By David Mackey and Edel Wyse, the Carbon and Energy Fund
As widely signalled, the 2025 Autumn Statement does not directly ringfence capital for NHS estates to drive forward investment to meet its Net Zero mandate. Instead, the Statement acknowledges the challenges faced by the government to balance a growing day to day expenditure and to meet the forecast capital needs, whether in infrastructure, carbon abatement and growth opportunities. The 2025 Statement and Balance Sheet guidance introduces the framework for appropriately considering the benefits of private financing and provides a clearer indication of the policy and fiscal environment in which decarbonisation will need to progress. Within that context, there is significant opportunity to accelerate delivery through more structured and partnership-based approaches; novating risk to the sector best placed to manage it.
For over a decade, NHS decarbonisation has relied heavily on time-limited grant programmes such as the Public Sector Decarbonisation Scheme launched in so as not to divert available funding from patient facing needs. While these government funded schemes have supported important deployment, they have also created episodic delivery cycles. The Autumn Statement signals a shift away from this model, and towards approaches that prioritise long-term planning, stable commercial structures and privately financed solutions where it makes sense to do so.
This transition is welcome across multi sectors who stand ready to support the establishment of a government led and defined. The Carbon and Energy Fund (CEF) via it’s public sector approved frameworks pioneered this process in the NHS and continues to do so. It has delivered over £1bn of decarbonising infrastructure and energy assets using PPP/EPC with over £250m privately finance demonstrating VFM for the public sector and risk transfer to the private sector.
A More Defined Pathway for Estates Decarbonisation
The Statement reinforces the reality that future progress will depend less on central grant funding and more on collaborative delivery models. The evidence base from CEF programmes demonstrates that where Trusts adopt structured partnership models, the results are tangible:
- replacement of end-of-life infrastructure,
- substantial reductions in carbon emissions,
- improved resilience and operational performance,
- and modernisation delivered without the need for Trust capital
- job retention and market stabilisation
This is precisely the role that Public-Private Partnerships (PPPs) are designed to fulfil.
PPPs as the Primary Delivery Mechanism
The fiscal position outlined in the Autumn Statement effectively places PPPs and funded partnership models at the centre of large-scale energy and estate transformation across the NHS.
These arrangements:
- ensure appropriate risk management,
- drive the reduction in energy consumption,
- deliver economies of scale
- establish a framework of acceptable principals
- bring forward private investment,
- upgrade critical infrastructure,
- guarantee financial improvements,
- and achieve carbon reduction outcomes without drawing on new Treasury allocations.
In the current environment, this combination provides a credible and scalable route to delivery.
Strengthening the Case for Low-Carbon Heat
Although the Statement does not explicitly address heat decarbonisation, it strengthens the underlying rationale for transitioning to alternative heat sources at pace. Market developments are advancing rapidly across:
- industrial waste-heat recovery,
- mine-water and geothermal technologies,
- expanded heat-network infrastructure,
- and the next generation of heat pump systems.
Given the NHS’s significant and consistent heat demand, these technologies represent a strong strategic fit. Opportunities associated with data-centre waste heat — particularly for Trusts within proximity of major clusters — are of particular note, offering long-term, low-carbon heat at scale.
This represents one of the most material emerging opportunities for the estate.
A Delivery Model Anchored in Partnership
The Statement reinforces a core principle: long-term decarbonisation of the NHS estate requires coordinated partnership working, including:
- specialist energy and infrastructure partners,
- local authorities and heat-network operators
- data-centre stakeholders
- private financiers
- NHS Trusts
- Multi community beneficiaries
This collaborative model provides access to capital, expertise and delivery capacity that would not otherwise be available and the opportunity to transfer risk to a sector who are best placed to manage it.
A Clear Direction and Significant Opportunity
Far from limiting progress, the Autumn Statement and guidance on the management of the national balance sheet provides a framework which supports:
- stable commercial structures,
- lower operational expenditure,
- secure low-carbon heat supply,
- and delivery models that do not rely on intermittent government funding.
PPPs, alternative heat sources and structured partnerships provide a clear and deliverable pathway to achieving these outcomes.
The direction of travel is now explicit. The tools are in place. The opportunity — particularly around heat networks and integration with the UK’s data-centre ecosystem — is substantial. The priority is now to move from planning to implementation. CEF privately financed schemes have been deemed off-balance sheet by Trust auditors and its revised contract is compliant under the budget principles and latest accountancy rules. To achieve Value For Money the contract is investable by the most competitive private finance providers and will be market tested against each other, the cost of the Trust providing its own capital and whatever contractors can secure. The Trust will decide which is the best VFM to achieve its statutory carbon target against its CDEL and RDEL limitations; all within the backdrop of transferring quantifiable risk from the public sector to where it is best managed.
