Going, going, gone - the great hospital sell-off?

Many of our precious hospitals are being prepared for handover to private developers - and from PropCo to the Infrastructure Bill, the government is stripping away barriers to this firesale.

Deborah Harrington
5 February 2015

Image - are NHS hospitals the new target for rentier capitalism?

The NHS - particularly A&E - is in crisis. Worsening waiting times and overcrowding, patient safety being breached, and already the second lowest number of beds per person in Europe…

So why are those responsible for our NHS behaving like Estate Agents running an auction sale of its buildings and assets?

It is hard to find any reference to the NHS, whether in newspapers, strategic plans, or think tank proposals, that doesn’t include a recommendation to sell-off the land and assets.

Of course it is always clothed in the jargon of efficiency, modernisation and maximising utilisation as anything but a publicly owned hospital. It’s even dressed up as fairness and common sense.

For example:

Sell off NHS land for care homes, urges Lib Dem MP and former health minister Paul Burstow. His review also suggests planning rules could be relaxed and discounted prices offered to encourage investment.

Sell off Charing X Hospital for flats and a smaller clinic, suggests The Imperial Health Board.

‘Pump prime’ to unlock assets held by NHS Property Services, instructs NHS Chief Executive Simon Stevens in his Five Year Plan.

There are at least £7.5bn worth of NHS sites currently deemed ‘surplus to requirements’, says the Department of Health.

“Ministers should actively seek to achieve value for the taxpayer and consider disposal in order to release resources for the frontline.” agrees Labour in their new 2015 policy document ’10-year plan for health & care’.

“Vacate and sell surplus buildings” insists Community Health Partnerships who manage the LIFT Estate (public/private partnerships of primary care clinics). Note how vacating creates a surplus building

And finally - though it isn’t hard to find more examples - here’s some recommendations from the London Health Commission, chaired by Professor the Lord Darzi on behalf of the Mayor of London –

“Recommendation 53: (….) trusts have the incentive to dispose of surplus assets.

Recommendation 54: (…) trusts are encouraged to transfer assets for redevelopment and disposal.

Recommendation 55: (…) to transfer assets from the NHS to other parts of the public sector.

Recommendation 56: (…) ensure that estates planning and a comprehensive asset database are part of wider service planning.

Recommendation 58: (…) be permitted to include affordable housing as part of wider site redevelopment plans.”

The London Health Commission’s findings prompted SP, the firm behind the engineering design for the Shard, ‘to analyse the opportunities for redeveloping the (NHS) real estate,’ it was reported.

But elsewhere developers didn’t have to go looking for what might be available. The government was out spreading its wares for them in London at a property fair, MIPIM 2014 where one of the sessions was ‘Exploring healthcare: opportunities for the property industry’, explaining to international investors how to cut themselves a slice of the NHS estate.

And the government is busy making the NHS property sell-off even easier.

Let’s start with the most recent piece of the puzzle first.

The Infrastructure Bill currently making its way through the final stages in parliament has attracted controversy for the ‘Cameron loophole’ to allow fracking under homes without planning permission, as well as threatening ancient woodlands and a new era of private, toll highways.

But one small part of the Bill, the Public Sector Land Assets section, could allow the government to sell off any public land it chooses, whilst cancelling public access and use without consultation. Clauses 21 and 22 allow property to be transferred from any public body to the Homes and Communities Agency (HCA) and for it to then be sold to developers free from any previously existing public rights.

It’s another big step towards an unregulated fire-sale of public assets. Planning laws are being pushed aside and local powers to protect public assets are being stripped away in the race to transfer land from public ownership to private profit opportunity.

Hospitals, clinics and other NHS property are squarely in the sights of the purchasers.

In December 2014 the Independent described how the government has already ‘given up’ 2 million square metres of property since the Coalition came to power – the equivalent of 20% of its estate.

Despite the implication of the title ‘Budge up, Sir Humphrey, your boss needs to shed more buildings’, that the sales are mainly civil servants’ offices, the article goes on:

“The Cabinet Office is aiming for up to £6bn of extra receipts from property by 2020 – as part of its ambitions to find £10bn of savings by 2018 and up to £20bn by 2020 – not just from giving up offices, but airfields, barracks and prisons. Property developers would like the politicians to get on with it. Those builders that have been urged to solve Britain’s housing shortage say it would be easier for them to do so if the Government got on with releasing the estimated 40 per cent of land on which it is sitting in the shape of surplus Ministry of Defence and NHS sites.”

If we go back a bit, we can see that the politicians have been ‘getting on with it’ for quite a while. In February 2010, three months before the General Election, Labour’s Housing Minister John Healey launched the Homes & Communities Agency’s (HCA) Public Land Initiative. It offered a £53 million scheme to identify public sites - and to dispose of them at nil value. It set up an agreement to ensure the value was repaid ‘at some point in the future’.

In other words, the scheme transfers the ownership on a buy now, pay later (when and if you’ve made a profit) basis.

The previous government’s scheme was modest - aiming for the building of 1,250 homes on ex public land, 500 of which would be available for ‘affordable’ rent (though not council housing) and ‘low cost home ownership’.

The accelerating sell-off

But as soon as it was elected, the Coalition Government accelerated this release of ‘surplus’ public land. Its 2011 HCA Development and Land Disposal Strategy moved the release of public land and assets ‘for the creation of new homes and employment opportunities’ to the top of its agenda. Clause 8 also stated the HCA would be included in the Public Right to Reclaim Land. This misleadingly named law gives individuals and private organisations the right to identify public land they considered unused or underused by its current occupiers. A successful application means that the Secretary of State can insist that land or property should be sold on the open market, if the current owner can’t show it has an acceptable designated use for it.

