NHS Property Services

– in the House of Commons am 2:30 pm ar 23 Chwefror 2024.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Motion made, and Question proposed, That this House do now adjourn.—(Joy Morrissey.)

Photo of Richard Foord Richard Foord Liberal Democrat Spokesperson (Defence) 2:37, 23 Chwefror 2024

My aim during this Adjournment debate is to get a plain answer to one simple question: to whom does NHS Property Services answer? That is a crucial question, because the organisation is in possession of an estate of more than 2,700 properties with a value of more than £3 billion. The company is responsible for roughly 10% of all NHS facilities, yet there is a need for clarity on how it is overseen. I aim to unpack some of the key questions that need answering and outline some ways in which we can improve the situation we find ourselves in, specifically in relation to Seaton Community Hospital in my constituency.

What exactly is NHS Property Services? I had to answer this question myself several months ago, when I learned of plans by NHS Devon to hand back part of Seaton Community Hospital to NHS Property Services, from which NHS Devon had been renting the building. I had little idea why NHS Property Services was the nominal owner of a full wing at Seaton Hospital. That is in spite of the fact that the wing was funded entirely through donations raised by the local community before the hospital was built and opened in 1988.

NHS Property Services is a Government-owned company with one single shareholder, the Secretary of State for Health and Social Care. To me, that implies that Ministers are ultimately responsible for the oversight of that company, even though I accept that the day-to-day running of the organisation is delegated. Yet ask a Minister about this, as I have, and Members might hear a rather different story. Each Minister who I have asked questions of has simply said that they cannot get involved in the decision-making processes in NHS Property Services in any meaningful way. I can understand Ministers not wanting to tinker in operational decisions, but there are some principles at stake in relation to Seaton Hospital that means it is not just an operational matter. Surely a company should be accountable to its shareholders—how otherwise can the company and its board be held accountable for their actions?

That is the paradox: we have a company worth billions that is solely owned by the Government, yet Ministers protest that they can have almost nothing to do with it. Far from being entirely detached from Government, the framework within which NHS Property Services operates is set by the Department of Health and Social Care. When I talk to regional representatives from NHS Property Services, as I have several times, they make it plain to me—in what they say and what they do not—that they are bound by policies emanating from Whitehall. That affects everything from how the organisation was established to its current operating framework, including how much NHS Property Services charges as rent for spaces that it lets to local NHS organisations such as integrated care boards.

That is a key barrier in the fight to save Seaton Hospital as one single entity. The current £140 per square metre market rent puts the embattled wing far out of the price range of any local, community-based organisation that wants to take over the space and use it for the improvement of health and wellbeing in the Axe valley. That is a crazy price: it is well over double what one would have to pay for office space here in Westminster—and, trust me, real estate prices in Seaton should not be comparable with those in Westminster.

My concern is that, on the one hand, the rent is extortionate because it is based on a clinical rate, and yet, on the other hand, the property directors—the people charged with running NHS Property Services—have a background in infrastructure and estates and want to get the maximum income they can from the estate they are running, so they pay little heed to the health context.

I will talk a little about the health context to bring this Seaton Hospital case study to life. The chief medical officer, Sir Chris Whitty, in his annual report last October called “Health in an Ageing Society”, wrote specifically about the tendency of older people to retire and move to rural areas, and specifically to coastal areas such as Seaton. He said:

“We’ve really got to get serious about the areas of the country where ageing is happening very fast, and we've got to do it now. It’s possible to compress the period of time that people spend in ill health...because otherwise we will end up with large numbers of people leading much more dependent lives.”

The report recommends:

“Providing services and environments suitable for older adults in these areas” as an “absolute priority”. Sir Chris Whitty says that, specifically, we need policies to reduce disease, to reduce disability and to help people to exercise, eat well and stay fit.

That was the chief medical officer, and I will also refer to a report written just a couple of weeks ago by Beccy Baird from The King’s Fund. It calls for a radical refocusing of health and care, with primary care and community services at its core. The report says that

“progress has been hampered by an incorrect belief that moving care into the community will result in short-term cash savings. Other factors include a lack of data about primary and community services leading to a ‘cycle of invisibility’”,


“urgent challenges such as A&E waiting times and planned care backlogs becoming the priority for politicians tempted by quick fixes instead of fundamental improvement.”

Sir Chris Whitty and Beccy Baird are up against some in the public sector who are tempted to treat all estate management matters as the same. The head of the National Audit Office, Gareth Davies, talked in Parliament in January about asset management being one of the

“main areas of financial opportunity” for the Government. I would caution the National Audit Office and NHS Property Services to read the Whitty and Baird reports, rather than simply seeking to divest all property in the NHS for as much as Property Services can get.

