The Department of Health gave the NHS’s new property company a £100m working capital loan last summer amid concerns of a potential cash flow risk, it has emerged.
HSJ has also learned that the DH and NHS Property Services Ltd are now in negotiations over a new arrangement to enable the property company to access capital if necessary.
The DH gave NHS Property Services £190m of working capital at the beginning of 2013-14 to cover the whole financial year, its first year of operation. An additional £100m of working capital was agreed in July. The leaders of NHS Property Services – which is a private company wholly owned by the health secretary – hope that they can now agree a more flexible system enabling them to access working capital if necessary.
HSJ understands that the property company considers the £100m allocation prudent, as it was facing a large potential risk during the summer. However it does not expect to use the full amount.
The £100m amounts to about 10 per cent of NHS Property Services’ expected annual turnover.
A spokeswoman for the company said that, when it was set up, it was assumed that it would be able to generate more working capital through invoicing clinical commissioning groups and NHS England. However, “in the event, the new organisations were initially slow in making payments”.
HSJ has also learned that NHS Property Services itself was slow in sending its invoices out – in part due to confusion over whether transferring more than £3bn worth of NHS estate would land the NHS a hefty VAT bill.
NHS Property Services has been forced to deny that it used its capital budget to support revenue spending, following allegations made in Parliament by Conservative MP Charlotte Leslie.
Ms Leslie, who sits on the Commons health committee, called for an audit of the organisation’s accounts, and for details of its recruitment procedures for board level posts.
Health secretary Jeremy Hunt acknowledged the seriousness of the issue, asked for more details and pledged to “look into it with the greatest priority”.
An NHS Property Services spokeswoman said that none of the company’s £125m capital budget was used to support revenue spending.
It has also emerged that NHS Property Services’ chair has resigned, just six months after the company went live. Charles Howeson will step down in January.
The company says that, although it initially planned to spend its first year in “transition” before beginning a two to three year “transformation” phase, the transition work only took six months.
NHS Property Services said in a statement: “Charles believes it would best suit the company’s strategic needs for a replacement to be recruited who could potentially lead the company right through that next phase of development, which would almost certainly extend beyond his own personal availability.”
Mr Howeson will conduct a review of the company’s “customer approach and culture” for the DH next spring.
Charlotte Leslie’s parliamentary questions also revealed NHS Property Services Ltd has spent more than £5,000 on human resources advice from Metrosexual Health Ltd.
The social enterprise specialises in “health and wellbeing” services including massage, psychotherapy, and body hair removal. It also offers sexual health services such as chlamydia screening.
However it also supplies HR support services, as chief executive Justin Gaffney formerly worked as project manager for the introduction of Agenda for Change at the former St Mary’s Hospital Trust between 2004 and 2007.
NHS Property Services say they tendered for job banding and evaluation support, and brought in Metrosexual Health on a trial, “non-contract basis” which is being kept under review.
NHS Property Services has also bought in more than £250,000 worth of external advice from KPMG, Deloitte, Mills and Reeve LLP and Gallager Employee Benefits.