MP warns that NHS company owning 18% of GP premises is ‘set up to fail’

The NHS property company that owns 18% of GP practice premises in England was ‘set up to fail’ and now faces debts from tenants worth more than £500m, MPs have warned

This is an edited version of an article originally published by GPonline.

Around 1,250 GP practices in England are thought to be in premises owned by NHS Property Services (NHSPS) – a DHSC-owned company set up in 2011 to manage and improve NHS estates.

The company was instructed to move the management of NHS estates onto a more commercial footing, a move that saw some GP practices in these properties facing up to six-figure service charge rises – with some warning they could be forced to close.

Under plans set out in a report by the House of Commons Public Accounts Committee, practices could face renewed pressure to agree tenancy and lease deals with NHSPS – with MPs urging the government to set clear timetables for settling long-standing disputes over service charges and to agree formal lease agreements.

GP service charges

The BMA threatened legal action earlier this year after a National Audit Office report said that practices in NHS-owned premises faced a combined outstanding debt of £173m. BMA leaders accused NHSPS of ‘acting unlawfully’ over the fee hikes, warning that charges had been imposed for non-existent services – such as a lift they did not have – or services practices had already paid for.

The public accounts committee report warns that NHS Property Services was ‘set up to fail’. MPs on the committee say the company was created with a ‘muddled objective’ – expected to run NHS estates but without the powers of a commercial landlord.

The company also inherited ‘long-standing issues’ including limited data on properties and tenants, no lease agreements with two-thirds of its tenants, existing arrangements under which tenants were not always fully charged for rent and services, and a staggering ‘2,400 different facilities management arrangements’.

By April this year just 30% of NHS Property Services tenants had rental agreements in place, the public accounts committee report says.

NHS resources

It adds that ‘between March 2014 and March 2019 outstanding debt from unpaid bills for rent, facilities management services and service charges increased from £210m to £576m’. Just over half of this debt has been challenged by tenants – and the committee warned that ‘time wasted in issuing challenging, pursuing and correcting contested invoices is not a good use of overstretched NHS resources which should be focused on healthcare delivery’.

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In a series of recommendations published by the committee, it urges the DHSC to set ‘clear debt recovery targets’ for NHSPS and a timetable for agreeing rental agreements with all tenants by July 2020.

Public accounts committee chair Meg Hillier, Labour MP for Hackney South and Shoreditch, said: ‘NHS Property Services was gifted valuable local assets when the NHS was reorganised. It can neither make its own decisions about the future of these public assets but nor does it always engage well with local stakeholders.

‘It lacks the powers to run its £3.8bn portfolio of properties effectively. It is unacceptable that the majority of its tenants, including health centres and GP surgeries, have not signed rental agreements.

Rental agreements

‘In turn, the lack of rental agreements has led to disputes by NHS organisations and GPs over the accuracy of their bills. This has resulted in nearly £700m either still unpaid or written off. Pursuing and resolving these disputes is a waste of NHS resources which would be much better focused on delivering better patient services.

‘The DHSC must take urgent action to fix this system which does not serve the taxpayer or local health bodies well.’

An NHSPS spokesperson said it was ‘committed to working with the government to resolve issues highlighted in the report.

‘We welcome the public accounts committee’s report and recommendations,’ the spokesperson said. ‘The report focuses on the legacy issues inherited by NHSPS such as the absence of formal rental and service agreements, and rightly identifies that these issues must be resolved for NHSPS and its NHS partners to reduce billing issues and recover income.

‘We have applied our property expertise to invest £447m upgrading, maintaining and developing new NHS facilities, and disposed of 410 properties declared surplus, raising £347m by March 2019. All capital receipts received from NHSPS properties are reinvested back into the NHS estate. As a direct result of releasing land and buildings the NHS no longer needs, we have enabled provision for c.6,000 housing units to be developed.’

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