Government “Naylors” its Estate colours to the mast

In the official response to the Naylor Review, the government has finally acknowledged that world-class healthcare requires world-class property.

The government has confirmed that it will:

• Establish the NHS Property Board to ensure optimum use of the estate
• Deliver strategic estates planning service to support STPs
• Invest in training and development creating new career paths
• Assist with the provision of additional specialist support
• Improve collection and use of data
• Encourage take-up across the NHS of accredited training

Looking at the balance sheets, this amounts to an additional £3.9 billion by 2022/2023.

Strategic visions are all well and good; but the proof of the pudding is in the eating, and the government has certainly given a number of insightful examples of how it intends to deliver its programme.

NHS Property Board

The Board will provide a single leadership focus for the system and is. charged with ensuring the NHS estate is developed and used in a way that supports the delivery of clinical strategies and is adaptable to locally changing demand, new models of care, and integration of clinical services.

It would appear that this new body will act as an overseer, bringing together and directing existing NHS property setups’ strategic functions so that there is greater alignment.

One of its first challenges will be to co-ordinate the disposal of smaller and lower risk sites for housing; and to promote co-location of health, community, and social care services among the whole public estate. The government wants to build 26,000 new homes of which some 3,000 should be made available to NHS families, particularly as in some areas the lack of affordable housing is impacting on workforce recruitment and retention.

What operational changes this will lead to remain to be seen at this stage; and will not be fully known until (at least) the Property Board is active and operational at all levels.

Strategic level funding

If £10 billion of investment is required in the NHS estate and the government has confirmed spending of £3.9 billion this leaves a shortfall of some £6.1 billion pounds which the NHS is expected to find itself from its existing assets. Whilst £3.3 billion should come from the disposal of surplus land for residential development, there is still £2.6 billion unaccounted for.

The contribution from the government will go towards STPs primarily (c.75%) with c.20% going to turnaround plans for those Trusts facing the most urgent and critical backlog maintenance issues and the final c.5% towards efficiency programmes to reduce costs.

This does not leave any funds for trusts who have non-critical backlog maintenance and the STPs’ plans will likely exceed the budgets given. Whilst the government alleges that most of the capital funding allocation remains available, how long will this last? If £3.9billion is being given to plug a £10 billion void, at some point, the allocation will run out.

Even at this stage, as a strategic oversight, the government recommends that private finance is investigated. Acknowledging the lessons to be learned from PFI, and the recent collapse of Carillion, the government still advocates exploring the possibility of LIFT, PF2, and PPPs – but is this expected to plug the funding gap completely?

Incentives and disincentives

In the end, the government has saved some of its biggest incentives, but also perhaps its biggest challenges, for NHS provider trusts and foundation trusts themselves:

Robust estate strategies

There needs to be better communication at all levels and amongst all estates bodies. Clinical service strategies must be constantly under review; both as part of the Five Year Forward View and beyond.

The government is seeking to improve accountability for estates transformation from an organisational level by advocating for a single member of the executive trust board to be responsible for estates transformation. Trusts must also engage better engagement with STPs, as clear estates representation and accountability is a criterion for STPs to access capital.

This is the government’s first “stick”. If trusts don’t co-operate and engage pro-actively with the STPs, the STPs won’t be given funding to transform the estate.

Access to capital

To access the almost £4 billion the government is putting forward, organisations must show that they are pursuing all value-for-money opportunities to generate capital within the STP footprint.

If an organisation isn’t doing its all, the STP won’t get that money. This is a particular problem when money is wanted for the benefit of one NHS body; but at the expense (sale of land) of another, within the same STP footprint.

This is the government’s second “stick”. Organisations must act in the best interests of the STP as a whole, rather than in the interests of their own organisation, if they want to access the STP funding.

Retaining capital receipts

The 50% overage paid to the DH on the sale of former PCT estate, with no guarantee the money will come back to the area, and no opportunity to save the money for future investment has long put trusts off wanting to dispose of major assets.

The government will seek to address this by removing the right for the DH to claim overage on former PCT properties sold by trusts; and will allow trusts, via the STPs and upon application to the DH, to bank sales proceeds with the DH only to draw them down at a later date, when needed.

This is the government’s major “carrot”: removing two of the biggest financial hurdles to the disposal of surplus land. The government will also retrospectively enforce the overage to any payment made since 1st April 2017.

Summary

Serious changes are needed both to the management and operation of the NHS estate. With some government funding, but the majority being raised by the NHS itself, the government wants immediate and unequivocal action to transform the NHS estate to be fit for purpose now and in the future.

The government wants action at all levels:

• Nationally: appointing an overseer in the form of the NHS Property Board to provide a strategic oversight and, no doubt, policy influencer.
• Regionally: giving great power and importance to the STPs, without whose approval finance won’t be given; and who will have the task of overcoming organisational pride to redevelop and reconfigure the estate to serve the STP footprint.
• Locally: by eliciting action from the providers, making it easier to dispose of land, ensuring that strategic support is given to arrange the estate better for disposal, and removing some of the institutional barriers which have previously hindered disposal.

With an acknowledgement that there is not enough money to fund what needs to be funded directly (but with a hope that the money can be sourced from within and without) the government’s ambitions for transformation of the NHS estate are, at the very least, exciting and invigorating.

Whilst NHS estates managers may not agree with all the proposals, all must initially be celebrating the fact that the oft-ignored NHS estate is finally being appreciated and acknowledged as an integral part of the healthcare system.

If you haven’t already, you’ll soon be starting on an ambitious project to reinvigorate your estate. Whether it is understanding the full extent of your estate to identify surplus areas, or once the surplus areas have been identified, understanding what preliminary action needs to be taken to ready those sites for disposal, Hempsons’ team of dedicated and specialist lawyers are ready to assist.

Key action points from the Naylor review

• Does your organisation have a concise understanding of its full estate?
• Does your organisation understand the legal boundaries can that often stand in the way of site disposal?

Through the development of our REX software, a comprehensive Real Estate Extranet, Hempsons can provide the structure to enable you to manage, operate, and understand your estate. Contact us for a free demonstration of what this software can do.

Our extensive knowledge acting for NHS trusts gives us an unparalleled ability to assist with evaluating the legal boundaries to site disposal. With over 125 years’ experience acting in healthcare matters, few others can offer the experience, expertise, and understanding that Hempsons brings to healthcare matters. From understanding complex estates, and disposal options, to establishing ASDMs for improved efficiencies, and our extensive history with public-private finance initiatives, Hempsons is exceptionally-placed to put into action the plans and proposals made by Naylor, insofar as they impact your organisation.

Contact us for information about how we can assist with the following:

• Strategic estate partnerships
• Disposals for capital receipts
• Gain share on capital receipts and revenue generation
• Key worker accommodation
• Intermediate care facilities
• Competitive processes to engage the investor and developer markets
• Maximising value and accelerating your strategic estates plans