SUMMARY OF REPORT CONTENTS

  Value of UK NHS Capital Spending 2007-2011 (£ billion)    Following the publication in 2000 of The NHS Plan, which set out a programme of investment and reform in the healthcare sector on an unprecedented scale, the Government has largely delivered on its promise to increase capacity within the sector through a major capital building programme. By 2010, the DH is on course to achieve its target of 100 new hospitals, of which the vast majority have been delivered through PFI. To date, 131 hospitals have been built or are under construction as part of the scheme at a cost of £12 billon. In addition, around 3,000 GP premises have been modernised and around 750 primary care centres built, many of which have been completed under LIFT. 

However, with the UK currently experiencing the first economic downturn since the 1990’s, the outlook for healthcare construction programmes now seems less certain than in previous years.  The Government is now looking to provide stimulus for the construction industry by bringing forward further development of the healthcare estate.

Over the past year, the Government’s healthcare programmes had begun to slow, with around £2.4bn worth of PFI projects issued over the past two years on hold and many flagship schemes shelved as early as June 2007, before the credit crunch. During 2007, seven large hospital projects, worth a total of £1.7 billion, started on site and in 2008, just two large hospital projects started on site.

However, in 2009, despite the deepening recession, some large PFI hospitals may now go ahead under the government’s plan to help fund up to £13bn of PFI projects and there are renewed signs that healthcare initiatives in the public and private sectors could now provide significant work opportunities for contractors during the downturn.

The NHS has, in recent years, undertaken the largest hospital building programme in its history.  More than 100 hospitals have been built under the 2000 NHS Plan. Although the programme is due to end in 2010, substantial funding increases for the healthcare sector by the government are planned for the next 3 years. With over £21bn planned on healthcare projects over the 2008-11 period, this sector offers a much needed opportunity for architects and contractors amidst the downturn being felt in other areas of the construction industry. 

For contractors and suppliers, the healthcare market is still growing, despite the slowdown in large PFI hospital projects and the re-branding and re-procurement of the ProCure21 and LIFT initiatives.  Although the major contractors prevail in the larger, complex projects, there remain many opportunities for regional and medium sized companies both as sub-contractors and also as prime contractors for smaller sized facilities through the new P21+ and Express LIFT programmes.

Procure21 is currently being re-tendered and from 2010, the Framework will be worth around £2.9bn over a 4-year period, while Express LIFT is likely to be worth around £500-600m when projects begin to feed through.