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NHS Property Services was ‘set up to fail’, says public accounts report

by Beth Gault
5 November 2019

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A lack of powers and inherited long-standing issues has set NHS Property Services (NHSPS) up for failure, according to a new report from the Public Accounts Committee (PAC).

The report said that although NHSPS has made some progress in tackling inherited issues – such as limited information on properties and tenants – it had a ‘muddled objective’ when it was created in 2013, hindering its ability to solve the problems.

It found NHSPS’s lack of powers to force tenants to pay rent and other charges has made it difficult to run an effective property management company, with 70% of its tenants having not yet signed rental agreements.

The BMA said the report shows this is a ‘ridiculous situation’ that is taking up ‘too much time’ to resolve and echoed warnings that it will take legal action if no satisfactory response is received to the BMA’s concerns. 

A spokesperson from NHSPS said: ’NHSPS has and continues to work collaboratively with the BMA and earlier this year carried out an in-depth review of specific cases, as agreed with BMA, which concluded that NHSPS charges were broadly correct.’

Disputes over debts

The PAC report said the committee was told by NHS England and NHS Improvement that where disputes are ongoing with tenants over debts ‘in some cases, it may be necessary for NHS Property Services to write off an element of historic charges’.

This could happen ‘where past charges prove to be inaccurate’ or where ‘the charging position going forward is agreed and there is no value to the health system in incurring additional cost to work through the historic billing’.

NHSPS plans to sit down with 2,000 of its customers to agree the charges it has issued this year and pre-agree charges for 2021, to ‘remove scope for dispute’, according to the report.

In its recommendations, the committee said the Department of Health and Social Care (DHSC) should set out a clear timetable within the next two months for NHSPS to agree tenancy details with all tenants by July 2020, alongside clear debt recovery targets.

It follows another report by the National Audit Office in June, which found that NHSPS’s approach to collecting lease fees did not work ‘effectively’ and that outstanding debts owed by tenants – including GPs – had almost tripled in five years.

‘No level playing field’

The PAC report found that outstanding debt had reached £576m as of March 2019 and £110m of debt had been written off in the past five years.

It also highlighted that there is ‘no level playing field’ for all NHS tenants in terms of paying rent.

The report said: ‘About 18% of GP surgeries in England are owned by NHSPS. The rest are either commercially owned or owner-occupied.

‘We are concerned that one GP practice can pay a full rent on its commercial premises, while another GP practice down the road occupying broadly similar premises can get away with not paying its rent on time or at all.

‘In addition, tenants were not always fully charged for rent and services before NHS Property Services took on ownership.’

It recommended that the DHSC move towards a fairer model of charges and be more transparent about any subsidies offered.

‘Six years to get a grip of this problem’

The report said: ‘The DHSC, NHS England and NHS Improvement and NHS Property Services have had six years to get a grip of this problem and have failed miserably.

‘While we recognise that the situation is complex and the provision of health services provided by tenants must continue uninterrupted by rental disputes, the whole system needs to work together far more effectively to find a solution which incentivises tenants to sign rental agreements and pay their bills promptly.’

The report added: ‘We are concerned that the Department has yet to set out a course of action to address this problem, but instead is relying on others to find solutions without a clear timetable for achievement.’

PAC chair MP Meg Hillier 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.’

‘Practices urgently need a solution’

BMA GP Committee chair Dr Richard Vautrey said: ‘Ultimately, this ridiculous situation means GPs are being forced to spend far too much time and effort trying to resolve these issues instead of caring for patients and is also discouraging many young doctors from becoming GP partners.

‘The BMA has already set out in a letter of claim that we believe the NHSPS is acting unlawfully and made clear if no satisfactory response is received, we will take NHSPS to court.

‘Practices urgently need a solution to this matter as it is draining precious resources away from frontline care at a time when we are already thousands of GPs short.’