Management of NHS Property

Steve Barclay Excerpts

Wednesday 4th July 2018 Westminster Hall

[The Minister for Health (Stephen Barclay)]

It is a pleasure to serve under your chairmanship once again, Ms Dorries. I pay tribute to the hon. Member for Bristol South (Karin Smyth) for bringing such an important issue before the House.

The hon. Lady opened by saying that property may not be the most exciting of topics but, as her speech set out, it is integral to the healthcare service offered in local settings. The substance of her remarks was whether we can better align the property estate with a place-based approach to healthcare. As we move to a more integrated and place-based approach to health, I think there is cross-party consensus that property has an important role to play as an enabler of that. The hon. Member for York Central (Rachael Maskell) kindly recognised that that is very much the approach that I have taken in my post, and my hon. Friend the Member for York Outer (Julian Sturdy) recognised it in expressing his frustration with one or two meetings and asking whether decisions on property are aligned with the place-based approach.

The first point I will make to the hon. Member for Bristol South is that the long-term plan and the future discussions about the NHS give us the opportunity to look at wider system changes around integration and place-based healthcare, and how property aligns with that—for example in York, which has been discussed—as an enabler of change in a more holistic approach. As such, her remarks are timely as part of that wider debate.

The hon. Lady mentioned Knowle West health park, which, if I am honest, I looked at for the first time when preparing for the debate; I was not as sighted on that as I might have been. The issue is that, if NHS England provided that service, the additional market rent costs would have been reimbursed, but because it is provided by the county council they are not. However, as she recognised, there has been progress in recent weeks, thanks in part to her work. I am happy to take forward a discussion on that offline if that would be helpful, because I recognise that it is an important service and that we need to ensure that, where market rents are applied, it is not counterproductive to those services.

However, that should not get in the way of the wider point. The hon. Lady suggested that the new approach is a backwards step. I simply point out that there has actually been significant progress by NHS Property Services. The previous model had the inherent conflict that the primary care trusts were both the landlord and commissioner of the property, and therefore the use of the estate was quite opaque. As a result, we did not get transparency on the true cost of the estate, meaning that inefficiencies were not being flushed out and estates were not being utilised in the most effective way.

One driver of NHS Property Services applying market rents has been the need to encourage better utilisation of the estate by being more transparent on the actual costs. I point out to the hon. Lady that there has been significant progress as a consequence. Some £200 million in capital receipts has been unlocked, 500 capital investment construction projects are being launched each year and running costs have been reduced by £120 million. On balance, as we look forward to the long-term plan and pick up on some issues that the hon. Lady quite rightly highlighted, it is also important to recognise that the old system often allowed estates to be utilised inefficiently. Having truer market rents has actually enabled more transparency and driven efficiencies, with savings then able to be reinvested into the service.

The hon. Lady also mentioned salaries and bonuses, which again are part of a wider question. On the one hand, these are big businesses and their leaderships compete in a competitive market. There is a wider debate within Parliament on the right value to assign to senior salaries in the public sector in order to attract talent. These are big budgets, so we need to attract people of the right ability; it is a false economy to save a relatively small sum on lower salaries for people who then make incorrect decisions that waste much larger sums. At the same time, salaries should reflect the values of the NHS and should not be out of step with others in the NHS. There is a cross-party debate on that, and I am interested in the hon. Lady’s points about it.

The hon. Lady also raised NHS Property Services’ new offices. My understanding is that the previous model was highly inefficient. It had five different properties, so the move to Gresham Street was a consolidation of those five properties into one. That drives productivity, which is a key issue that we need to unlock within the workforce. Two thirds of NHS costs are in the workforce, so driving workforce productivity is a key objective. I am sure the hon. Lady will agree that the workforce being consolidated in one office enables a degree of productivity and efficiency that would be harder to achieve if they were disparate across five areas.

The hon. Lady mentioned the impact of the rent adjustment on Bristol. Some 15 GP practices in and around the city of Bristol occupy NHS Property Services sites. NHS England has been working with the Avon local medical committee, practices, NHS Property Services and the Bristol, North Somerset and South Gloucestershire clinical commissioning group and has facilitated negotiations between GP practices and NHS Property Services on reviewing the levels of rent and service charges invoiced to GP practices, to ensure that there is transparency on them.

However, as the hon. Lady will be aware, rent and business costs incurred by practices are reimbursed to GPs under the premises cost directions, and GPs should be compensated for any rent changes through that route. The Department has provided an additional £127 million to the NHS England mandate, with effect from the 2016-17 financial year, to fund the increased costs in the NHS of this policy change.

[Karin Smyth]

I am grateful for the Minister’s comments about, and work on, Bristol. I agree that the estate was not always particularly well managed in the local health system previously, and that the correct incentives are needed. However, does he agree that he has outlined a merry-go-round of money keeping the entire system afloat? NHS Property Services exists on a large and continuing Department of Health loan, so it is not, in any sense—as the Minister described—a successfully run property business.

[Stephen Barclay]

I was trying to make the point that greater transparency on the true cost of the estate drives behaviour to use the estate more effectively. Part of the difficulty has been that, because the estate was not adequately charged market rents in some areas, moving to a fairer and more transparent assessment of market rents—these things are independently assessed, I hasten to add—is a difficult adjustment. However, a consequence of correctly assessing the value of the estate is the unlocking of efficiencies where the estate is not being utilised, and that money can then be reinvested into the system.

I absolutely agree with the hon. Lady’s wider point, which I took as the substance of her remarks, that property is the enabler of system change. That also came out in the points raised by my hon. Friend the Member for York Outer, and has been inherent in points made by the hon. Member for York Central in our previous discussions. Property does not sit in a silo but is inherent in the wider service offering, and it also plays into reconfigurations. A key part of clinically led reconfigurations of estates to drive productivity will be what property there is to enable that and how to utilise it.

The point on which there is a degree of cross-party consensus, as my hon. Friend the Member for Henley (John Howell) recognised, is that decisions need to be accountable. Likewise, I am happy to pick up on the point he raised on behalf of his constituents about there being no accountability. That is an absolutely fair challenge to the Department and one that I am very happy to look at. However, I am mindful, as I know he will appreciate, that these are often independent bodies making independent decisions, and we need to look at how they fit into the system.

A further point raised by the hon. Member for Bristol South, although it is slightly outside of the scope of the debate, was about wholly owned subsidiaries, which she also raised in more detail in the estimates debate. I make two points. First, as she knows, subsidiary companies actually give greater flexibility to trusts that want to compete in a local market and perhaps offer higher salaries offset by changes to pensions. That is one way in which trusts are empowered and enabled to hire in a competitive market, for instance in the case of maintenance staff. It is an enabler, and it often results in people getting paid more for a role, although there may be other, less favourable terms and conditions to offset that. I merely point out that those were exactly the arrangements reached for Members, and I do not remember too many press headlines suggesting that Members were being exploited by that change.

Secondly, I remind the hon. Lady that, as I am sure she is well aware, legislation introduced by the last Labour Government enabled wholly owned subsidiaries. Again, I do not recall Labour Ministers, when taking that legislation through the House, suggesting that it would provide a way of exploiting NHS workers or privatising the NHS.

I commend the hon. Lady for the points she raised. This is a timely debate given our discussions with the NHS leadership on the long-term plan. She is absolutely right—Government Members and other Opposition Members also recognised this—about the centrality of property to the place-based approach that we seek to take. I am happy to have a separate discussion with her on Knowle Park to check whether that is now in the right place or whether further work is needed. I look forward to further discussions with her on how we should utilise the property estate in the most effective way.

Question put and agreed to.