NHS Property Services lacks the powers it needs to make tenants sign lease agreements and pay their rent. This is the conclusion of a report by the National Audit Office (NAO) into the performance of the property management business.
Between 2013/14 and 2018/19 NHS Property Services has written-off £110m in debt and outstanding debt has almost tripled. In March 2019, it recorded £576m of outstanding debt, up from £210m in March 2014. NHS Trusts and Foundation Trusts occupy 31% of the NHS Property Estate. GPs, which occupy 18%, owe 30% of the current outstanding debt.
NHS Property Services has no effective way of getting tenants to sign formal rental agreements. Since 2013-14 the percentage of tenants without leases has increased from nearly two-thirds to 70%. The NAO report says the quality of data held has been improved and a new billing system was introduced in 2017, but still many bills are disputed, particularly by tenants without rental agreements.
Furthermore, NHS Property Services does not have the same powers as a commercial landlord for NHS tenants, limiting its ability to take action when bills are not paid. Action against non-NHS tenants, including GPs, must be approved by the Department on a case-by-case basis.
Gareth Davies, Head of the NAO, says: “The Service has slowly improved the way it manages its NHS properties. However, more than eight years after being created it still lacks the powers it needs to run its affairs effectively, and the accuracy of bills is still disputed.
“In our view, too many NHS organisations and GPs seem to regard paying for their premises as optional, with almost £700 million either written off or still unpaid.
“The system for charging for NHS property is not working effectively and the Department urgently needs to address the fundamental causes of this unsatisfactory situation.”
NHS Property Services has met most of its estates management objectives. By March 2019, it had sold 410 excess properties at a value of £347 million, and invested £447 million in upgrading, maintaining and developing new facilities. It has also reduced the 2,400 separate facilities management service arrangements it inherited to around 50 contracts. However, in 2017 the Department of Health and Social Care estimated it had maintenance backlog worth £1 billion.
NHS Property Services has not met the Department’s goal for it to become financially self-reliant. Between 2013-14 and 2018-19, it reduced its direct operating costs by £51 million. However, it recorded a loss in each financial year, with total losses of £1,010 million, including losses of £565 million that resulted from the revaluation of assets. The Service’s seven directors received total bonuses of £206,000 in 2018-19.
The NAO recommends that the Department, in collaboration with NHS Property Services and NHS bodies should ensure that tenancy details are agreed including amounts by the end of March 2020, and put in place a process to ensure that all billing disputes are settled within 90 days. NHS Property Services should also develop quality metrics for the accuracy of billing.
Commenting on the findings of the NAO investigation, Miriam Deakin, Director of Policy and Strategy at NHS Providers says: “The government has recently made moves to allow Trusts to apply for the transfer of ownership on their estate. This recognises the fact that trusts themselves are best placed to manage their property, and set out the level of investment they need to make to modernise buildings and facilities in order to support the delivery of the long term plan.
“But this alone will not solve the wider problems trusts face in accessing sufficient capital funding. We agree with the NAO that it is important for the Department of Health and Social Care to complete its strategic review of NHSPS as quickly as possible to help inform the upcoming Spending Review.”
NHS Property Services was established in December 2011 to manage, maintain and improve NHS properties in England and facilities previously owned by strategic health authorities and primary care trusts. It operates 2,900 properties with an estimated value of £3.8 billion, and has approximately 6,950 tenants.
