The Minister for Health and Secondary Care (Andrew Stephenson)
I congratulate the hon. Member for Tiverton and Honiton (Richard Foord) on securing the debate. I am grateful for the opportunity to set out the role of NHS Property Services. This subject is understandably of great interest to right hon. and hon. Members across the House.
The hon. Gentleman raised the issue of the future of Seaton community hospital. I will come to that in the latter part of my speech, but let me say for the record that I completely understand his desire to protect a much-loved community health facility. As the Member of Parliament for Pendle, I successfully fought to keep open Pendle Community Hospital in Nelson, and in the neighbouring constituency of Ribble Valley, the new £7.8 million Clitheroe Community Hospital opened in May 2014, so I recognise the importance of community hospitals, not just in offering in-patient care, but in acting as a hub for other healthcare services. It will be most useful for me to first set out to the House why and how NHS Property Services came into being.
Under the Health and Social Care Act 2012, the coalition Government abolished primary care trusts and transferred their commissioning responsibilities to clinical commissioning groups. Their property interests transferred to either NHS trusts or NHS Property Services, which was established in 2013 for this purpose. That decision was made because it allowed commissioners to focus on providing care for patients, rather than managing property. NHS Property Services took ownership of nearly 3,500 local facilities, such as community hospitals, health centres, GP surgeries and care homes. In the past 10 years, NHS Property Services has reduced the size of that estate by a fifth, saving over half a billion pounds of taxpayers’ money, every penny of which has been reinvested into the NHS.
Richard Foord
I understand the Minister’s point about reinvesting the proceeds from selling what might have been regarded as excess NHS property, but my concern relates to where that money goes. My understanding is that, following a sale, half the money might go back to the integrated care board, which would be Devon in this case. The problem with that situation is that it does not take account of the fact that local communities donated the money to build the infrastructure in the first place. That is certainly the case in the Axe valley with Seaton Community Hospital.
Andrew Stephenson
I appreciate the hon. Gentleman’s concern. I hope to provide reassurance in the latter part of my speech that the sale of Seaton Community Hospital is certainly not on the cards and is exceptionally unlikely. However, I appreciate that when property is sold, there is always tension between how much of that money will be reinvested in local communities—many of which have a stake in having created the facilities in the first place—and how much goes into the general NHS pot. The important point for me to land today is that all the money remains within the health services and none returns to the Treasury, so any sales of property from this portfolio are not a way for the Government to generate income, but simply a way of ensuring that the property estate is managed in the most effective fashion.
NHS Property Services was established as a limited company and is led by a board of executive and non-executive directors who are appointed for their property and healthcare expertise, including a departmental shareholder representative. The board’s directors all have the usual responsibilities relating to the proper governance of a limited company, with certain shareholder matters reserved, such as share issue or senior appointments. The board must work within the wider frameworks across Government, such as the Treasury’s guidance on managing public money, which rightly sets out the strict rules for delivering value for taxpayers’ money. The company therefore works with the Department to agree fiscal targets to work within, and is rightly held accountable for its use of public money. However, it is important to emphasise that my Department is not responsible for operational decisions, which are taken by the board and its executive management team.
One reason for the creation of NHS Property Services was to ensure that decisions could be taken without political interference. Although I appreciate that the hon. Member and others across the House may be of the view that my noble Friend Lord Markham, who has ministerial responsibility for NHS Property Services, can intervene to reduce the rents for unoccupied space at Seaton Community Hospital or similar facilities across the country, it would simply not be appropriate for him or any other Minister to intervene in any individual case.
The coalition Government established NHS Property Services through the cost recovery principle, which is the broad framework that the organisation works under. This means that it is funded through charging its costs to the occupiers of its buildings and the recipients of its services. As such, every pound it spends and does not recover is a pound that cannot be spent on delivering frontline care.
