An analysis of hospital estates spending in the English NHS – by the TaxPayers' Alliance – May, 2022
Hospital estate spending: taxpayers could save hundreds of millions
Our latest research has found that NHS trusts could have saved almost £220 million in gas and electricity costs. As part of an exclusive with the Daily Mail our findings raise serious questions about the huge spending disparities between hospitals on essential items. But it's not just energy where savings can be made. We also discovered that disparities in laundry costs between hospitals leave room for millions more in potential savings. So too in catering where hospitals were found to have paid well over the odds for meals, to the tune of £10 per meal and more - with no marked improvement in quality! With the new health and social care levy coming into force and energy prices skyrocketing, struggling taxpayers need the NHS to be eradicating these inefficiencies.
Hospital bosses should ensure they are offering value for money for patients and taxpayers in every pound spent.
NHS England had operating expenditure of £125 billion in 2019-20. The majority of NHS England’s budget goes on staffing, medical equipment and pharmaceuticals. But there is still an enormous amount (around £10.2 billion in 2020-21) spent on maintaining and running its buildings. These are called the estate costs and cover over 1,200 sites including 220 acute hospitals.
In 2016 a review by Lord Carter of Coles analysed efficiency in English hospitals, looking specifically at the savings that could be achieved through reductions in unwarranted variations in costs. He looked extensively at non-clinical resources, including hospital estates and facilities management. This research seeks to build on the work done in areas such as cleaning and food costs, applying an updated analysis of cost variations to these and other functions.
Using data on the estate costs of the NHS in England, this research assesses whether there are any potential inefficiencies and best practices that can be identified. As this is taxpayers’ money, politicians and NHS managers should be able to justify any apparent anomalies and inefficiencies that appear and use this to make savings without affecting patient care.
Between 2015-16 and 2019-20, London had the lowest average cost for laundry in English NHS trusts. If all hospitals achieved the lowest cost for laundry items, then the saving could be £10 million in the Midlands in 2019-20 alone. Hospitals such as Nottingham University performed well, whereas Dudley Group and University Hospitals Coventry & Warwickshire performed badly.
Smaller hospitals with newer buildings, less floor space and no London weighting paid less for portering than other trusts. Sheffield Teaching Hospitals and Leeds Teaching Hospitals had consistently lower than average costs. Kings College Hospital and Barking, Havering and Redbridge had consistently higher than average costs.
Energy usage increased with size and more modern trust buildings are generally more energy efficient, although it can be hard to say that it has an important effect on energy usage overall. There was very little relationship between the amount of backlog repairs – a proxy for how well a building is managed – and energy usage.
Trusts with older buildings or a larger backlog of repairs did not necessarily see higher energy usage. It is hard to say that there is a correlation between older buildings, more repairs and higher usage, however intuitive this correlation may seem.
Energy costs would have been £150 million lower in 2019-20 if all trusts had paid the lowest price per kilowatt hour for electricity. For gas, it could be a saving of £68 million in 2019-20.
During 2019-20, PFI hospitals have been shown to have a slightly lower unit cost for electricity compared to non-PFI hospitals.
There was no relationship between the spending on and the perceived quality of hospital food. This was also true for both PFI and non-PFI hospitals. Many large general hospitals were spending £10 per meal or more.
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 NHS England, Annual Report and Accounts 2019/20, 28 January 2021, p. 118.
 NHS Digital, Estates Returns Information Collection – Summary page and dataset for ERIC 2020/21, 14 October 2021, https://digital.nhs.uk/data-and-information/publications/statistical/estates-returns-information-collection/england-2020-21, (accessed 11 January 2022).
 NHS Digital, ERIC 2020/21 – Site data, 14 October 2021, https://files.digital.nhs.uk/23/6CD1F2/ERIC%20-%20202021%20-%20Site%20data.csv, (accessed 11 January 2022).
 Lord Carter of Coles, Operational productivity and performance in English NHS acute hospitals: unwarranted variations, Department of Health, February 2016.