Government to incentivise surplus estate sales

Its response to the Naylor review of NHS estates, published by the Department of Health and Social Care, said the NHS must manage and use its estate more efficiently and strategically – selling assets that are no longer needed or redeveloping surplus land to meet modern healthcare needs or provide staff accommodation.

It added that co-locating services can reduce running costs and deliver more integrated services, while funds released can be ploughed back into frontline services.

It expects the NHS to realise £3.3bn from the disposal of surplus land, which will complement the £3.5bn capital funding over five years announced in the Budget and the previously announced £425m. It is estimated the NHS in England will require £10bn in capital and the balance could be made up with private finance.

The response makes clear that NHS organisations will be allowed to retain capital receipts from land sales on condition that the funds be reinvested in the NHS estate to deliver local priorities and sustainability and transformation partnership (STP) strategies. The response underlined the need for NHS leaders to agree where receipts should be invested across their local STP footprint.

STPs will be required to regularly update their estates strategies so they support clinical developments and STPs’ vision for clinical excellence and financial sustainability.

Currently, receipts from the sale of provider land or estate are usually retained by the trust. However, trusts often postpone sales until they need the funds. To speed up the delivery of capital schemes, the government said it would introduce new bridging arrangements, allowing trusts to ‘bank’ land sale receipts with the Department, and then draw them back, with interest, when needed to fund agreed STP priorities.

And it plans to scrap rules that require trusts to pay half the profits from the sale of former primary care trust estate to the Department. It acknowledged this was a disincentive for providers to dispose of property – the change would apply to all sales that required these overage payments since 1 April 2017.

Receipts from sales of NHS Property Services buildings will continue to be pooled nationally, though there are mechanisms in place for these funds to be invested locally.

The £3.5bn over five years announced in November’s Budget will be allocated to a number of programmes, including: £2.6bn to support STP estates transformation plans; £700m for critical maintenance and to help turnaround plans in struggling trusts; and £200m to support efficiency programmes. The government also backed value-for-money private finance, highlighting the success of LIFT (local improvement finance trust) schemes.

‘These are substantial sums,’ the government said. ‘The NHS now has a clear view of the capital resources to be made available in this and each of the following five years and can plan its investments accordingly. The partner organisations within each STP should work together to produce and agree a prioritised capital investment plan covering the whole STP footprint, drawing on the expertise of strategic estates planning advisers as necessary, and creating a pipeline of local capital development projects.’

It added that an NHS Property Board has been set up to oversee delivery of the Naylor recommendations.