What you need to know about NHS Property Services

The majority of practices in NHS Property Services (NHSPS) premises are facing serious difficulties related to increases in service charges – here’s the BMA’s guidance for practices based on recent successful legal action supported by the BMA

CREDIT: This is an edited version of an article that originally appeared on the BMA

Back in 2013, approximately 3,600 NHS premises in England underwent a significant change. They were transferred to NHSPS (NHS Property Services), an entity owned by DHSC (Department of Health and Social Care) with the Secretary of State as the sole shareholder.

In 2016, NHSPS introduced the Consolidated Charging Policy (‘the Policy’), aimed at imposing charges on medical practices for rent, maintenance, and service expenses, with the goal of recouping all costs.

Over the subsequent years, the BMA received numerous accounts from practices asserting that NHSPS was unfairly imposing charges on them, not aligning with their pre-existing contractual terms. Moreover, these charges were substantially higher than those levied by NHSPS’ predecessors.

The recent court case

The BMA successfully supported five GP practices in legal proceedings against NHSPS to get clarification of the basis on which NHSPS calculates service charges. The case and subsequent settlements resulted in significant reductions in the amount of debt NHSPS sought to reclaim from the practices involved.

Settlement outcome

After a lengthy court case and subsequent settlement process, the BMA successfully assisted the five GP Practices in reducing the quantum of service charge claims demanded by NHSPS.

These practices have had to pay significantly less than what was being claimed by NHSPS with one practice seeing NHSPS’ claim against them reduced by more than £400,000 – a reduction of more than 80%.

For the period between 2013/14 and 2019/20, the BMA assisted the five practices in reaching a settlement with NHSPS. This settlement secured reductions ranging from £25,000 to over £400,000 on the amounts claimed by NHSPS and a total reduction of more than £750,000. 

The considerable reductions achieved by these practices that challenged their service charge claims underlines the importance of querying service charge demands that appear disproportionate or unrepresentative to the services practices receive.

Practice managers should take care when interpreting the results of these settlements and directly applying them to their own circumstances, as these are not test cases. As noted throughout this guidance, each tenant’s obligations will turn on their specific context and occupancy arrangements.

Why the BMA supported legal action against NHSPS

For some years, BMA members have been raising concerns about the basis on which NHSPS was issuing charges to practices and the increasing amounts NHSPS was seeking to recover.

Crucially, these practices had been informed that they were required to make payments to NHSPS in accordance with the Consolidated Charging Policy. These charges have reached a magnitude to make some practices unviable. The BMA has heard from many partners who are reluctantly contemplating handing their GMS (General Medical Service)/PMS (Personal Medical Service) contracts back as a result.

Underlying this were additional concerns about NHSPS’ business practices. Specifically, there were concerns about NHSPS’ inability to provide a coherent explanation to GP practices about what they owed NHSPS and the legal basis for the demands and invoices it was issuing.

Five practices, with support from the BMA, chose to take legal action against NHSPS. This was initially in pursuit of declarations from the court that the introduction of the Policy did not automatically change or ‘vary’ the terms of the practices’ occupation including the amount they must pay in service charges.

The aim of the BMA’s legal action

The purpose of getting declarations from court was to clarify that NHSPS could not rely on the Policy alone to change the practices’ legal obligations; that instead, the practices’ obligations arise from their existing terms of occupation and changes must be provided for under those terms or otherwise mutually agreed between the practices and NHSPS. The purpose of the litigation was to deter NHSPS from its bullish strategy of demanding increases from practices (sometimes under threat of legal action against the practice) without adequately establishing or explaining the legal basis for those increases.

The case began at the outset of 2020. In June 2020 when NHSPS filed its response at court, it conceded that the policy had not been incorporated into, or retrospectively varied, the tenancies and existing service charge obligations of the five practices. At the same time, NHSPS counterclaimed against the five practices claiming arrears of service charges.

This escalated the legal proceedings into a major commercial lawsuit in the middle of the global pandemic. This was just as practices were working hard to roll out the national vaccination programme. We were disappointed that NHSPS decided to escalate the process rather than focus on the narrow issue of the Policy.

NHSPS’ decision to sue these five practices created huge amounts of work for the five practices, causing enormous stress to the practice partners and staff involved. NHSPS’ decision to drag the five practices through protracted legal proceedings during a period of national crisis was shocking to both the BMA and the five practices involved.

