Yesterday’s report from the National Audit Office that only 32 of the pledged 40 new hospitals will be delivered by 2030 has been delivered along with criticism of the Government’s handling of the programme and has met met with calls from the construction sector for greater utilisation of offsite construction.
From the outset of the New Hospital Programme (NHP) it was stated that modern methods of construction (MMC) would be utilised within a standardised design, to reduce cost and time. NHP has been planning for schemes in cohort 3 and later to use the innovative standardised hospital design – Hospital 2.0 – which incorporates MMC. However, the design for a standardised hospital has been delayed and will not now be completed until May 2024.
By June 2023, three of the eight schemes in cohort 1 had opened or part opened against an expectation of five. Forecast costs for schemes in cohorts 1 and 2 increased by 41% between 2020 and 2023. NHP estimates that by cohort 4, using Hospital 2.0, hospital construction will be 25% cheaper and 20% quicker compared with traditional approaches. The NAO points out that the approach can bring efficiencies and other advantages but remains unproven.
Healthcare construction expert Richard Pierce, CEO of offsite construction firm, Darwin Group, says that embracing more offsite construction would accelerate the programme and help the Government to hit its ambitious healthcare targets.
“Offsite, modular construction offers a repeatable, high-quality build solution when constructing world-leading facilities, and can be delivered 60% faster than traditional building methods. It can also eliminate upto 90% of waste generated when compared to traditional methods, making it one of the most sustainable options in the marketplace.”
Lack of records criticised
The NAO has also criticised the Government for a lack of records to document the decision-making process behind the schemes accepted into the programme. In 2019, the Health Infrastructure Plan was created under which 27 new hospital schemes were planned by 2030. These plans were expanded in October 2020 with the announcement of 40 new hospitals by 2030, of which 32 were identified with a further eight to be selected later. Alongside eight other hospitals that DHSC had already approved for construction and which it was not counting towards the 40 new hospitals commitment, this meant a total portfolio of 48 hospital schemes by 2030, which were subsequently allocated across five cohorts. The New Hospital Programme was set up to deliver this commitment.
It’s the schemes that were selected for inclusion in the Health Infrastructure Plan, before the NHP was established that have been flagged in the NAO report, that is 31 of the 32 identified initially. In response to NAO requests, the Department of Health and Social Care (DHSC) has been unable to document fully the process used to select the HIP schemes. It is reported that the DHSC, supported by NHS England, used clear, evidence-based criteria to create a shortlist, but then adjusted this shortlist substantially, and it is this part of the process for which no further documentation is available. The failure to document this part of the process is described as an omission which means there is no basis for the NAO to determine why these schemes were selected. The NAO says that for large capital programmes it expects the government to use clear, defensible criteria to select schemes and to maintain records of its decisions.
Problems with the current scheme
The NAO report highlights a number of concerns with the NHP, including its modelling for hospital size, programme delays, staffing and rising costs. For instance, the NAO warns that the NHP’s ‘minimum viable product’ version of Hospital 2.0, which is intended to achieve key objectives at the lowest possible cost, may result in hospitals that are too small. This is because NHP is modelling hospital sizes using assumptions that may be unrealistic about the extent to which care in future will be provided outside of hospitals, and about the transformational benefits of switching to wards with single rooms only.
The NHP has also faced difficulties hiring skilled staff. By February 2023 only 109 posts had been filled with full-time staff, compared with 223 posts filled through consultancy services. It is normal to use consultancy services on such large programmes, however, the NAO cautions that such reliance on consultants, particularly in a long-term project, risks lack of continuity and loss of knowledge.
The October 2020 announcement about the new hospitals stated that all 40 named schemes (cohorts 1 to 4) would be ‘fully-funded’, yet the £3.7 billion allocated in the 2020 Spending Review was intended mostly for cohorts 1 and 2. With no further decisions made, uncertainty arose over whether schemes that had been announced were affordable and achievable. When the DHSC ‘reset’ the programme in May this year, announcing that the five hospitals made using reinforced autoclaved aerate concrete (RAAC) would be brought into the scheme, and that three mental health hospitals approved outside of NHP would also count towards the target, it became clear that eight of the schemes announced in 2020 would be delayed until the 2030s.
Must do better
The NAO report concludes that the Government has not achieved good value for money with NHP so far. By March 2023, NHP had spent £1.1 billion, with slower than expected progress on individual schemes and central activities, including developing Hospital 2.0. It can improve value for money through to 2030, but needs to manage substantial risks, including the risk of building hospitals that are too small and rising costs resulting from hospitals being built simultaneously.
Gareth Davies, head of the NAO says: “There are some important lessons to be drawn for major programmes from the experience of the New Hospital Programme so far. These include strengthening the business case process to improve confidence on affordability and delivery dates, and improving transparency for key decisions.”
