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The NHS in England is drawing up plans to inject private capital into the dilapidated health estate, as insiders claim they are “winning the argument” over the use of alternative funding models.
A range of new private finance schemes are being considered as part of work to develop the government’s 10-year-plan for the NHS, to be unveiled in the spring, according to people close to the discussions inside NHS England.
One health official said: “It does feel [that] the tide has turned and it’s being put around within NHS circles that there is a consensus that [a reversal] needs to happen and no one is pushing back on it.
“It feels we have won the argument that this needs to be an option on the table. It’s now working out what,” they added.
Health secretary Wes Streeting has indicated he is open to the idea of injecting private capital into NHS infrastructure, provided a model could be found that does not increase borrowing pressures for the Treasury, according to people briefed on his thinking.
Streeting said last week he was “very sympathetic to the argument that we should try and leverage in private finance”, but added the government should “tread cautiously and carefully” in developing terms for those arrangements.
“I’m open to serious proposals from the NHS, or indeed anyone else,” he said.
Private finance initiative schemes were abolished by the Conservative government in 2018 after hospitals, schools and local authorities struggled to cope with large debt repayments and a National Audit Office report warned that they were poor value for money for taxpayers.
Officials are looking closely at how the Welsh Mutual Investment Model, under which the Cardiff government pays private partners to build and maintain public assets such as hospitals, could be rolled out in England.
A handful of public-private partnerships are currently being delivered under the Welsh model in which the government’s equity stake is capped at 20 per cent.
One person familiar with the talks noted that chancellor Rachel Reeves would be reluctant to accept any deal that added to government’s debt levels.
“The big thing is finding a model that pleases the Treasury to keep it relatively off the balance sheet,” they said.
The Treasury is likely to be uneasy about the long-term financial implications of new private investment models, given that increasing the size and capacity of NHS infrastructure would have knock-on impacts on costs of staff, equipment and upkeep.
Building new infrastructure rather than maintaining the existing health and care estate is expected to be the main focus of any agreements, as maintenance work is less attractive to private investors and more likely to sit on the Treasury’s books, they added.
Health leaders have described a “broken” capital investment system that has left the service struggling with dilapidated estates. A shortfall in funding over the past decade has led to a maintenance backlog of £13.8bn, the highest on record.
Earlier this month NHS England chief executive Amanda Pritchard, who resigned this week, called on ministers to “consider private capital investment”, marking a significant intervention.
NHS England’s influence has come under scrutiny this week, however, after Pritchard’s shock resignation, with Streeting seeking to shrink the size of the service and bring it under closer departmental control.
When Labour was last in power between 1997 and 2010 — there was a surge in the use of private finance to build public infrastructure such as schools and hospitals.
In a recent report, the NHS Confederation, which represents health managers, called on the UK government to emulate the Welsh initiative to expand private sector involvement in the development of health infrastructure
NHS England did not immediately respond to a request for comment.