In December 2011 NHS Property Services Ltd (PropCo) was formed - curiously, in advance of the Health & Social Care Act 2012, which (at clause 300.8) allowed the creation of such a company wholly or partly owned by the Secretary of State for Health.

PropCo was formed with a single £1 share, currently held by the Secretary of State for Health, and listed at Companies House.

The precipitous creation and particular legal form of this new organisation caused concern at the House of Commons Health Committee. The National Audit Office investigated and uncovered failures of good practice. It noted that the government had failed to properly consider forms of public ownership and failed to provide detailed operating objectives. The NAO noted that one of the outlined advantages of setting up a company was the possibility of a future complete sale to the private sector.

In April 2013 when Strategic Health Authorities and Primary Care Trusts were abolished every piece of NHS land or property deemed ‘surplus’ (including any administration buildings or clinics with more than 50% administrative use) were transferred to PropCo.

Since the HCA was already busily selling off our assets as fast as it could, why was there a need for a separate property company, just for the NHS?

What's the point of PropCo?

It appears PropCo was created to take full advantage of the provisions of the 2006 Act (section 223) which ‘frees’ the NHS Estates to use property at their disposal for purposes other than providing health services.

In simple language, the two Acts provide that:

  • ·         The Secretary of State can form a property company.
  • ·         Private companies may also hold shares in the company
  • ·         The Secretary of State is not required to retain whole ownership of the company
  • ·         The Act allows any transfer of NHS property and staff to the company and its shareholders
  • ·         The number of shares the Secretary of State has to hold is not stipulated within the legislation - allowing ‘partnerships’ with the private sector in future.






PropCo also assumed responsibility for running those primary care buildings that had already been incorporated into public private partnerships in the Local Improvement Finance Trust Programme (LIFT) created in 2000, in which the Department of Health has a minority (40%) stake. The LIFT Estates originally were designed for private investment in primary health and social care facilities. Now they also cover libraries, leisure centres, children’s centres and education services. PropCo is contracted to run the NHS LIFT scheme by another arm’s length company, Community Health Partnerships (CHP), which developed them.

The world of public private partnerships is a convoluted one. The Department of Health issued a FAQS sheet prior to launch of PropCo.

  • ·         Why do you need a new company? What was wrong with the old system?
  • ·         The new company has been set up as a result of the government’s reforms of the NHS
  • ·         What specifically can NHS Property Services do differently to PCTs?
  • ·         We are clear that bringing together a skilled workforce who maintain, manage and develop NHS Estate and properties will bring real benefits to the health service, particularly in terms of driving efficiency, releasing facilities that are no longer required [my emphasis] and focusing on modernising and improving NHS facilities for patients and staff.





By December 2012 when this fact sheet was written, already 3,600 assets had been identified for transfer to PropCo. ‘Independent expertise’ from companies Bevan Brittan and Mills and Reeve was employed to ensure proper legal transfer of assets was undertaken on all 3,600 estates, properties and facilities.

An extraordinary new clause called the Right to Contest was brought in on 8 January 2014 to be added to the Public Right to Reclaim Land. This extended the grounds for a request. It means that for land and property held by government departments and the majority of their arm’s length bodies a request can be made to release it even if it is currently in use on the grounds that there is a better economic use for it.

If PFI is Wonga, then PropCo is surely Cash Converters

Already it is clear where money is going. Properties previously owned by PCTs and SHAs have been moved out of local ownership and control, a system which ensures that overheads are kept as low as possible – into PropCo, a centralised limited company. That company not only owns them but has to charge rent and maintenance fees and sell off land and assets as it has to generate and maximise its own income.

The government is now selling our public capital assets off to the private sector with unseemly haste, even moving health services out at their request in order to make them ‘surplus’ to requirements. And it’s then allowing the private sector to pay if and when they make a profit on speculative housing development. Meanwhile if the NHS wishes to continue to use the facilities it once owned it must pay market rents for them.

This process extends far beyond the NHS into every area of public ownership. But its effect on the NHS has to be seen in conjunction with the other policy theme the think tanks are pushing - “close to home” care. What is absent from all these ‘patient centred’, ‘integrated’ pledges and compassionate commitments is hospitals and buildings in general. It’s all going to take place right in your own home where a team of experts will gather to help you spend your very own personal budget on your health plan of choice.

The government claims it wants to sell capital assets to pay off debt or pay running costs. But the sale is undermining any future potential for developing public ownership or public delivery. Since Margaret Thatcher came to power in 1979 we have been told the economy is like a household budget and we must live within our means. But an earlier Conservative PM, Harold Macmillan said of her policies ‘How do you treat a cold? One nanny said, ‘feed a cold’; she was a neo-Keynesian. The other said, ‘starve a cold’; she was a monetarist’. We are being starved and stripped of all we own. And it is likely to produce a sickness both inside the NHS and out that we will not easily heal.

If PFI is Wonga.com for the State then surely PropCo is Cash Converters. Once the assets are transferred out of the realm of health, out of public ownership, the cost of reclaiming them in the future is always just out of reach.

Our capital base, all that land and all those assets, represent a value for the future that cannot be easily represented. Just as PFI increases the financial drag away from clinical care into buildings and maintenance, so long term ownership of our assets decreases it. It gives the NHS the flexibility for reuse or new use. Having to repurchase on the private market takes away this flexibility, especially in times of rising property values.

Now NHS buildings are increasingly in the control of specially designed companies whose structure allows for the sale of shares to the private sector, effectively losing all we own in one fell swoop.



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