New Propco – Opportunity or Threat?

NHS Management

The Department of Health (DH) is to create a new property company to replace the two that currently exist1 nearly four years after the intention was first announced. The move is understood to be one of the recommendations of Sir Robert Naylor’s forthcoming report on the NHS estate.

The current position came into being as an afterthought to the now much derided Health and Social Care Act 2012 “reforms”, with a new DH owned company, Propco, solving the problem of who took over billions of pounds of property (such as primary care centres, clinics, community hospitals and offices) after Primary Care Trusts (PCTs) were abolished.

When Propco was set up there were concerns and issues and the suspicion that this was just a vehicle for privatisation or an asset sell off. Many of the properties were occupied wholly or in part by non-NHS bodies. Social enterprises (largely formed by former NHS community services staff) raised concerns that the change would add further complexity to the management of the estate, stalling the ongoing rationalization of existing property assets. They noted that new leases would have to be prepared with additional expense and management arrangements would become more complicated having overall a destabilising effect on local health economies.

Propco became NHS Property Services and its recent decision to move to market rents has caused a lot of problems. In July last year it was reported that commissioners remain locked in protracted negotiations around how much they will pay for buildings rented off NHS Property Services because of data problems. A senior Clinical Commissioning Group (CCG) finance officer told HSJ the principle of the move was understandable, but raised concerns that the implementation was being “botched”. NHS England director of financial control Steve Wilson informed CCG finance directors in a letter dated 15 June that there had been “a number of data quality issues” with NHS Property Service’s data highlighting earlier concerns that the setup of Propco had been compromised2.

For me locally there are problems with Health Centres facing extra charges and a community based organisation, born out of the Local Authority and NHS working together, suddenly being asked to pay huge increases in rents and charges; which I have taken up on their behalf.

But my wider concern is about the aims and objectives of the new property services company. Is this incarnation an attempt to be supportive of the NHS and its Sustainability and Transformation Plans (STPs)? These STPs are the great hope for our NHS, implementing the Five Year Forward View. Or is this new company just a route to a sell off more of the extensive NHS estate; or is it an income generator getting in the rents and charges. And why not bring in all NHS properties and include management of the many large PFIs (maybe better expertise could renegotiate better deals)?

This confusion about aims and objectives was highlighted when the original Propco was set up. In its March 2014 Report, Investigation into NHS Property Services, the National Audit Office pointed out that the objective “to hold property for use by community and primary care services AND deliver value for money” (emphasis added) was not clear.

This is important because just about every STP has pointed to estates as one of 3 or 4 key enablers of change. So does Newpropco have the role of facilitating these STP changes, or is it about maximizing income or receipts? Are decisions to be made locally, or by Newpropco, or through joint working? How will Newpropco staff be expected to work with localities – at present there is little or no local presence or knowledge.

So far the objectives of Newpropco have not been published but a DH spokesperson has said “The ability to invest in the highest standards of patient care, delivered in the right buildings and facilities, is a priority for this government. The creation of a new NHS property organisation will help to identify unused property to generate funding for reinvestment in the NHS whilst driving down estate running costs and creating opportunities to deliver new homes across the country.” Very laudable but not very specific on how potentially competing aims are balanced.

To add confusion last October, Simon Stevens the Chief Executive of NHS England told HSJ that NHS England was exploring the possibility of NHS organisations keeping their land sale receipts to invest in new services, rather than surrender them to central government.

This tension between running a property company and managing properties on behalf of the best interests of the operation of the care system is probably not resolvable.

I await with interest what Ministers will say about the setup of Newpropco and the Naylor Report when we see it. We must all hope this venture goes a lot more smoothly and with a much clearer strategy than the last attempt. It would also help if it operated in a more open and transparent manner like the NHS is supposed to be and not behaving like a commercial company in disguise.

1 NHS Property Services (Propco) was set up in 2012 to take over the ownership and management of property previously owned by organisations, such as primary care trusts, which were abolished by Health and Social Care Act reforms. It runs 3,500 properties, including offices, primary care and community health facilities. Community Health Partnerships (CHP) was established in 2001 to manage the DH’s interests in local improvement finance trust companies. LIFT is a scheme for public-private community property developments.

2 This is acknowledged now as many tenants have no proper leases or even agreements of any kind to cover rent and charges. Information was never properly collected on start up.