The UK Government’s decade-long health strategy emphasises community-based care facilities, while its infrastructure blueprint points towards public-private partnership financing models. Craig Elder and Carly Caton, partners at law firm Browne Jacobson, examine the potential framework
Moving healthcare provision from hospital settings into local communities represents a fundamental pillar of the UK Government’s long-term NHS strategy.
Central to the transformation set out in the 10-year health plan, which was published this summer, is the establishment of neighbourhood health centres across every community, designed to offer patients a comprehensive breadth of services including diagnostics, mental health, rehabilitation, pharmacy and nursing.
The government has already designated 42 strategic locations for these facilities, where healthcare professionals, social care workers and allied specialists will work together under one roof, adopting an integrated approach to patient care that aims to diminish reliance on hospital services.
With public finances under considerable strain, however, the government must identify how it will finance what could amount to hundreds of community health hubs nationwide.
Leveraging private finance key to UK Government ambitions
A potential answer is presented by the government’s infrastructure blueprint, UK Infrastructure: a 10-Year Strategy, which was published around the same time as the 10-year health plan.
It acknowledges that private finance could potentially play a role in supporting the development of community healthcare infrastructure, alongside decarbonisation initiatives.
There will be no wholesale return to the Private Finance Initiative (PFI), the mechanism that delivered more than 700 public infrastructure projects, predominantly during the previous Labour Government from 1997 to 2010.
However, the new administration has committed to incorporating PFI’s lessons into a fresh public-private partnership (PPP) framework, with comprehensive details expected this autumn.
While the exact structure of this new model remains undefined, the Department for Health and Social Care (DHSC), working alongside the National Infrastructure and Service Transformation Authority (NISTA), has issued a preliminary market engagement notice for “Project Wings”.
This initiative encompasses the “design, build, finance, operation and maintenance of specific primary and community health infrastructure projects via a PPP framework”. It aims to target construction and maintenance companies that would implement these projects.
A crucial consideration involves determining which organisations will serve as contracting authorities for future healthcare PPPs. Integrated care boards, NHS trusts and local authorities may all participate in delivery, depending on the specific programme structure.
Lessons from the Private Finance Initiative
Under Project Wings, NISTA will conduct further market consultation aimed at building upon “insights gained from previous government involvement” with PPP frameworks.
Before its termination in 2018, PFI was the predominant PPP model. Private sector partners would cover initial project costs, subsequently recovering this investment plus ongoing financing and operational expenses through long-term payments known as unitary charges from the commissioning body – typically local authorities, NHS trusts or government departments.
This period witnessed the most extensive sustained phase of major public infrastructure investment in recent history, funding vast amounts of new public infrastructure across transport, education, healthcare, leisure, corrections, street lighting and environmental services.
Nevertheless, concerns emerged regarding poor taxpayer value and excessive profits for investors who refinanced debt at reduced rates after completing the higher-risk construction phases.
The National Audit Office’s report, Lessons learned: private finance for infrastructure, published in March, recommended enhancements in areas including flexibility, transparency, public sector equity participation and improved risk transfer mechanisms for future PPP models.
Creating a fresh PPP framework
A new PPP model’s potential benefits include private bsector innovation, rigorous project management and structured pipeline discipline. Whether these advantages materialise in practice remains a subject of debate.
The government will, therefore, be determined to ensure these lessons are genuinely applied, and that the new pipeline delivers these benefits while avoiding PFI’s perceived shortcomings – including excessive transaction costs, protracted procurement processes, insufficient flexibility and inadequate risk transfer value.
PPP programmes succeed when there exists a reliable project pipeline enabling private sector partners to achieve economies of scale with reasonable certainty.
Likewise, the market requires well-funded public sector delivery mechanisms with the capability for effective engagement. In theory, this could extend to programmes spanning diverse social and economic infrastructure, provided they possess corresponding long-term revenue streams – whether through regulated assets, user fees or government unitary payments.
The path forward
Bringing together primary and community healthcare services forms a central component of the 10-year health plan, while the UK’s infrastructure strategy outlines how facilities accommodating these services will be constructed, renovated and expanded to meet community requirements.
Project Wings represents the beginning of market engagement to realise this vision. The contracting authorities that may soon participate should ensure they possess the commercial and project management expertise. Because while a comeback for PFI appears unlikely, it’s clear that public-private partnerships will be necessary to deliver the government’s objectives.
