NHS Property Services’ outstanding debt has almost tripled amid an inability to make tenants pay their rent, according to the National Audit Office.
The NAO, in an investigative report published today (26 June), said debt increased from £210m in March 2014 to £576m in March 2019, with tenants taking much longer to pay their debts.
Gareth Davies, the head of the NAO, said: “The service has slowly improved the way it manages its NHS properties. However, more than eight years after being created it still lacks the powers it needs to run its affairs effectively, and the accuracy of bills is still disputed.
“In our view, too many NHS organisations and GPs seem to regard paying for their premises as optional, with almost £700m either written off or still unpaid.”
NHSPS “inherited legacy issues”
Ian Ellis, chair of NHSPS, said the report highlighted “legacy issues” the service has inherited from “operating in the widespread absence of formal rental and service agreements”. He added: “We fully acknowledge that whilst improvements have been made, these have been at a slower pace than we wanted, but support is also required from the broader health system to fully address this. We are committed to working across the stakeholder community to implement systemic fixes.”
The report said that although GPs occupy only 18% of properties, they owe 30% of the current outstanding debt. It also said that between 2018-19, the service recovered only 58.4p for every £1 it billed.
The service, which is wholly owned by the Department of Health, was first set up in 2011 to “manage, maintain and improve NHS properties in England, and facilities previously owned by strategic health authorities and primary care trusts”.
It operates 2,900 properties with an estimated value of £3.8bn and has approximately 6,950 tenants.
Currently, NHSPS owns between 10% and 15% of the total NHS estate.
The NAO said that NHSPS has “not met the department’s goal for it become financially self-reliant”.
Although it reduced its direct operating costs by £51m between 2013-14 and 2018-19, it recorded a loss in each financial year, with total losses of £1bn. That figure included losses of £565m that resulted from the revaluation of assets.
NHSPS’s seven directors received total bonuses of £206,000 in 2018-19.
However, the NAO also said the service has met most of its estates management objectives. By March 2019, it had sold 410 excess properties at a value of £347m, and invested £447m in upgrading, maintaining and developing new facilities.
£1bn maintenance work backlog
It added that the service has reduced the 2,400 separate facilities management service arrangements it inherited to around 50 contracts. However, in 2017 the Department of Health estimated the service had a backlog of maintenance work worth £1bn.
The NAO recommended that the Department of Health, in collaboration with the NHSPS and NHS should ensure “the service and all of its tenants agree tenancy details and amounts by the end of March 2020, and put in place a process to ensure that all billing disputes are settled within 90 days”. It also said the service “should develop quality metrics for the accuracy of billing”.
Ellis said the NHSPS supported these recommendations, including the idea to develop a joint plan by 2020.
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