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.

Moving in without a lease...picking up the pieces years later on

This week has seen me forensically vetting some NHS files to establish the original condition of a property at the time the NHS moved in and took up residence.

If there is one thing that I have come across on regular occasions when dealing with NHS leaseholds, it is where the NHS has moved teams in to a leasehold building before agreeing the lease.

Whilst this might be the answer to urgent operational requirements at the time, the risks of doing this are most likely never realised until many years down the line when the NHS decides to move out and the landlord serves a rather large dilapidations schedule and someone like me is asked to sort out the problem. It is an error that the NHS never seem to learn from and I have no idea how they might ever stop doing it.

The number of times I have wished there had been a decent schedule of condition and improvements file to help me unravel the situation regarding a dilapidation claim.  Unfortunately I have found the same with improvements and that quite often NHS has made quite extensive improvements to a property without considering  the contents of the lease or what might happen at the end of the term.

Some Trusts are happy to move out of a leasehold property and leave the place with the improvements in a tidy state and later argue using section 18(1) Landlord and Tenant Act 1927, but now the market is moving a little this might be foolhardy depending on location.

Having recently worked with a most excellent QS, if the original ‘base’ condition that the property was in, when it was first used by the tenant can be established, then it may be worth getting a price for the tenant NHS to do the work and comparing that price with what might have to be paid out through a dilapidation claim.  Both of the options somewhat rely on there being someone ‘expert’ to negotiate / manage on behalf of the NHS to see the matter through to conclusion, so it can be a close thing financially on which option to take.  Often NHS just budget for having to pay dilapidations at the end of the term simply because ‘that’s where they have the budget’ – as to strip the improvements out / undertake the dilapidations workload would be classed as a ‘Capital Project’ with all the ‘wrappings’ in terms of procurement and business cases.

I must say that perhaps I am a bit old fashioned in that I find the rise of the email/electronic file and decline of the ‘hard copy file’ can also make things difficult in these situations when trying to find correspondence relating to improvements and works over the life time of a lease.  Whilst electronic filing is great for space saving, it needs to be part of a good overall office system where there is someone decent to oversee the electronic filing and ensure that the filing is (i) done correctly in an organised manner – and maintained as such, (ii) timely – so you can find what you have sent  just a few days before; and (iii) that someone from IT doesn’t decide to move the files from one server to another and lose half of them and (iv) there is a decent search facility – that can also search PDF files – then you also need to be running some hard copy system alongside. 

The advent of half thought out electronic filing systems, combined with the pressure on NHS to save money by streamlining admin staff – and also combined with changes of landlord and landlord information management systems over the period that a building has been occupied-  means you can often end up with a rather opaque situation. Over the years I’ve come to believe that a partial hard copy filing system really does need to co-exist the electronic system.

There is nothing quite like returning to a client’s office several years further along the line and suddenly realising that they are still using the hard copy filing system that you set up several years previously to run alongside the electronic system.  Picking up files with your own handwriting on in third party offices that you have not been to in many years is strange but when you see that it has worked for your client  -and in the case of a dilapidation claim – is saving them a king’s ransom– well the feeling is one of quiet satisfaction.

Hello and Welcome

Welcome to my blog page which I have set up for the benefit of occupiers of NHS or health care premises in England and Wales.

 

This blog is aimed at providing hints and tips to GPs, charities and other healthcare related providers who are tenants in multi occupied buildings.

 

Some of you may have leases or other agreements, some of you may not.   Whatever the arrangement, I am sure you will find the contents of my blog interesting and useful. You might even save some money along the way and learn a few interesting things outside your normal specialism.

 

I will:

• Delve into the mystery of service charges and insurance etc. setting out the commercial property industry requirements and standards for transparency.
• Explain in lay terms what you should expect from your landlord and when, perhaps, you might want more information before paying money over.
• Add in a few other tips about building compliance etc.
• Keep the blog updated and hopefully not too 'dry'.

 

I am an RICS Chartered Surveyor by background and I have come to specialise in Healthcare premises.  I am a advocate of best practise and throughout my blog I will regularly refer you to RICS, DoH and legal best practise guidelines and policies.  These are very handy to know when dealing with landlords.

 

I would have done a podcast but I will start with the blog in the first instance and see if there is interest out there for this sort of thing.

Happy reading.