Source · Select Committees · Public Accounts Committee
Recommendation 12
12
Acknowledged
DHSC consistently diverted NHS capital funds to revenue, despite new fiscal rules.
Conclusion
Demand for capital in the NHS continues to outstrip supply and the UK lags behind other OECD countries in terms of capital investment in its health system. DHSC has maintained its recent track record of not fully investing the capital funds HMT allocates it and instead reallocating large amounts for day-to-day revenue spending. It transferred £0.4 billion from capital to revenue in 2022–23, £0.9 billion in 2023–24, and it told us that a similar amount of £0.9 billion would be switched during the current 2024–25 financial year.19 However, DHSC provided assurances that there would be no further transfers of capital to resource funding because the Chancellor has introduced new fiscal rules to prevent this from happening.20 14 Q 74, Final local government finance settlement: England, 2024 to 2025 - GOV.UK 15 Q 75 16 Q76 17 C&AG’s Report, para 1.8 18 Q 7 19 Q 18; C&AG’s Report, paras 4.21 and 4.23 20 Q 17 10
Government Response Summary
The government stated that the fiscal rules set out by the Chancellor at the Autumn Budget 2024 mean that no further capital-to-revenue transfers will be used, and the department welcomes this decision. In 2025-26, a budget of £13.6 billion for health capital investment has been agreed.
Government Response
Acknowledged
HM Government
Acknowledged
2.8 Decisions to switch CDEL to RDEL have previously been made, in line with the principles set out in ‘Consolidated Budgeting Guidance’ and in agreement with HM Treasury, to meet financial pressures and protect frontline care. 2.9 The fiscal rules set out by the Chancellor at the Autumn Budget 2024 mean that no further capital-to-revenue transfers will be used. The department and NHSE welcome the Chancellor’s decision not to allow further capital to revenue switches and recognise the importance of capital investment in the NHS in delivering an effective and productive healthcare system. 2.10 In 2025-26, record levels of capital investment into health have been agreed, with a budget of £13.6 billion. Excluding years affected by the Covid-19 pandemic, this settlement represents the highest DHSC capital budget in real terms since 2010. 2.11 The NHS has lived within its overall budget in every recent financial year. NHS systems must now agree credible operational and financial plans for the year and deliver on those plans, under rigorous scrutiny and oversight from Ministers, DHSC and NHS England.