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Michael Wood: The NHS can learn much from councils about raising revenue

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Given the parlous state of the public finances it has always struck me as odd just how little the NHS understands about local government finance, and vice versa. 

As the physical plans for redesigning health and care services increasingly move from grant funded, stand-alone projects to form part of wider programmes using a mix of finance, perhaps it’s time to demystify how each sector works.

NHS capital has long dominated financing discussions. Securing the finance necessary to develop or manage its estate from the Department of Health meant that the health service was not dependent on sourcing ongoing revenue. The situation is now surely different.

One NHS capital finance expert described their job to me as simultaneously having to explain to NHS trusts not to bother asking for money while trying to convince the Treasury to delve into its coffers.

Put simply, if the capital pot is empty there is an increasing need for the NHS to focus on generating revenue. This presents an opportunity for local government.

Strong, mutual benefits arising from councils supporting their NHS colleagues with the why, what and how of raising revenue.

The starting point should be a shared understanding of why revenue matters locally. With the government intent on local economies financing their own future, there is a clear strategic need to raise revenue receipts. If your local NHS partners are not aware of this then it is highly likely they are making isolated decisions that do not maximise their local contributions.

What funds are available matters. Risk-based financing may be the norm for many sectors, but the health service is not one of them. Using funding sources such as the Public Works Loan Board or municipal bonds to kick-start health and care infrastructure planning is eminently possible but requires a much longer-term, local commitment than NHS boards have typically taken.

Beyond the usual money-making areas such as private patients and car parks lies the question of how to raise revenue. The NHS needs ideas as to the value it could generate from assets such as its services, innovation, estate, location, brand, workforce (and others) and then the commercial acumen necessary to develop them into something tangible.

There is a clear role for local government to explain, support and involve their health colleagues. The future of your economy may depend on it.

Michael Wood, local growth adviser, NHS Confederation. Follow him at @NHSLocalGrowth

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