NHS Estates Report

Published 18 November 2019

Innovation and a sustainable future.

It is widely accepted that there is a £6 billion maintenance backlog for our NHS estates, £3 billion of which is safety critical. This backlog arises as a result of years of austerity; whereby £4.3 billion of capital funding, together with receipts from the sale of NHS assets, have been diverted to keep day-to-day NHS spending in balance.

The primary care and community estates are in particularly poor order, with aged and decaying buildings, many of which are contaminated with asbestos, that are wholly unsuitable for hub working, new technology or the housing of multi-disciplinary teams. All of these are key elements of the NHS Long Term Plan (LTP).

Capital spending to address these issues has seen a 7% real-terms decline from £5.8 billion in 2011 to £5.3 billion last year, according to a Health Foundation report.1 To compound this list of problems, the report’s authors calculate that capital to revenue budget transfers have led to the capital budget falling as a share of the total departmental health budget from 5% in 2011, to less than 4% in 2015/16.

Private finance initiative (PFI) schemes have also fallen out of favour. These build-and-maintenance deals with private sector partners, that built over 125 replacement or upgraded hospitals, have kept NHS capital spending off Treasury balance sheets for the last two decades. HM Treasury’s recent Infrastructure Finance Review Consultation2, which closed in June 2019, makes it clear that the Government supports and is exploring new ways to attract private finance, but not schemes that share the same characteristics as PFI and PF2.

And yet, any alternative scheme needs to address the impact on The Capital Departmental Expenditure Limit (CDEL) limits; while there is no apparent shortage of willing investors in NHS property, borrowing which counts against DHSC CDEL can mean it is difficult, or even impossible, to get an otherwise compelling scheme approved.

Then there is the matter of NHS Property Services (NHSPS), the commercial company wholly owned by the Secretary of State which acts as landlord to a sprawling and diverse primary care and community estate. NHSPS provides estates management, support and facilities management services to some 3,000 properties – accounting for 10% of the NHS estate, and worth £3 billion.

Dogged by criticism since it was established in 2012 to take on and manage assets of the former Primary Care Trusts, the original intent – to find a joint venture private sector partner to invest in the NHS estate – was quickly shelved. Critics question the rationale for the management of NHS estate assets on a national basis, when the LTP appears to promote more localised Sustainability and Transformation Plan (STP)-driven solutions.

Many trusts are now keen to acquire and potentially develop these assets in line with STP planning, but progress in transferring assets from NHSPS has been slow.

In autumn 2019 the NHS was cheered by two injections totalling over £4 billion worth of government capital investment for new-builds and vital repairs, while £100 million was allocated to 21 other trusts to develop business cases for rebuilding. While the British Medical Association (BMA) and the NHS Confederation say new funding is welcome, what is required is a consistent, planned approach to maintaining and renewing the NHS estate.

In this report we examine these challenges, considering the views of experts who call for new freedoms to innovate and form relationships with private and public sector partners. New ideas are coming to fruition, demonstrating how the NHS estate can potentially derive more sustainable income for trusts and help deliver the LTP’s aims. Here our experts share their thoughts on how to create a world-class NHS estate for patients and staff.

We would like to take this opportunity to thank our experts: Sir Robert Naylor (former Chief Executive at University College London Hospitals NHS Foundation Trust), Nigel Edwards (Chief Executive at the Nuffield Trust), Paul Price (Head of Commercial at Northumbria Healthcare NHS Foundation Trust), Richard Darch (Chief Executive at Archus), Tony Spotswood (Director of Health and Community Development at Affordable Housing & Healthcare Group) and Mark Bagnall (former Director of Estates, Facilities and Capital at University Hospital Southampton NHS Foundation Trust).

Click here to download the report in full, or see below for the relevant articles:

WHERE ARE WE NOW?

The NHS estate is in a parlous state. Years of austerity, selling off assets and diverting capital funding to balance day-to-day spending has created a £6 billion maintenance backlog…

Click here to read article on where we are now.

MAKING ESTATES WORK

There are trusts developing innovative schemes, such as joint ventures and Limited Liability Partnerships, to raise funds for capital projects.

Click here to read article on making estates work.

WHAT NEXT?

NHS leaders and partners say that capital funding must come from a range of sources that provide efficient and flexible ways to maintain estates and plan for the future.

Click here to read article on what is next.

REPORT SUMMARY

This report shares some novel and exciting ideas for raising capital, and locally effective and accountable ways of using it, that take into account future, as well as present, need. Here we highlight a number of important points from the report.

Click here to read the report summary.

Click here to download ‘NHS Estates: Innovation and a sustainable future’ in full.