Seaton Hospital was transferred to NHS Property Services in 2017. The purpose of Property Services at that time was to centralise the holdings of various strategic health authorities and primary care trusts under one umbrella organisation. The aim was to remove the burden from local NHS organisations, and offer greater financial security by holding all those properties centrally. It was intended to provide better management of these important spaces, so as to ensure value for money and quality facilities, using economies of scale and of scope.

Fast forward to 2024, and it is clear that the model is broken. Rather than ensuring that our local health services get the space they need, we seem to be making perverse, false economies. The Government give money to integrated care boards only to have Government-owned NHS Property Services recoup a large portion of that money in rental fees for the buildings that ICBs use, at a rent set and advised by market rent auditors. This offers very little flexibility or security for our local NHS services, which, as in the case of Seaton Community Hospital, are left in a scenario in which the ICB is forced to cut services while still being lumbered with a bill for the space those services used to occupy. We lost the clinical beds we had at Seaton Hospital in 2017, and the space has since remained vacant. The only way to remove this item from the budget line is to turn over the space to NHS Property Services, which becomes liable for the amount charged in rent.

As hon. Members can see, this system is not only complex but incredibly backwards. The Government are effectively renting these buildings from themselves, despite the fact that many were previously directly owned by local health bodies. They are not even rented out at a fair price, despite the stated commitment to achieving fair market rates. These facilities are rented out as clinical spaces, even when they are not used for clinical purposes. This is based on an evaluation that must have been completely off the scale when it was made in 2016. Seaton Hospital was evaluated by the assessor Montagu Evans, and I do not know who it could possibly have talked to if it thinks that Seaton Hospital is worth £300,000 rent a year.

Why, we might ask, is the rent not adjusted to reflect the building’s current status? So far as I can gather, it is because the Government’s rental framework does not allow it. It places a huge roadblock in the way of community groups and hospital friends organisations that seek to convert such spaces into new settings aimed at providing non-clinical services of the sort to which Sir Chris Whitty and Beccy Baird were referring. Instead, the system seems analogous to a self-licking lollipop, or a dog blindly chasing its evasive tail without ever stopping to think why it cannot catch it.

During my many conversations with NHS Property Services in recent months, individual employees have sought to be helpful. However, they find themselves handcuffed by Government policy. They are unable to deviate from the Government’s framework, which, through the consolidated charging policy, first introduced in 2016, sets the rate that ICBs and, now, community organisations need to pay. The rate was introduced when Jeremy Hunt, who is now Chancellor of the Exchequer, was Health Secretary.

In effect, the Government own all NHS facilities and have the power to direct the arrangements under which they are rented out, including the wing of Seaton Community Hospital that was funded, in whole, by local villagers, townspeople and the Seaton and District Hospital League of Friends charity. What on paper might seem like a prudent way to manage NHS facilities, and to make sure that they are properly maintained, means in reality that, in places like Seaton, the community no longer has a stake or a say in how its local hospital is used.

That begs the question: who is in charge? The answer should be the Secretary of State and Ministers reporting to her, but given her Department’s attempts to point the finger at this operational body and to divest itself of responsibility, it seems that nobody is in charge. People are pointing in several directions, and I cannot identify exactly who is setting the market rate. Simply put, the Government have let go of the wheel, and are content to let the car spin out of control so that they do not have to take responsibility. That is not good enough.

Our NHS is the envy of the world and one of our country’s greatest achievements. When the great Liberal thinker William Beveridge conceived of a service that was free at the point of use all those years ago, it was revolutionary and re-shaped the way in which modern democracies have approach public health. We cannot allow it to be eroded because of the unwillingness of the Government to face up to the challenge. The mark of leadership is honesty and accountability. I would like to see that from Ministers. Rather than the Government saying, “This is an operational matter for NHS Property Services, not me,” I would much rather someone from this Conservative Government admitted that they know what the so-called market rent is, why it is charged at that rate, and why the community must pay if it wants to use that space. Better still, that community should be given a concessionary rate, in recognition that clinical activity is not going on in that wing of the building at this stage. The community ought to be able to hire the space for a much more affordable rent.

I have three questions for the Minister. First, is the Department for Health and Social Care responsible for setting the amount that NHS Property Services charges local NHS services such as ICBs to rent the space? Secondly, could the consolidated charging policy, which I understand sets out those prices, be changed by the Secretary of State or Ministers? Thirdly, if the answer to those questions is yes, why have I been told repeatedly that Ministers cannot, so they say, get involved in operational matters relating to NHS Property Services?

