On 16 February the Department of Health issued a Dear Colleague letter addressed to all chief executives of strategic health authorities and primary care trusts. The letter contains directions relating to the acquisition, management and disposal of property.
The scope of the directions is very wide. A non-exhaustive list of transactions to which it applies is set out in the letter and includes:
- disposals of freehold or leasehold property;
- acquisitions of freehold or leasehold property, including the acquisition of a sub-lease over property;
- granting of leases and sub-leases and assignments of the same;
- granting of licences in respect of freehold or leasehold property;
- granting of legal charges over freehold or leasehold property;
- entering into contracts relating to freehold or leasehold property including management, maintenance or cleaning contracts; and
- placing land on the register of surplus public sector land.
There is no de minimis limit and even a short term licence arrangement requires consent as would renewal of existing leases. It is important to note that facilities maintenance agreements are also caught as would be renewal of existing contracts.
Where agreements have already been exchanged the directions do not apply but any amendments to existing agreements are affected.
Before entering into any transactions the PCT must obtain prior written consent from the SHA. If the value of the transaction is £35 million or above then it must also obtain prior written consent from the Department of Health.
PCTs are required to produce all relevant information to the SHA. The SHA has to consider all relevant factors including the duration of the contract, payments due and future use of the estate. In particular in relation to the future use of the estate the SHA should have regard to transforming community services (TCS).
The Department of Health has directed the SHA to only approve the transaction if it is satisfied that:
- it will not adversely affect the future implementation of the transfer of PCT property to other NHS or non-NHS organisations; and
- it is in accordance with good estate management principles under Estatecode and the delegated limits for capital investments.
Although the SHA is instructed to have due regard to TCS any property arrangements that PCTs are intending to enter into as part of TCS arrangements are not excluded from the directions and will require SHA consent.
It is anticipated that compliance with the directions will place an additional burden on PCTs in particular in relation to short term or low value arrangements and also significantly increase the burden on the SHA to provide consent. PCTs also need to have in mind the requirement for consent when agreeing heads of terms for any property or facilities transactions and ensure they factor into the timetable a sufficient period to obtain the necessary consent.