Public Sector Disposals - Could the NHS Estate Juggler be at his limit?

Working for a new public sector Client this week has made me realise how wildly different Public Department’s methods and resources are for the disposal of public land and property assets.

Whilst NHS Estatecode policy clearly sets out the requirement for NHS land & property assets to be sold at best value with the benefit of planning consent for the most valuable purpose, when it comes to finding the money to actually go and get these planning consents, many Trusts just are not willing to make that spend or even to allocate resource to explore potential. From experience I have found that high level decision making in NHS Trusts is often led by Senior Clinicians or former clinicians whom have graduated to senior roles, and they very much tend to prioritise financial resource to those matters that are immediately patient facing. Spending money to obtain planning consents on property that is surplus is not something they will readily consider – despite the recommendations of Estatecode. Could it be something to do with the quality of the business cases that are put before them? Or is it just strategic Estates Management (other than capital projects) not being recognised as something that is important to Trust operations?  

I’m finding that some Councils are quite different when it comes to disposals – they tend to sell requiring the best financial value and they will sell surplus sites fairly quickly. I see some parallels with the approach taken by the Defence Infrastructure Organisation, in that there is a keen reliance on the use of consultants and agents for decision making.  This can be a good and a bad thing – but probably more good than bad.  There also seems to be a much closer relationship between Council Land & Property Managers and the respective Local Planning Authority than NHS counterparts.

I am noting that quite often the Councils have had the aforethought and resource to nominate land for planning allocations considerably in advance of any actions for disposal or formal declaration as surplus.  In comparison,  Estates personnel in NHS Trusts are often too busy covering off ERIC returns, Capital Projects, general Compliance issues and trying to control who is using what in their buildings  -and they just haven’t got the time to strategically plan their Trust’s estate in terms of Town & Country Planning.  Indeed, I’ve found that it is not unusual for NHS Trust’s to make arrangements and undertake capital development without planning consents.  Nobody has the time! The main offenders being car park expansions, locating temporary buildings and changes of use within buildings.

A few years ago I was working for a large Acute NHS Trust which owns considerable land holdings, perfectly ripe for residential development. At the time, the Trust had no planned future use for around 70% of the land and speaking to a Housing Association colleague down that neck of the woods, this land has still not been offered up for disposal and also remains unallocated in planning terms. Due to numerous changes in management at the Trust- in both Estates and senior Trust management, I suspect that no one in house has had much time to think strategically (other than decisions for Capital development / refurbishments of clinical areas) and, I suspect, nobody likely answered any of the ‘exploratory’ emails from the HCA, who have been sniffing round for surplus / soon to be surplus public sector land for some time. 

  

In recent years, Estates resource in the NHS has seems to have been stripped to the bare basics to achieve savings targets and this fact together with increasing patient demands on NHS Estate, the steady increase of HTM standards, the need to closely manage PFI contracts (or pay the price!) and a revolving door of service providers due to changes in NHS Commissioning means that NHS Estate departments are just far too busy to truly stand back and identify/ manage surplus land effectively.

Ask any NHS Estates Directors and they will tell you quite genuinely that they get 200+ emails a day as well as relentless phone calls.  The first thing they ask themselves when prioritising workload is ‘is any one going to die?’ Strategic land planning is way down the list!   

Clearly this flies in the face of Government ambitions given the ‘call for public sector sites’ to be brought forward to help the Housing Crisis, but this could be throwing yet another ball at a juggler at his limit. I suspect the ball will be ignored.

The Managing Agent is not your 'mate', mate.

I recently had to put together a letter to a Landlord’s agent asking for various items for the purposes of a service charge audit, as a demand had come out of the blue for an extra £27k for service charge items.  There was also a 10% ‘pre arrangement fee’  on all of the service charge items with another 10% managing agents fee on the total! Hence I sought to investigate this fee on fee charging arrangement, which did not reflect the lease terms.

The NHS Client was paying near on half a million pounds a year to this Landlord for one block of accommodation but unfortunately the managing agent seemed to be more of a construction company rather than a company used to dealing with service charges per se, and in particular, did not seem to be familiar with the RICS code of Practise for commercial service charges.

Having put together an extensive letter and asked my Client to review before sending, my Client asked me to ‘tone it down’ because they want to be ‘friends with the Landlord.’  I was surprised because I thought the letter was incredibly normal for a service charge audit – and did not think that the Agent would be surprised given their fresh demand for extra money out of the blue.

I  felt a loss with this ‘friends’ business and sought to sensitively explain to the NHS Client that the Managing Agent is not the Landlord. I’m still not sure that they understood.

So for my blog I decided to list a few golden rules to help NHS tenants understand this relationship:-

1)      The relationship between Landlord and Tenant is based on the lease contact.

2)      You do not have to be ‘friends' or 'mates’ with the Managing Agent to do a great job for your Client or Employer.

3)      Always be polite and professional, engaging in timely communications, face to face where possible.

4)      Understand that the Agent is NOT the Landlord.  They merely represent the Landlord and can be taken  ‘off the job’ by the Landlord at very short notice.

5)      If you are a Tenant as big/reliable at paying rent as the NHS, you do not have to put up with second best from your Agent/ Landlord.

6)      If you are a Tenant in occupation of massively over-rented accommodation, yet paying reliably, again,  you do not have to put up with second best.

7)      Never be shy of raising issues in support of financial transparency and industry best practise.

8)      Never be shy of raising contractual issues in support of the proper performance of the lease contract.

9)      Long term contractual relationships are based on correct administration of the lease contract and NOT on the rapport with the Managing Agent.

10) Most commercial Landlord's know that 'happy tenants make happy rent payers'. Make sure they are keeping you happy! 

There’s probably lots more of rules that I could think of, but that's plenty for this blog. More soon!