London NHS to be incentivised to sell surplus estate

In November, local NHS bodies, local authorities and national organisations, including NHS England, NHS Improvement, the Department of Health, NHS Property Services and the Department for Communities and Local Government, signed a Memorandum of understanding (MoU)on devolution. This acknowledged that there was a greater opportunity to raise funds from selling surplus estate in London than elsewhere – but development of new buildings also cost more.

‘While the deployment of capital in the NHS from all sources combined must be equitable in relation to need across different parts of the country, it is recognised that in London there is significantly greater opportunity to raise capital through disposal of surplus assets, but also that the costs of capital investment are also significantly higher than elsewhere in the country,’ it said. 

The MoU added that the national partners agreed, in principle, to NHS trusts and foundation trusts retaining capital receipts, though a new body – the London Estates Board – will identify how to reinvest the funds to support system-wide priorities. The board will develop incentives to encourage NHS bodies to sell surplus estate.

The NHS is one of London’s largest landowners, with an estate estimated to be worth £11bn.

The Naylor report on NHS estates, published earlier this year, said that nationally the health service could release £2.7bn from selling surplus estate – about £1bn could come from London and radical reorganisation of the capital’s estate could release even more. 

However, it also noted that London accounted for £1.5bn of the overall £5bn of backlog maintenance in the latest figures.

NHS England said that a high proportion of London’s primary care estate – including GP surgeries and family health clinics – is in poor condition, with 13% requiring rebuilding and 51% in need of refurbishment.

NHS England chief executive Simon Stevens (pictured) said: ‘This strengthened partnership has the potential to unlock funds for reinvestment in much needed modern NHS buildings and clinics across London, as well as kick starting more concerted action on rising health threats such as obesity and air pollution.’