Trust agrees short term deal over £26m property dispute

Cornwall Partnership Foundation Trust and NHS Property Services have been in a dispute for more than a year over the liability for an estimated £26m worth of backlog maintenance costs relating to 17 buildings.

HSJ has learned that the two parties have signed a “licence agreement” with liability remaining with NHS Property Services for now.

As part of the deal NHSPS will also provide £2.5m of capital funding for the buildings in most urgent need of repair.

However, the agreement is only binding until 31 March 2018 when a new deal will be required.

The dispute began when the trust led a consortium of local organisations, which took over adult community health services in the county in April 2016.

This resulted in the trust taking over 17 buildings with backlog maintenance costs worth £26m, a survey commissioned by the trust found.

Determining which organisation was liable for these costs formed part of the lease negotiations between the trust and NHSPS but no agreement was made.

Trust chief executive Phil Confue said the trust felt it was unfair that it had been asked to be liable for the maintenance costs, given the short timescale of the adult community health contract, which ends in March 2018.

As lease terms were not agreed, the trust refused to pay NHSPS rent for the buildings, which grew to £5.7m, because the trust felt this would signal acceptance of the proposed lease terms.

This led NHSPS to ask for intervention from NHS Improvement and the Department of Health.

Although formal arbitration never went ahead, the move accelerated the lease negotiations, Mr Confue said, and the parties have now signed the licence agreement lasting until the adult community services contract expires.

As a result, the trust is paying NHSPS back the rent owed, while NHSPS is also paying back £1.1m owed to the trust relating to facilities management services the trust provided on behalf of the company.

Mr Confue said it was reasonable that the liability remained with NHSPS and said the trust is working with NHSPS to find ways of addressing the rest of the backlog over five years, in conjunction with the sustainability and transformation partnership.

Under the licence agreement, NHSPS will provide capital investment worth £2.5m for repairs to buildings in most urgent need of maintenance.

Mr Confue said the buildings in question are Launceston, Camborne and Redruth, and Falmouth community hospitals.

A spokesman for NHSPS said the buildings had suffered from “many years of underinvestment” before becoming part of the organisation’s portfolio.

“We’ve previously made clear that trusts can pay sums owed without prejudicing future lease negotiations,” he said. “We are pleased to have reached a mutually agreeable conclusion to these discussions.”

He added that NHSPS said it had made “significant investment” in the NHS estate in Cornwall, including £2m in the last two years on drainage works for Newquay Hospital, a new generator and chimney removal at St Austell Hospital, and fire safety remedial works at Falmouth Hospital.