Source · Select Committees · Public Accounts Committee
Recommendation 34
34
Accepted
New Hospital Programme's optimistic assumptions risk further cost overruns and insufficient funding for all schemes.
Conclusion
DHSC faces a number of specific pressures that could make cost overruns more likely. If any of the key assumptions underlying the MVP model of Hospital 2.0 prove overly optimistic or detrimental to future healthcare provision, such as the assumed 95% bed occupancy rate, then NHP may require more funding than has currently been allocated by HM Treasury.74 DHSC also told us that the current funding does not include hospitals scheduled to commence reconstruction in the 2020s but to complete after 2030.75 That would mean substantially more funding being required from HM Treasury to build the eight cohort 4 schemes that were recently delayed into the 2030s.76
Government Response Summary
The government agrees that NHP plans and costs should be realistic, stating it is keeping assumptions under constant review and will include specific funding for pre-2030 costs of schemes completing after 2030 within the new programme business case, due for approval by May 2024.
Government Response
Accepted
HM Government
Accepted
6.1 The government agrees with the Committee’s recommendation. Target implementation date: May 2024 6.2 The government agrees that the NHP’s programme plan and costs should be realistic and deliverable. In May 2023, the government gave greater clarity on programme scope and funding in its announcement confirming that the NHP is expected to be backed by over £20billion of investment. The department has provided all schemes with an indicative funding envelope on which they can base their programme plans. All trusts will still need to go through business case approval processes. As outlined in response to recommendation 5, the NHP is keeping assumptions on size of future hospitals under constant review. 6.3 The NHP also agrees that it should continue to engage with the construction industry to understand and manage likely capacity constraints and is already implementing an extensive market engagement strategy to this effect. The NHP held a market engagement event in November 2023, which updated industry on the current status of the programme and future plans and was attended by over 300 supplier or business organisations across eight primary market areas. 6.4 The NHP is developing a third version of the programme business case with different options, as is usual practice, with a view to securing approval through the government’s Major Projects Review Group by May 2024 and confirming funding through future Spending Review processes. Once agreed with HM Treasury, the intention is for the programme business case to include a specific amount of proposed funding for the pre-2030 costs of the eight schemes expected to complete after 2030. The government remains committed to all schemes in the NHP, including those expected to complete after 2030.