The Budget promised something many people have been asking for: better care closer to home. Neighbourhood health centres have the potential to take pressure off hospitals and make it easier for patients to get the support they need. But if these facilities aren't designed correctly, maintained and upgraded over time, we'll be back where we started – struggling with ageing buildings and rising costs. This is why the public-private partnership (PPP) models being developed now matter just as much as the facilities we build in years to come.
As a long-term investor, developer and asset manager of PPP projects, Kajima Partnerships has worked with the full suite of PFI, PF2, as well as non-profit distributing and mutual investment models developed in Scotland and Wales, respectively.
Looking ahead, what we need from Government is a bold commitment to models that take the best elements from these and embed long-term stewardship into the DNA of healthcare infrastructure. This means moving beyond short-term fixes and embracing frameworks that guarantee long-term performance, resilience and adaptability so that every pound spent delivers lasting benefit for patients and communities.
Legacy PFI has seen some well-publicised issues with rigid contracts, complexities that bred mistrust and inconsistent frameworks for ensuring long-term asset performance. Those concerns were often legitimate and have caused significant damage to the image of PPP as a whole. Both the public and private sector are ready to welcome changes that can deliver lasting benefit for all.
Much of the debate around the use of private finance focuses on the financing premium. But the real comparison which needs to be made is not between the cost of public and private capital but between the cost of proactive management and that of allowing buildings and essential services to fail through under investment.
This is the difference between servicing and changing the oil regularly on your car or just running it and hoping for the best. Preventative maintenance comes at a cost, but it increases performance, reliability and reduces the risk of failure. Without this servicing, short-term savings generally lead to higher costs over time.
If the Government wants its new PPP model to succeed, it must set the standards for buildings that perform clinically and operationally throughout their life.
Whole-life PPP models have the potential to generate long-term value through disciplined maintenance, planned lifecycle upgrades to keep up with changing demand and technology, and a condition-led hand back, driven by outcomes not just bricks and mortar.
The potential for these projects to be on the balance sheet should help to make governance and accounting simpler and more transparent. This will also support more appropriate risk transfer with investors taking responsibility for construction and lifecycle performance while the NHS retains full control of soft services and clinical delivery.
Renewals and maintenance should continue to be included in project costs, avoiding the ‘patch-and-pray' approach that has left much of today's healthcare estate in a very poor state of repair. Models should focus on outcomes-driven KPIs, measuring patient access, utilisation, carbon performance and flow improvements, so that success is judged by results. Payment mechanisms also need to be re-designed, simplified and automated, and strike a more appropriate balance to incentivise good performance.
This represents a much-needed shift towards greater stewardship, with shared planning, shared data and shared accountability built in from handover until hand back, and offers a practical solution for the crippling £16bn maintenance backlog currently facing the NHS estate. Contracts must include a defined hand back plan from day one, with clear timelines from business case to opening and published outcome metrics that align with NHS priorities and local clinical models. To help streamline this process, the Government should introduce a consistent national framework for guidance and contract drafting to ensure that each project does not become a bespoke negotiation. Finally, shared data platforms will also be vital for real-time monitoring and transparent decision-making once projects are live, along with regular formal condition surveys and establishing clear frameworks for lifecycle funding.
For the industry, these steps will provide much-needed clarity on pipeline, standardised contracts, outcome KPIs and long-term governance.
With those foundations, investors will provide the patient capital, long-term vision and technical expertise needed to build at pace, while the whole-life model will ensure these facilities continue to serve communities for years to come.
These projects are the first real attempt in a decade to determine whether we can deliver the modern, flexible, community-based facilities that the health service urgently needs and to maintain them properly over their life cycle. And given the scale of the challenge, the real question is no longer whether we can afford to do this but, rather, whether we can afford not to.
