Private investors and councils key to capital investment, says Mackey

Limited access to capital funding means the NHS will need to design more funding schemes that are “off balance sheet”, potentially enabled by local authorities, Jim Mackey says.

In an interview with HSJ, the chief executive of NHS Improvement said there are several large investors wanting to lend money to trusts, but the Treasury has “very rigid rules” that can prevent this happening.

A review of NHS estates, led by Sir Robert Naylor, found at least £10bn of additional capital funding is required to deliver proposals in sustainability and transformation plans and clear backlog maintenance problems.

Mr Mackey said: “We’re not going to get a £10bn cheque, but if we could be a bit more creative about off balance sheet mechanisms and local authority joint ventures, what hits CDEL [the Department of Health’s capital expenditure limit] and what doesn’t, I think we’re in business.

“On a monthly basis, I meet between three and five institutional investors who desperately want to lend money to the NHS.

“But if they lend it and we’re very rigid about the rules then it’s just like we’re funding it ourselves and it still hits CDEL. If we just eased up a bit, and that will require a Treasury discussion and agreement, I think we’re in business.”

“I’m not in control of that, but if I was we would have an NHS Improvement investment fund. We’d raise the money privately, put some public money into it and we would deploy it into the sector against a set of priorities.

“Other sectors have managed to do it with either different or more flexible accounting treatment [but] the Treasury is understandably tight about the impact on public finances and borrowing and all those sorts of things.”

The Department of Health’s capital budget has been frozen in cash terms over the course of this parliament, and then raided by up to £1.2bn each year to plug deficits in the revenue budget.

Full story in The HSJ, 5 April 2017