Today I have published a pamphlet through an organisation called Social Finance that argues for the use of a form of investment called the Social Impact Bond into the NHS. It’s called “A new way to invest in better healthcare (Paul Corrigan Social Finance Sept 2011)”. In one way it’s a radical idea because it argues that the NHS needs to develop resource allocation that moves beyond the year-on-year financing dictated by Treasury Rules. In another it’s very commonplace in most other areas of our lives. We invest money this year to make money in future years and we can ‘rollover’ the cost and benefit of the investment, and the costs, on a year-on-year basis.

At the moment any value for money improvements the NHS achieves are limited in part by the annual funding model enforced by Treasury rules. Over the years the rule, that sees the NHS having to receive and spend its money within the same calendar year, may have improved its accounting capabilites – but has developed very little in the way of economics. For commissioners this means that the money they will obtain from the DH needs to balance annually the amount spent – then all will be well. Within a single year it is almost impossible to develop any real return on that annual investment and given it has not been allowed, most NHS organisations have not bothered to learn how money, if spent in a new way, could produce a much greater return on investment over, say, five years.