Corporate report

Results of Department of Health and Social Care's review of NHS Property Services

Published 24 September 2020

Applies to England

At the Public Accounts Committee hearing on NHS Property Services Ltd (NHSPS) on 9 September 2019, the Permanent Secretary of the Department of Health and Social Care (DHSC) committed to publish the results of a review that was in progress of NHSPS. The results of the DHSC’s review are as set out below.

Conclusions

The functions provided by NHSPS remain broadly appropriate, but operational improvements continue to be required

Although NHSPS’ property portfolio may reduce further in size due to sales of surplus property and transfers of some properties to trusts, the review concluded that there was little evidence that there would be overall benefit to the NHS of NHSPS divesting itself wholesale of any functions in the short to medium term. It should instead focus on working with customers (tenants and NHS commissioning organisations) to agree what they need from a property company/strategic partner, and how can NHSPS deliver this for the benefit of the system.

The current policy of allowing local NHS bodies within Sustainability and Transformation Partnership (STP) groupings to request transfers of operational properties from NHSPS is appropriate

NHS bodies in STP/Integrated Care System (ICS) footprints (which already hold more than 80% of the total NHS’ property portfolio) could take on more of NHSPS’ portfolio, where they have property management capability and can show that the properties would be managed more effectively to benefit the local health economy. It appears unlikely that such transfers will have a material impact on the scale of NHSPS’ portfolio in the short-term, however conclusions may need to be revisited should the number of transfers increase significantly.

There would currently be little overall benefit in fundamentally changing the essentially ‘user pays’ funding model for NHSPS

The introduction of greater transparency in the charging of rents and services to mirror a commercial landlord/tenant relationship has caused disputes between NHSPS and its tenants. However, this is the widely accepted model for the large number of occupancies of ‘third-party’ landlords’ properties by the NHS, and is aligned to the NHS’ funding model of tariff and/or local funding allocations. The operational improvements already in the pipeline should begin to address this, but the company will require continued support from NHS England and NHS Improvement (NHSE&I) and DHSC to ensure that tenants continue to pay for their occupancies. Some minor modifications may however improve the flow of funding and should be explored.

NHSPS engagement with local NHS bodies and their STP/ICS groupings should be enhanced

This will require continued focus on detail by NHSPS and central facilitation to support resolution of funding disputes, especially ones that have arisen over several years, enabling there to be greater engagement between the company and its occupiers that adds value. This should improve integration of portfolios, services and estate and investment plans and may provide opportunities for NHSPS’ technical expertise to support delivery of local estate improvements. Where the NHSPS portfolio makes up a significant part of an STP/ICS footprint the company should be represented on relevant committees and working groups.

NHSPS’ establishment has enabled a dedicated focus on the management of its extensive portfolio of NHS property, but its integration with the NHS nationally and locally now needs to be improved

In addition to the above conclusion on STP/ICSs, NHSPS also needs to ensure that it is aligned to the regional structure of NHSE&I in order to build relationships and allow provision of expertise where required. NHSPS has already begun to refocus the strategic plan to align much more closely with the NHS.

Integration with Community Health Partnerships Ltd (CHP)

There should be increased coordination and integration of the operations of the 2 centrally held property services companies.

Recommended actions

The joint DHSC, NHSE&I and NHSPS programme of work to promote agreement and documentation of occupancy details, ease the flow of funding, and reduce the balance of accrued but uncollected income, should continue. This should include:

• continuing the programme into the 2020 to 2021 financial year and 2021 to 2022 if necessary, including agreeing and delivering against appropriate performance targets
• expanding the scope of the programme to make progress in customer sectors not currently engaged and to ensure that agreement of FM-service and specifications, utilities and management charges is also covered
• NHSPS’ current sharp focus on improving its data, clarity and transparency of charging must continue

Ahead of the 2021 to 2022 financial year, DHSC, NHSE&I and NHSPS should explore and where appropriate implement changes to the funding mechanism for NHSPS that will ease the flow of funding where this will not materially undermine the property-holding and service usage efficiencies that are promoted by the current, essentially ‘user-pays’, funding model. This could include central funding of management fees, elements of structural and external maintenance and greater use of direct payment of property costs by commissioners.

NHSPS should be supported to reset its relationship with the local NHS and explore how to better coordinate NHSPS’ technical property expertise and capacity with that of NHSE&I and local NHS groupings. This will require:

• closer engagement between NHSPS and NHSE&I, with appropriate support or endorsement where NHSPS can deliver benefits
• integration with STP/ICSs to allow full consideration of the property portfolio across a patch
• rebalancing the company’s priorities towards being a delivery partner for the NHS, without a presumption that NHSPS will be an automatic owner of properties or supplier of services. Changes to the objectives and priorities of the organisation will be required to support this and are already underway
• correspondingly, ensuring the appropriate and efficient flow of funding to NHSPS needs to be a shared responsibility between NHS bodies (national and local) and NHSPS, and this could include some tailoring of arrangements to local circumstances and preferences

NHSPS and CHP should seek to coordinate and align activities where possible, including align the companies’ policies so that the offering to the NHS is consistent. This should include consideration of shared functions where appropriate.