The pressure is on to reduce costs and maximise resources in the public sector. Are NHS bodies holding on to valuable surplus property waiting for a better market? Or can the release of surplus land be accelerated to help meet Government targets for new provision of affordable housing?

The Housing and Planning Minister, Grant Shapps, announced in June Government plans to release public sector land to build 100,000 affordable homes to meet a pressing need for new low cost housing. What was not clear at the time was where this land would come from.

David Flory, the deputy NHS Chief Executive, has underscored the commitment of the NHS to contribute to this plan by writing to NHS organisations encouraging sales. He announced that the NHS Information Centre will be collecting data on surplus land and the Homes and Community Agency (HCA) may be contacting NHS bodies to offer assistance in disposing of sites.

HCA has a spending programme of £4.5 billion stretching to 2015 and has already enlisted 146 providers that can apply for grant support to develop affordable housing.  

All of this follows on from an EC Harris report in 2010 (Refocusing the NHS Estate) that highlighted over two million square metres of un-utilised space within the NHS with a potential capital value of £1.45 to 2.5 billion. This equates to around 7 per cent of the total space within the NHS.

Perhaps it is not too surprising that during a period of rapid change and significant investment in the NHS, there has been much surplus estate in the process of being sold off and a snapshot might well show more empty space than usual. In a difficult property market, sites have undoubtedly taken longer to sell. But is there any evidence of NHS bodies banking surplus land until prices improve, particularly in the case of land suitable for housing development? Should NHS bodies attempt to focus on surplus sites being used for affordable housing, or leave that to the planners, who almost inevitably look to impose a quota of affordable housing provision in any planning permission for housing development? In places, this quota can be as high as 50 per cent.

David Flory’s letter refers to achieving an optimum return on surplus land and this suggests that there is no real change in how land is to be disposed of ie, seeking a sale for redevelopment for affordable housing would only be preferred if this delivers the best sale price. It is also clear that the data collection exercise is intended to bring some focus onto estate rationalisation possibly with a view to bringing forward disposals and, where practical, to marry up HCA funding support with suitable projects.

Headlines in the press suggesting that NHS bodies are being told to sell off surplus land do not quite reflect the tone of David Flory’s letter which simply refers to the data collection exercise and the hope that the housing initiative will be supported whilst making it clear that NHS organisations have a choice in whether or not to sell.

This almost certainly recognises that there are plenty of drivers in the system that already motivate estate rationalisation and that the decision when to sell and what planning uses should be sought, is best left to local determinants. In most instances NHS bodies will already be very proactive in ensuring that sites are disposed of as soon as is practicable once they are surplus.

Realistically, significant housing sites are only likely to come from the acute sector but there could be smaller scale sites for redevelopment released from elsewhere in the NHS. There is no scope within Estatecode (and no suggestion from elsewhere) that these sites should not be sold, other than for the best value obtainable and in some cases this may preclude affordable housing use.

It remains to be seen whether this is a part of a coherent, joined up Government push to realise a Government housing target or whether the real subtext has more to do with finding capital receipts to close NHS funding gaps as some have suggested. Headlines equating the value of un-utilised estate with the cost of employing nurses are less than helpful and a long term strategy which sees capital generated, which will undoubtedly be more modest than the EC Harris report suggests, could be realised and reinvested in the estate and in particular in initiatives to meet carbon reduction targets.

It remains to be seen whether the gentle encouragement to NHS organisations to help may evolve into Government or indeed public pressure to sell whatever can be sold even at a time of relatively low property prices.