Primary Care Trusts (PCTs) and Strategic Health Authorities (SHAs) were abolished under the Health and Social Care Act 2012 (HSCA 2012). From the end of 2012, healthcare properties vested in these entities will be transferred to the foundation trusts or NHS providers who have taken on community services. Any "excess", including administrative and surplus sites, will transfer to the newly created government property company.
 
A vast administrative and timetabled exercise is currently underway within SHA and PCT estates and facilities management functions to audit properties held by these organisations. This includes identifying and producing schedules of properties and occupiers for the relevant entities and their predecessors.

It also requires an assessment of the requirements of various occupiers where sites are used by both community and clinical operators to properly identify where the property should ultimately be transferred. Local Improvement Finance Trust (LIFT) and private finance initiative (PFI) projects are currently excluded from the scheme.

Foundation trusts and NHS providers are intended to acquire service critical clinical infrastructure, which is required for long term use. Where clinical sites are currently shared between different classes of occupier, these will transfer to the majority occupier subject to leasebacks to other sharers. Any acquisitions by foundation trusts and NHS providers are subject to overage and option rights in favour of the Secretary of State to provide for call-back and to ensure windfall profits are shared if transferred sites eventually become surplus to clinical requirements.

Interestingly, administrative and surplus sites do not transfer automatically and will be managed by a centralised property owning arm - NHS Property Services Limited (NHS Propco).

NHS Propco

NHS Propco was announced by Andrew Lansley on 25 January 2012. It remains to be seen what his successor will make of the concept. NHS Propco is expected to be the recipient of the majority of the existing NHS estate. Looking at existing numbers of employees working in estates and facilities departments of the current SHAs and PCTs, NHS Propco will inherit 2,000-2,500 people – somewhat of a behemoth in property company terms. Commentators also note it can expect to receive assets valued upwards of £4 billion from the PCTs and SHAs placing it on a par with property owning companies such as Land Securities and British Land.

NHS Propco will be owned by the Department of Health and is expected to be fully operational in April 2013. It’s objectives are speculated to include:

  • Consolidation of management
  • Delivery of cost effective property solutions
  • Holding property for use by community and primary care services
  • Delivery of "value for money" property services

NHS Propco will also be responsible for dealing with "surplus sites". The process initiated by the HSCA 2012 coincides with a time when many private companies and large scale infrastructure providers are reviewing their balance sheets with a view to making cost savings on the operational estates front.

Comment

The NHS has been charged with saving the taxpayer £20 billion by 2014. However, in a year when we have seen the first NHS hospitals go into administration against a background of concern about expensive PFI, it comes as no surprise that control and management of this significant land bank is being diverted away from local level.

Property consultants EC Harris have identified that the NHS could save £1 billion merely through efficiencies gained through land disposal and improved procurement for property. A further £1 billion has been identified by selling off 50 per cent of unused space - 1.9 million square metres of underutilised space has been highlighted.

Deputy NHS Chief Executive David Flory has previously written to NHS organisations to encourage sales to support the initiative to reduce costs and maximise resources in the public sector, possibly with a view to supporting affordable housing provision.

We hope that Propco's remit will also include positive steps to refinance and revive projects and developments that have stalled at local level through withdrawal of funding such as the programme for renewal of local GP surgeries. There have been some positive press releases recently identifying alternative sources of funding from the pension funds for hospital developments including the North Tees and Hartlepool NHS Foundation Trust.

Exciting times for NHS estate!