Just over a month before the final hearing, the court decided that the proceedings would be split into 2 hearings. The first hearing would deal with the principles of what services NHSPS can charge each of the practices for, and the second hearing would deal with the specific amounts due to be paid by the practices.

First hearing

Handed down on 8 June 2022, the judgment on the first hearing deals with the principal elements of NHSPS’ counterclaims (i.e., what are the terms of these five tenancies?). In the ruling, the judge found that each of the five practices are liable to pay NHSPS its reasonable costs for providing the services on the basis that each have agreed or implied terms of occupation.

Second hearing

The second hearing was to focus on the specific amount owed to NHSPS by each practice. After repeatedly failing to disclose evidence to back up its claims in accordance with the court timetable, NHSPS significantly amended its claims at the eleventh hour. In one of the five cases NHSPS reduced the amount it was claiming by 34%, amounting to a deduction of over £178,000.

NHSPS’ inability to disclose evidence to back up its original claims in a timely way and its last-minute changes to its claims suggests that it launched its claims against these practices without having first clearly identified what services it had in fact provided the practices and how much it was entitled to charge for these.

The BMA remains concerned that NHSPS sought to bring these claims in circumstances where it was unable to readily evidence its claims and had mistakenly overvalued the debt owed by three of the practices by over £235,000. It reinforced both our concerns that some of NHSPS’ demands of practices may be inflated and the BMA’s advice to practices that they cannot always accept those demands at face value. 

At the very least, this called into question the reliability of NHSPS’ ability to calculate what these five and other tenant practices owe NHSPS.

What does this mean for NHSPS tenants?

The length and complexity of the judgment shows the difficulties facing practices in trying to navigate changes NHSPS is making to its approach to service charges. The judge in this case avoided setting precedents for the wider system. Instead, he emphasised that the basis and amount owed by practices must be determined on a case-by-case basis.

NHSPS admitted in these claims that it cannot rely solely on the policy when charging practices. Instead, NHSPS must have regard to the individual facts and circumstances of the practice concerned. This includes written and unwritten occupancy arrangements.

Despite this, the judge determined that NHSPS had remained committed to ‘the Policy’ and has sought to implement the policy in practice in both documented and undocumented tenancies.

NHSPS’ documentation

NHSPS has been asked time and again to produce information and documentation to support the invoices it supplies to practices. It was only after years of legal action that NHSPS did this for these five practices. When NHSPS did finally provide the documentation, it had to amend its claims as it no longer relied on the majority of the disputed invoices it had issued to the practices since 2014.  

If this information been provided at the beginning, the practices would have been able to better understand the service charges levied against them. This may have made for a more constructive dialogue with NHSPS and avoided the need for costly legal action. NHSPS will need to provide a similar level of information to all its other tenants where the accuracy of historic invoices are in dispute.

Engage constructively

The BMA has always advised practices to engage constructively with NHSPS. Practices should seek their own advice on their position and put their particular case to NHSPS on what they believe is or is not, recoverable by way of service charges. Amounts in dispute should be raised with NHSPS.

NHSPS should then respond and confirm the basis on which each item is being charged to each practice specifically.  NHSPS should also demonstrate that these services have actually been provided and, in the absence of  any contrasting terms in the tenancy, to a required standard and at a reasonable cost.

You and your practice may enter into discussions in good faith with NHSPS in an attempt to find mutually agreeable terms of occupancy going forward. You should be mindful that any agreements do not jeopardise your existing legal rights and do not put future sustainability of the practices at risk. As in every case, we encourage you to seek independent legal advice before agreeing to anything.

Current charges

Practices should only make payments if they agree with the legal basis upon which NHSPS have claimed the charges are due and agree they are accurate.

NHSPS has conceded in court that its Consolidated Charging Policy (the Policy) had not been incorporated into, or retrospectively varied, the tenancies and existing service charge obligations of practices. Read our guidance on service charges for more detail.

The BMA GPs committee will stand with you where NHSPS enforces these charges despite there being no legal basis to do so. 

The BMA has been working to reach an agreement nationally. It is prepared to consider all options to reach a fair process for calculating service charges. The process should take into account previous arrangements and not result in practices having to fund the historic neglect of buildings owned by NHSPS.

For more information on NHS property services, read the rest of the BMA article here.