Many ICBs are struggling to balance the books—NHS Devon is no different in that respect—and are seeking to downsize the space that they rent to make ends meet. This situation is not specific to Seaton, although I think it is a good case study because of the way in which local people bought a brick and built the hospital themselves with many small donations. The situation facing our local community hospital strikes me as an illustration of why change is needed. I have been campaigning with the Seaton and District Hospital League of Friends charity, which supports Seaton Hospital, to change the charging policy, so that NHS Property Services can have flexibility on rental fees. I want the company to enable underused space in NHS facilities to be rented out to local community groups that want to invest in preventive health and community wellbeing, and that want to fulfil some of the vision that Sir Chris wrote about in his annual report last October.

Ultimately, I would like an affordable concessionary rate to be offered to Seaton and District Hospital League of Friends and the working group that works with them. That would be of benefit to rural and coastal communities such as Seaton. We need to know how to ensure accountability for the current arrangements, and I hope that there can be concessions for local communities, such as the one that I represent in the Axe valley. I look forward to the Minister’s responses to my questions, and I hope that he is willing to engage with me to enact meaningful change that will benefit communities and constituents, such as those in my Tiverton and Honiton constituency.

Photo of Andrew Stephenson Andrew Stephenson Assistant Whip, Minister of State (Department of Health and Social Care) 2:53, 23 Chwefror 2024

I congratulate Richard Foord on securing the debate. I am grateful for the opportunity to set out the role of NHS Property Services. This subject is understandably of great interest to right hon. and hon. Members across the House.

The hon. Gentleman raised the issue of the future of Seaton community hospital. I will come to that in the latter part of my speech, but let me say for the record that I completely understand his desire to protect a much-loved community health facility. As the Member of Parliament for Pendle, I successfully fought to keep open Pendle Community Hospital in Nelson, and in the neighbouring constituency of Ribble Valley, the new £7.8 million Clitheroe Community Hospital opened in May 2014, so I recognise the importance of community hospitals, not just in offering in-patient care, but in acting as a hub for other healthcare services. It will be most useful for me to first set out to the House why and how NHS Property Services came into being.

Under the Health and Social Care Act 2012, the coalition Government abolished primary care trusts and transferred their commissioning responsibilities to clinical commissioning groups. Their property interests transferred to either NHS trusts or NHS Property Services, which was established in 2013 for this purpose. That decision was made because it allowed commissioners to focus on providing care for patients, rather than managing property. NHS Property Services took ownership of nearly 3,500 local facilities, such as community hospitals, health centres, GP surgeries and care homes. In the past 10 years, NHS Property Services has reduced the size of that estate by a fifth, saving over half a billion pounds of taxpayers’ money, every penny of which has been reinvested into the NHS.

Photo of Richard Foord Richard Foord Liberal Democrat Spokesperson (Defence)

I understand the Minister’s point about reinvesting the proceeds from selling what might have been regarded as excess NHS property, but my concern relates to where that money goes. My understanding is that, following a sale, half the money might go back to the integrated care board, which would be Devon in this case. The problem with that situation is that it does not take account of the fact that local communities donated the money to build the infrastructure in the first place. That is certainly the case in the Axe valley with Seaton Community Hospital.

Photo of Andrew Stephenson Andrew Stephenson Assistant Whip, Minister of State (Department of Health and Social Care)

I appreciate the hon. Gentleman’s concern. I hope to provide reassurance in the latter part of my speech that the sale of Seaton Community Hospital is certainly not on the cards and is exceptionally unlikely. However, I appreciate that when property is sold, there is always tension between how much of that money will be reinvested in local communities—many of which have a stake in having created the facilities in the first place—and how much goes into the general NHS pot. The important point for me to land today is that all the money remains within the health services and none returns to the Treasury, so any sales of property from this portfolio are not a way for the Government to generate income, but simply a way of ensuring that the property estate is managed in the most effective fashion.

NHS Property Services was established as a limited company and is led by a board of executive and non-executive directors who are appointed for their property and healthcare expertise, including a departmental shareholder representative. The board’s directors all have the usual responsibilities relating to the proper governance of a limited company, with certain shareholder matters reserved, such as share issue or senior appointments. The board must work within the wider frameworks across Government, such as the Treasury’s guidance on managing public money, which rightly sets out the strict rules for delivering value for taxpayers’ money. The company therefore works with the Department to agree fiscal targets to work within, and is rightly held accountable for its use of public money. However, it is important to emphasise that my Department is not responsible for operational decisions, which are taken by the board and its executive management team.

One reason for the creation of NHS Property Services was to ensure that decisions could be taken without political interference. Although I appreciate that the hon. Member and others across the House may be of the view that my noble Friend Lord Markham, who has ministerial responsibility for NHS Property Services, can intervene to reduce the rents for unoccupied space at Seaton Community Hospital or similar facilities across the country, it would simply not be appropriate for him or any other Minister to intervene in any individual case.

