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Capital financing options are plentiful, STPs need to think differently

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Bricks and mortar have always played a key role in the transformation of health and care services, yet one common sustainability and transformation plan priority where the gap between ambition and reality seems particularly exposed is that of capital finance.

I organised, along with university and local government colleagues, a series of events this year looking at new forms of funding. The capital financing options out there at present are plentiful, however they rely on the NHS adopting a very different approach to this age-old problem.

Let’s be frank, those still clinging to central grants are likely to be disappointed. While they haven’t yet completely disappeared, the trend now is clearly towards local, risk-based finance.

To change its own Victorian-era landscape, the health sector needs to adapt to the modern local growth landscape.

Risk-based finance obviously has risks. The money will have to be repaid either in full or depending on outcomes, but this approach promotes - and rewards - a far more strategic understanding of what you want to achieve.

To maximise the use of this funding, we need to move away from stand-alone projects by, for example, individual hospitals, to focus on long-term partnerships across not just health and care but other sectors too. These integrated programmes also need to be able to generate capital receipts and on-going returns – ensuring the necessary revenue funding to provide a service is as important as the building itself.

This is where the local comes in.

The most important organisations in deciding your infrastructure plans should be your local partners. How can we influence developments that our local and combined authorities, mayors, LEPs and universities are planning? How can we collectively leverage much larger, long-term investment in local infrastructure? What is the value of our land to our partners given localisation and thus reinvestment of business rates?

We often think the main problem is the lack of money. From what I hear that’s not necessarily the case. The biggest challenges appear to be ones of culture, capability and skills. Anyway, before laying down your spade for good, download the slides at www.nhsconfed.org/localgrowth and see for yourself.

Michael Wood is NHS Local Growth Advisor at NHS Confederation. Follow him at @NHSLocalGrowth

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