Labour is running out of time to build new hospitals - Lord Hutton
Six hundred and fifty days ago Labour pledged to build a network of neighbourhood health centres so care could be delivered locally and problems caught earlier. In last year’s Budget, the Chancellor confirmed they would be delivered in partnership with private providers — a model the National Audit Office agrees is more likely to deliver projects on time and on budget. Yet despite ministerial ambition, the Whitehall machinery of delivery is still grinding slowly.
Millions are being spent on consultants, lawyers and reviews while organisations already exist that have delivered hundreds of health centres in high-need communities. These groups could rapidly develop funding models, build modern facilities or repurpose underused buildings. A recent NHS Confederation report argues precisely this. These are not complex assets; with political will and administrative clarity they could be delivered within a year or two.
Driving the state to implement manifesto commitments requires iron resolve from the centre and a Treasury willing to send clear signals to markets. Without that direction, even the best intentions stall.
The same lesson applies to acute care. Research from the AIIP, suggests the New Hospital Programme could be delivered twice as fast if the government embraced modern public-private partnership models. Treasury data show that 90 hospitals were built under the Private Finance Initiative (PFI) in less than a decade, with an average construction time of six years. By contrast, the current non-PFI programme, announced six years ago, has delivered only a handful. Traditional procurement is projected to produce just 45 hospitals over more than 25 years — half the output in more than twice the time. It is hardly surprising NHS leaders argue Public-Private Partnerships (PPPs) offer better value for money.
Recently, the Health Minister, Karin Smyth, was quizzed by MPs on the scandal of corridor care. No-one wants to see their relative stuck in a corridor in a situation that risks their safety and wellbeing, but the reality is it is happening far too often, as a group of Royal Colleges has warned. If we want to urgently unlock better facilities for patients and staff, there is a way forward.
The original PPP model was successful in building and maintaining 700 state critical assets to a high standard with construction and operational risk transferred to the public sector; however in the recent past there have been challenges with perceived transparency and flexibility - brought under the microscope by budgetary pressure.
But evidence is accumulating that modern PPP structures can address past shortcomings. A recent independent academic comparison in Germany found lifecycle cost reductions of 17–35 per cent, energy savings of up to 30 per cent, faster timelines and lower construction costs. Investors stand ready with substantial capital to deploy if ministers provide certainty.
Of course, that requires investors to have confidence about putting private capital into the UK in a competitive landscape. While an independent report commissioned by the previous government found that generally PPP had been successful, in a small number of cases there have been protracted disputes and conflicts. Often these are exploited by external consultants and ‘no win, no fee’ lawyers tempting NHS trusts with the promise of squeezing providers. That might seem a tempting offer if you’re facing an in-year deficit, but if you destroy investor confidence, it will take decades to recover.
A way forward has been proposed to ‘Reset’ relationships, and even look at extending existing contracts as a way to unlock new investment in MRI equipment, new wards or Net Zero retrofit. But we need the Treasury to allow local providers the space to unlock alternative finance.
This is not just about healthcare. The same urgency applies to defence, clean energy and transport. The £50m Welsh defence growth deal announced last week — boosting SME supply chains and creating a technical excellence college — is a welcome step. But as the Prime Minister has said, Britain must go faster in raising defence spending and strengthening sovereign supply chains, from advanced drones to semiconductors, to protect our forces and allies.
Events in Ukraine and Iran illustrate how urgent it is to publish the delayed defence investment plan. Ministers face choices: relax fiscal rules, create new public-private partnership structures, or support collective financing mechanisms such as a European defence bank. None are simple. Yet as a former Defence Secretary, I know delay carries its own strategic cost.
Britain has spent less than half the OECD average on physical capital investment since the early 1970s. The closest we came to parity was during the PFI era of the 2000s. Underinvestment is not abstract — it is expensive. The National Audit Office estimates delayed hospital upgrades alone are costing £100–£140m annually in maintenance for ageing buildings. Meanwhile the public sector faces a £49bn repair black hole.
Public-private partnerships are not ideological; they are practical. They deliver infrastructure, ensure long-term maintenance is locked into contracts and mobilise capital the state cannot deploy quickly on its own. Around the world from Australia to Canada, evidence of their success is growing, not shrinking. Britain should not be the outlier.
The private sector is ready. What is needed now is urgency — and the political will to build.
Lord Hutton is Chair of the AIIP, the trade body for PPP investors and a former Cabinet Minister