The coalition Government established NHS Property Services through the cost recovery principle, which is the broad framework that the organisation works under. This means that it is funded through charging its costs to the occupiers of its buildings and the recipients of its services. As such, every pound it spends and does not recover is a pound that cannot be spent on delivering frontline care.

The Devon properties were transferred to NHS Property Services on the basis that their ongoing running costs would be funded through rents at market rate and service charges. This approach was taken to give real incentives to local commissioners to take the tough decisions on which properties were most suitable for delivering their clinical strategy, looking at areas as a whole and moving away from a situation whereby subsided property costs could lead to a less effective approach. I accept that that can sometimes lead to tensions about how reasonable charges are set, but the aim is that NHS bodies, and other voluntary and charitable organisations that wish to occupy NHS premises, must factor in the full cost of occupying and maintaining specialist facilities in their decision making.

I will now turn to the future of community hospitals in Devon, including Seaton Community Hospital. As the hon. Gentleman set out in his Adjournment debate in November, Seaton Hospital was part of a group of community hospitals that transferred to NHS Property Services in 2017, when large parts of Seaton Hospital and others in Devon were already vacant. The clinical commissioning group carried out a consultation on the model of community care and a new model of care was introduced, making it more integrated and more community based, with more people receiving care at home. That resulted in a significant reduction in the number of community hospital beds required across Devon. Since then, progress has been made to identify sustainable alternative healthcare uses for vacant spaces in community hospitals in Devon, such as Ottery St Mary and Axminster. In addition, NHS Property Services and Devon ICB have worked with the voluntary sector to support local initiatives in some properties, such as, as the hon. Gentleman will know, the Waffle café at Seaton Hospital.

I understand that Seaton Hospital and some other hospitals still have significant amounts of vacant space. Despite their best efforts, NHS Property Services’ commissioners have been unable to identify relevant services that could fill this gap. NHS Property Services has continued to manage the property, with the costs of the vacant space being charged to the ICB to ensure the costs attributed to the property are fully recovered, but recently the financial challenges facing Devon ICB have called the sustainability of that position into question and it has explored options for alleviating those costs. However, as I explained, simply seeking to pass those costs back to NHS Property Services would not result in the Department having any more money to spend on local healthcare services in Devon.

As I am sure the hon. Gentleman will appreciate, the responsibility for decisions about where to locate clinical services in Devon is a matter for the ICB. It is not a matter for Ministers. However, NHS Property Services is working closely with local leaders to identify options that would help to mitigate the cost pressures arising due to Seaton Community Hospital not operating at full capacity. If, and only if, the ICB determines the property is wholly surplus to its requirements, NHS Property Services would have the responsibility for selling the asset, following Treasury guidelines, but it is important to stress that the site remains an operational site and NHS Property Services therefore has no plans to sell it.

As has been mentioned in the local media, the idea of partial demolition of the hospital has been floated. Again, there are no plans for that course of action, which would very much be a last resort in any event. I believe the site has now been listed as an asset of community value, which means that such a drastic step is exceedingly unlikely to be supported by the local planning authority or other local stakeholders.

Photo of Richard Foord Richard Foord Liberal Democrat Spokesperson (Defence)

It is true that the property has been registered as an asset of community value. To my mind that gives it a stay of execution, rather than that it is inevitable that it will be preserved intact. NHS Property Services talked through the very many options—I think 28 options—on the table for the vacant space at Seaton Hospital. One of that long list of options is indeed selling off the redundant ward, which could be demolished and used for houses. Did the Minister not know that?

Photo of Andrew Stephenson Andrew Stephenson Assistant Whip, Minister of State (Department of Health and Social Care)

I know the idea of demolition has been floated in a meeting, but I have been assured that there are certainly no plans for demolition. As the hon. Gentleman will know, an asset of community value nomination was accepted by the local authority, and as an ACV nomination remains live for five years, it will expire in January 2029, although I am pretty sure that local community groups and others would campaign for that to be extended. It is certainly much more than a stay of execution. I hope that has provided suitable reassurance to the local community that the threat of demolition is exceedingly remote, because the local planning authority and other local stakeholders simply would not agree to the demolition of this much-valued community asset.

I fully recognise that the local community has invested in the building of the hospital in the first place, and therefore is a key stakeholder in its future. The ICB and NHS Property Services continue in ongoing dialogue with a range of community groups about potential future uses, and the community has been invited by the ICB to develop a business case for the future use of the property by the end of June 2024. Any future decisions on the future of Seaton Hospital will be taken following evaluation of that business case. I sincerely hope that a financially sustainable solution can be found locally and in the best interests of the people of Devon.

Question put and agreed to.

House adjourned.