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Why are new-builds becoming unaffordable?

Pollie Boyle, senior consultant in Healthcare Planning at Essentia, argues that with current NHS financial pressures making it increasingly difficult to get funding for new-build projects, Trusts need to be looking instead ‘to deliver new models of patient-centred care’.

Recent high levels of building inflation and increasing space standards, coupled with decreased income to Trusts, mean that it is now twice as difficult to prove affordability on a new-build being planned today compared with a building with the same functional content planned 15 years ago. To prevent NHS building projects being aborted in their early stages, it is vital that Trusts plan wisely to deliver new models of patientcentred care that minimise waste and maximise asset utilisation. Between 1997 and 2010, over 100 new hospitals were built under PFI. Since then there have been few major new construction projects, and according to ERIC (the Department of Health’s Estates and Returns Information Collection system) data, NHS Trust capital investment in such projects has fallen by 18 per cent since 2013 (see Table 1), while total capital investment for new-builds, improving existing builds, and equipment, has fallen by as much as 22%. Despite the earlier wave of investment in new buildings, much of the rest of the NHS estate is past its useful life. Why then are we not continuing to replace worn-out assets? 

One explanation is that space standards applicable to new hospital builds have increased, while between 2002 and 2016 average annual building inflation crept up to around 4 per cent, yet Trust income from the tariff has decreased. In this perfect storm, it has become increasingly difficult to balance expected income and expenditure. As a result, many new building projects have stalled early on in the planning period.  

Increased area allowances

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Upcoming Events

The Fire Safety Event 2024

National Exhibition Centre (NEC), Birmingham
30th April - 2 May 2024

Wales regional conference, exhibition and awards dinner 2024

International Conference Centre (ICC) Newport
28th - 29th May 2024

NAHFO National Conference 2024

Crowne Plaza Newcastle Upon Tyne
3rd - 5th June 2024

Design in Mental Health 2024

Manchester Central
4th - 5th June 2024

InstallerSHOW 2024

National Exhibition Centre (NEC), Birmingham
25th - 27th June

Healthcare Estates 2024

Manchester Central
8th-9th October 2024

Access the latest issue of Health Estate Journal on your mobile device together with an archive of back issues.

Download the FREE Health Estate Journal app from your device's App store

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