NHS Estates Report

Innovation and a sustainable future.

It is widely accepted that there is a £6 billion maintenance backlog for our NHS estates, £3 billion of which is safety critical. This backlog arises as a result of years of austerity; whereby £4.3 billion of capital funding, together with receipts from the sale of NHS assets, have been diverted to keep day-to-day NHS spending in balance.

The primary care and community estates are in particularly poor order, with aged and decaying buildings, many of which are contaminated with asbestos, that are wholly unsuitable for hub working, new technology or the housing of multi-disciplinary teams. All of these are key elements of the NHS Long Term Plan (LTP).

Capital spending to address these issues has seen a 7% real-terms decline from £5.8 billion in 2011 to £5.3 billion last year, according to a Health Foundation report.1 To compound this list of problems, the report's authors calculate that capital to revenue budget transfers have led to the capital budget falling as a share of the total departmental health budget from 5% in 2011, to less than 4% in 2015/16.

Private finance initiative (PFI) schemes have also fallen out of favour. These build-and-maintenance deals with private sector partners, that built over 125 replacement or upgraded hospitals, have kept NHS capital spending off Treasury balance sheets for the last two decades. HM Treasury's recent Infrastructure Finance Review Consultation2, which closed in June 2019, makes it clear that the Government supports and is exploring new ways to attract private finance, but not schemes that share the same characteristics as PFI and PF2.

And yet, any alternative scheme needs to address the impact on The Capital Departmental Expenditure Limit (CDEL) limits; while there is no apparent shortage of willing investors in NHS property, borrowing which counts against DHSC CDEL can mean it is difficult, or even impossible, to get an otherwise compelling scheme approved.

Then there is the matter of NHS Property Services (NHSPS), the commercial company wholly owned by the Secretary of State which acts as landlord to a sprawling and diverse primary care and community estate. NHSPS provides estates management, support and facilities management services to some 3,000 properties - accounting for 10% of the NHS estate, and worth £3 billion.

Dogged by criticism since it was established in 2012 to take on and manage assets of the former Primary Care Trusts, the original intent - to...