The Devon properties were transferred to NHS Property Services on the basis that their ongoing running costs would be funded through rents at market rate and service charges. This approach was taken to give real incentives to local commissioners to take the tough decisions on which properties were most suitable for delivering their clinical strategy, looking at areas as a whole and moving away from a situation whereby subsided property costs could lead to a less effective approach. I accept that that can sometimes lead to tensions about how reasonable charges are set, but the aim is that NHS bodies, and other voluntary and charitable organisations that wish to occupy NHS premises, must factor in the full cost of occupying and maintaining specialist facilities in their decision making.
I will now turn to the future of community hospitals in Devon, including Seaton Community Hospital. As the hon. Gentleman set out in his Adjournment debate in November, Seaton Hospital was part of a group of community hospitals that transferred to NHS Property Services in 2017, when large parts of Seaton Hospital and others in Devon were already vacant. The clinical commissioning group carried out a consultation on the model of community care and a new model of care was introduced, making it more integrated and more community based, with more people receiving care at home. That resulted in a significant reduction in the number of community hospital beds required across Devon. Since then, progress has been made to identify sustainable alternative healthcare uses for vacant spaces in community hospitals in Devon, such as Ottery St Mary and Axminster. In addition, NHS Property Services and Devon ICB have worked with the voluntary sector to support local initiatives in some properties, such as, as the hon. Gentleman will know, the Waffle café at Seaton Hospital.
I understand that Seaton Hospital and some other hospitals still have significant amounts of vacant space. Despite their best efforts, NHS Property Services’ commissioners have been unable to identify relevant services that could fill this gap. NHS Property Services has continued to manage the property, with the costs of the vacant space being charged to the ICB to ensure the costs attributed to the property are fully recovered, but recently the financial challenges facing Devon ICB have called the sustainability of that position into question and it has explored options for alleviating those costs. However, as I explained, simply seeking to pass those costs back to NHS Property Services would not result in the Department having any more money to spend on local healthcare services in Devon.
As I am sure the hon. Gentleman will appreciate, the responsibility for decisions about where to locate clinical services in Devon is a matter for the ICB. It is not a matter for Ministers. However, NHS Property Services is working closely with local leaders to identify options that would help to mitigate the cost pressures arising due to Seaton Community Hospital not operating at full capacity. If, and only if, the ICB determines the property is wholly surplus to its requirements, NHS Property Services would have the responsibility for selling the asset, following Treasury guidelines, but it is important to stress that the site remains an operational site and NHS Property Services therefore has no plans to sell it.
As has been mentioned in the local media, the idea of partial demolition of the hospital has been floated. Again, there are no plans for that course of action, which would very much be a last resort in any event. I believe the site has now been listed as an asset of community value, which means that such a drastic step is exceedingly unlikely to be supported by the local planning authority or other local stakeholders.
Richard Foord
It is true that the property has been registered as an asset of community value. To my mind that gives it a stay of execution, rather than that it is inevitable that it will be preserved intact. NHS Property Services talked through the very many options—I think 28 options—on the table for the vacant space at Seaton Hospital. One of that long list of options is indeed selling off the redundant ward, which could be demolished and used for houses. Did the Minister not know that?
Andrew Stephenson
I know the idea of demolition has been floated in a meeting, but I have been assured that there are certainly no plans for demolition. As the hon. Gentleman will know, an asset of community value nomination was accepted by the local authority, and as an ACV nomination remains live for five years, it will expire in January 2029, although I am pretty sure that local community groups and others would campaign for that to be extended. It is certainly much more than a stay of execution. I hope that has provided suitable reassurance to the local community that the threat of demolition is exceedingly remote, because the local planning authority and other local stakeholders simply would not agree to the demolition of this much-valued community asset.
I fully recognise that the local community has invested in the building of the hospital in the first place, and therefore is a key stakeholder in its future. The ICB and NHS Property Services continue in ongoing dialogue with a range of community groups about potential future uses, and the community has been invited by the ICB to develop a business case for the future use of the property by the end of June 2024. Any future decisions on the future of Seaton Hospital will be taken following evaluation of that business case. I sincerely hope that a financially sustainable solution can be found locally and in the best interests of the people of Devon.
Question put and agreed to.