Department of Health makes £300m available for NHS capital projects ready to start this year

The Department of Health has made £300m available for capital projects in a surprise move that could provide a much-needed boost to the workload of construction firms.

The Department of Health (DH) confirmed to Building that it had made £300m available for capital investment across the NHS, which amounts to 6.7% of the department’s £4.5bn capital budget for 2011-12.

A department spokeswoman said the money had been realised “thanks to good management of central capital budgets”.

“We are now in discussions with the NHS to see how it could best be spent,” she said.

The confirmation of the fund came after trade magazine Health Service Journal obtained a letter from NHS London to stakeholders across the capital calling for bids to the funding pot.

The letter, seen by Building, said the cash would be available to any NHS organisation for projects valued at £5m or more, with the department “more likely to favour larger value projects”.

It said projects would need to start in 2011/12 and finish by the end of 2012/13 with those with a greater spend this year “likely to be looked upon more favourably”.

It added that, “although the Treasury is not keen on bullet payments into PFI/LIFT schemes, if there is a strong value for money business case behind this they can be put into the mix for consideration”.

The letter said NHS London could expect to win up £75m from the fund and called for bids for the cash to be submitted by 6 January.

“NHS London will then prioritise across all bids and submit our prioritised bids to DH by 12 January. It is anticipated that allocations will be confirmed by end-January,” the letter said.

However, the Department of Health denied that it had set a 12 January deadline and would not say when funding would be awarded.

“No decisions have been taken and no deadlines established at national level. Further announcements will be made when the best possible use of this capital funding has been identified,” a DH spokeswoman said.