability. We explain these definitions in more detail in the relevant sections.
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