Amid rising demand, outdated infrastructure and pressing system transformation goals, how we allocate capital in the NHS has never mattered more. Yet, the current policy may be misallocating resources.
In this report, CF and Burrum River Advisory take a data-driven look at how capital investment is allocated across NHS Trusts — and ask whether reforms to capital policy could more effectively support system transformation and equitable resource distribution.
Key findings:
Our analysis, highlights several critical issues:
No clear link between capital need and financial performance: Trusts operating in surplus do not appear to have greater capital needs than those in deficit. In fact, many underperforming Trusts face larger estate backlogs but may receive less capital under the current allocation model.
- Incentivising quick wins over real change: The current system may favour capital projects that are easier to deliver quickly – rather than those that support transformation over the long term.
- Systemic inefficiencies and missed opportunities: Trusts with outdated estates or underinvestment in equipment and digital infrastructure may be overlooked, despite their critical needs.
- Capital alone doesn’t drive efficiency: While a modern estate supports patient experience and productivity, the key levers of efficiency – like workforce planning, operational models, equipment investment and technology —are often left underfunded.
- Financial incentives may distort behaviour: Some Trusts may defer essential maintenance to present a financial surplus – sacrificing long-term sustainability for short-term gain.
Regression analysis results: Backlog score vs. Financial sustainability score (PFI and outliers excluded)
We make the following recommendations for DHSC and NHS England:
Without changes, the NHS risks wasting scarce capital on patchwork fixes—rather than building the infrastructure needed for a sustainable health service. Capital must be used strategically—not just where it’s most easily delivered.
Catherine Skilton at CF comments:
“The current capital regime is out of step with the government’s goal of improving productivity in the NHS, contributing to reactive spending rather than strategic investment. When financial incentives drive short-term decisions, transformative projects can fall by the wayside, leaving Trusts struggling with misallocated resources. Needs-based capital allocation for equipment, digital and estates would ensure funds reach those who require them most, supporting the transformation of services. Without long-term planning and certainty, healthcare systems will remain trapped in cycles of inefficiency, unable to meet patient care needs within the available funding. Reforming capital policy isn’t just about budgets—it’s about unlocking the potential for sustainable, equitable healthcare, and a system that prioritises transformation over in-year financial performance”
Matt Custance at Burrum River Advisory comments:
“There’s a lot of talk about how estates can improve efficiency but not a lot of research. This work begins that analysis. We do find that when financial anomalies like PFI contracts (which distort the cost of capital from other NHS benchmarks) are excluded, there is a statistically significant relationship between financial performance and quality of the estate. It’s also clear that there are a lot of factors affecting efficiency and financial performance which are disconnected from the physical infrastructure. What our analysis certainly shows is that providing capital bonuses to high-performing Trusts is addressing a problem which is completely unevidenced. A needs-based approach to allocation would be more supported by the data. UK Healthcare needs to do more work to demonstrate the benefits of capital investment (and the problems of not investing), so that we can prove the need for more and better investment.”
About Burrum River Advisory
Burrum River Advisory is a strategic advisory firm specialising in public services transactions. With expertise in corporate structuring, investment planning and capital business cases, Burrum supports clients across health, care and beyond to design better deals with the private sector and each other, and deliver long-term change.
About CF
CF is a leading consultancy dedicated to making an enduring impact on health and healthcare. We work with leaders and frontline teams to improve health, transform healthcare, embed life science innovation and boost growth through investment. With unmatched access to UK healthcare data and award-winning data science expertise, our team are a driving force for delivering positive and meaningful change.
To learn more about our Health Systems financial capabilities, contact us today.
