NHS Property Services ‘lacks power’ to collect rent

Author: Jo Carlowe

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NHS Property Services Limited (NHSPS) “lacks the power” to recover fees from practices and other tenants, the National Audit Office has found.

In its report*, published today, the National Audit Office (NAO) finds that the NHSPS is unable to make tenants sign lease agreements and pay their rent, which has contributed to increasing levels of outstanding debt.

According to the NAO report, although only occupying 18% of properties, GPs owe 30% of the current outstanding debt.

However, the British Medical Association (BMA) has accused the NHSPS of raising fees without explanation, and has today written to the organisation calling for the problem to be resolved.

The NHSPS 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.

The NAO report describes how the service 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 Service has improved the quality of data it holds and introduced a new billing system in 2017, but many bills are still disputed, particularly by tenants without rental agreements.

The Service 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.

Outstanding debt has almost tripled, to £576 million, and tenants are taking much longer to pay their debts. In 2018-19, the Service only recovered 58.4p for every £1 it billed.

Between 2014-15 and 2018-19, the Service wrote off £110 million of debt and a new arbitration process for resolving disputed bills is not working effectively, the NAO report finds. The service has not met the Department’s goal for it to become financially self-reliant and 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 NAO, in its report, recommends the NHSPS and all of its tenants agree tenancy details and amounts by the end of March 2020; and put in place a process to ensure all billing disputes are settled within 90 days.

Commenting on today’s report, Dr Richard Vautrey, BMA GP committee chair, said: “Problems with practice premises and the financial pressures that go alongside owning or leasing surgery buildings are constant frustrations for hardworking GPs, and have an important negative impact on GP recruitment and retention.

“Specifically, in recent years, GPs leasing buildings from NHS Property Services have seen their service and maintenance fees rise astronomically with no agreement and no proper explanation. It is only right then, that GPs do not pay these fees that could risk the very future of their practices and the ability to provide care for patients.”

Dr Vautrey added: “It is simply not the case… as this report claims, that GPs see paying for premises as ‘optional’. Practices want to pay a fair and appropriate rent but this needs to be reimbursed by CCGs [clinical commissioning groups]. A lack of funding in recent years means commissioners cannot keep up with sky-rocketing commercial rents demanded by NHS Property Services, and they’ve simply passed the problem and the cost to family doctors. This is unacceptable at a time when practices are already under huge financial strain. Good quality, up-to-date premises are key to providing good quality patient care, and the government must provide sufficient investment to ensure practice buildings are fit for purpose.”

Responding, Ian Ellis, chair of NHS Property Services, said: “The report makes clear the positive impact the organisation’s management team and its strategic business plan is having on strategic estates and facilities management, as well as the improvements, efficiencies and savings we have delivered in collecting data, streamlining facilities management contracts, improving space utilisation and reducing vacant space.

“It also highlights how NHSPS has used its property expertise to invest £447m upgrading, maintaining and developing new NHS facilities, and in addition selling 410 surplus properties and raising £347m by March 2019. All capital receipts are reinvested into the NHS estate and land and building release has enabled the development of 5,931 new homes to date.

“The report comments on some of the legacy issues NHSPS has inherited from operating in the widespread absence of formal rental and service agreements and the significant impact this has had on the company’s ability to: agree charges with customers for accommodation and services provided, reduce billing disputes and recover outstanding debts. We fully acknowledge that whilst improvements have been made, these have been at a slower pace than we wanted but support is also required from the broader health system to fully address this. We are committed to working across the stakeholder community to implement systemic fixes.

“NHSPS, as a responsible property owner and service provider, is committed to working constructively with the Department of Health and Social Care, NHS England and other NHS partners, to support  the recommendations of the NAO investigation, including to develop a joint plan to ensure all tenants will agree tenancy details and charges by 31 March 2020 to create a properly regulated, transparent and optimised estate for the benefit of our customers and their patients, now and in the future.”


*Investigation into NHS Property Services Limited. Report by the Comptroller and Auditor General, National Audit Office, 26 June 2019.

OnMedica

Editorial team, Wilmington Healthcare

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