MPs: DHSC and regulators ‘failed miserably’ over quango

The Public Accounts Committee published a report on Tuesday, which criticised the Department of Health and Social Care, NHS England/Improvement and NHS Property Services for their inability to “get a grip” on the company in the six years it has existed. 

The committee added NHS Property Services was “set up to fail” and was created with a “muddled objective”.

Its chair, Labour MP Meg Hillier, said: “The department must take urgent action to fix this system which does not serve the taxpayer or local health bodies well.”

NHS Property Services, which was established during the Lansley reforms at the start of this decade, has been tasked with running the estate vacated by primary care trusts, which consists mainly of GP practices and community hospitals.

NHS Property Services’ portfolio consists of around 2,900 properties (equivalent to 12 per cent of the NHS estate by floor space) with an estimated value of £3.8bn. It has nearly 7,000 tenants.

However, the company does not have the same powers as a commercial landlord — such as being able to evict or take legal action against tenants — to enforce occupancy contracts and charges, and it has failed to agree leases with two-thirds of its tenants. This has contributed to the company recording a deficit every year of its existence.

The PAC, which took evidence on NHS Property Services in September, said the “whole system needs to work together far more effectively to find a solution which incentivises tenants to sign rental agreements and pay their bills promptly”.

It said the lack of rental agreements “undermines” NHS Property Services’ ability to manage its estate properly and “drive maximum value”. It acknowledged that the company has “no effective way” of getting tenants to sign formal rental agreements.

The PAC called on the DHSC to set out a “clear timetable” within two months for NHS Property Services to agree tenancy details with all tenants by July 2020.

However, NHSE/I’s finance director Julian Kelly said during the September evidence hearing he would “not hold [his] breath” on that target being achieved. 

The PAC also raised concerns about a “lack of transparency” in NHS Property Services’ property disposal decisions, and whether “decisions are taken that are in the best interest of the local health system or to achieve the greatest financial benefit”.

NHSPS sold £55m of NHS property in 2018-19 (see spreadsheet).

The committee recommended the DHSC moved towards an “equitable model of charges” after noting the current system by which GPs are charged by NHS Property Services “can lead to unfairness”.

The DHSC is currently carrying out a review of NHS Property Services. It was originally required to be published by October this year, but this deadline was later pushed back until the end of 2019.

An NHS Property Services spokesman said the report “rightly identifies that these issues must be resolved for us and our NHS partners to reduce billing issues and recover income”.

He said the company had “applied its property expertise” to invest £447m upgrading, maintaining and developing new NHS facilities in its six years, as well as disposing of 410 surplus properties which had raised £347m. 

He added the company is working with the DHSC, NHSE/I and “other NHS partners” to “develop a joint action plan to address these recommendations”.

The DHSC and NHSE/I were both approached for comment.

Earlier this year, HSJ revealed NHS Property Services paid the largest amount of bonuses (£180,000) to its directors of all national NHS agencies.