PropCo – shifting the ownership of NHS land and property

Following the Health and Social Care Act (HSC Act) of 2012, land or property previously owned by NHS bodies (like Primary Care Trusts) and used primarily for the provision of healthcare was transferred to the ownership of the new Clinical Commissioning Groups (CCGs) that plan and buy health services in their area. However, other property (including where 51% or more of the work carried out was administrative rather than clinical in nature) became classified as ‘surplus’ and transferred without charge to a new, unaccountable company, PropCo (also known as NHS Property Services Ltd), set up in April 2013.

PropCo was set up to manage NHS property and facilities (mostly for GP surgeries, health centres and community hospitals) and dispose of property surplus to NHS requirements. Its Annual Stewardship Report for 2014/15 says that PropCo will also work closely with NHS England “to support the delivery of the property components contained in the NHS Five Year Forward View” (http://www.property.nhs.uk/what-we-do/).

PropCo receives no government funding and is expected to generate its income from either selling off ‘surplus’ property, renting its property back to the NHS at market rate, or renting it to other (e.g. non-NHS) users.

Should a CCG or hospital Trust wish to continue to use a building that has been transferred to PropCo, it has to pay rent to PropCo or seek alternative accommodation. In either case, the CCG is forced to pay rent at market rates, and so costs for non-clinical accommodation have increased.

Once any NHS land or property is sold it passes outside the provisions of the NHS Act, so that any future government will not be able to transfer these properties back into state ownership. Land that, until now, has been available to the NHS at minimal cost for the expansion of hospitals or other health provisions will have gone forever.  Future development will therefore only be possible either at increased cost to the taxpayer, or by reducing spending on existing health services.

By July 2014, PropCo owned and managed at least 3,500 properties across England (or about 11% of total NHS estate in England), valued at between £3 to 5 billion. The biggest transfer of properties so far took place in December 2016, when the Department of Health decided to transfer the freeholds of 12 community hospitals in Devon to PropCo (http://www.property.nhs.uk/biggest-transfer-of-properties-to-nhs-property-services/).

By August 2015, PropCo had disposed of 145 sites, receiving a total of £97 million (“for the benefit of the NHS”) and released land for over 2,000 new homes (http://www.property.nhs.uk/what-we-do/).

In April 2016, PropCo changed the way it calculated rents on freehold properties, with many occupiers seeing higher rental charges. This was supposedly “to improve utilisation and value for money in property occupancy” (http://www.property.nhs.uk), although others say it was in order to prop up PropCo prior to it being floated on the open market. One reported result has been that around 900 GP practices have received rent increases, in some cases as high as 400%. While the cost of rent is currently reimbursed by the Department of Health,  practices still face increases in associated and non-reimbursable costs like management fees (in some cases charged at higher than commercial rates), and have to stump up the money for increased rental charges until they are reimbursed.

PropCo is currently owned entirely by the government. However, it can at any point sell off up to all but one of its shares to private investors. As PropCo was set up with just one share valued at £1.00, the government could issue another 99 shares at £1.00 each and, by selling these to private investors, transfer almost complete ownership, and total control, of huge NHS assets to private owners at almost no cost.

Sources

https://skwalker1964.wordpress.com/2012/09/09/propco-and-the-health-act-the-great-nhs-property-scam/

https://www.opendemocracy.net/ournhs/deborah-harrington/going-going-gone-great-hospital-selloff

January 2017

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