Source · Select Committees · Public Accounts Committee
Recommendation 36
36
Accepted
Significant funding \
Conclusion
We highlighted to DHSC that there seemed to be a black hole in the funding allocated compared with what would be required to get all the hospitals in the programme built, and asked whether it was discussing the issue with HM Treasury. DHSC told us that it had frequent discussions with HM Treasury and considered the funding was sufficient and 71 C&AG’s Report, paras 8 and 19 72 Committee of Public Accounts, Lessons from major projects and programmes, Thirty-Ninth Report of Session 2019–21, HC 694, 29 January 2021 73 C&AG’s Report, para 13, Figure 8 and Figure 9 74 Q 73 75 Q 46 76 C&AG’s Report, para 4.2; Letter from Shona Dunn, DHSC dated 26 September 2023 77 C&AG’s Report, Figure 11 The New Hospital Programme 19 that it had taken account of optimism bias and inflation. It intended to confirm details through the full business case process.78 It said that if circumstances continued to change then DHSC would have to take account of new pressures as they arose.79 Use of consultants
Government Response Summary
The government agrees that NHP plans and costs should be realistic, and is developing a third programme business case for approval by May 2024 to secure and confirm funding, including for schemes completing after 2030, thereby addressing the committee's concern about a funding gap.
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.