A state-owned property company that runs swaths of the National Health Service estate has no formal leases in place with most of its tenants and lacks the power to collect more than £500m in unpaid bills, according to a damning report by government auditors.
NHS Property Services is owed £576m of unpaid rent and other charges and has racked up £1.01bn of losses since it was established six years ago, the National Audit Office said.
“The framework for charging for NHS property is not working effectively and the department [of health] urgently needs to address the fundamental causes of this unsatisfactory situation,” the report said.
The company was established in 2013 to take over thousands of properties occupied by doctors’ surgeries, clinics and other health services.
Three years later the company switched to charging tenants market rents, having previously charged on a “cost recovery” basis.
But NHSPS, which now owns £3.8bn of properties making up 12 per cent of the health service estate, has faced opposition from GP practices and other groups complaining about bills rising steeply even as health services struggle to serve a growing and ageing population.
Those problems have been compounded by a lack of formal leases for 70 per cent of the properties. NHSPS lacks the powers commercial landlords have to force tenants to sign leases or to enforce charges, according to the NAO. The company wrote off £110m of debt between the 2014-15 and 2018-19 financial years.
Despite the problems, in 2017-18 directors at the service received £235,000 in bonuses — “the highest in the health sector”, the NAO said.
The British Medical Association, a trade union and professional body for doctors, said it was considering legal action against NHSPS over the “worrying rise in service fees faced by GP practices”.
“In recent years, GPs leasing buildings from NHS Property Services have seen their service and maintenance fees rise astronomically with no agreement and no proper explanation,” said Richard Vautrey, who chairs the BMA’s GP committee.
“It is only right, then, that GPs do not pay these fees that could risk the very future of their practices and the ability to provide care for patients.”
Dr Vautrey added that the BMA had sent a letter of claim to NHSPS alleging the property company was behaving unlawfully, and would pursue legal action if it did not receive a “satisfactory response”. The BMA did not explain how it considered the company had behaved unlawfully.
A spokesperson for the property company said it had carried out a review of specific cases with the BMA “which concluded that NHSPS charges were broadly correct”. “We received a further letter . . . from [the] BMA’s legal advisers, setting out six specific GP cases where they were considering action but asked NHSPS to work with them collaboratively to agree a way forward,” the spokesperson added.
NHSPS said in response to the NAO report that it was working to address “legacy issues”.
“We fully acknowledge that whilst improvements have been made, these have been at a slower pace than we wanted, but support is also required from the broader health system to fully address this,” the company said.
It said it would work with the health department, NHS England and other partners to try to agree tenancy details and charges by the end of the 2019-2020 financial year.
It said the NAO report “also highlights how NHSPS has used its property expertise to invest £447m upgrading, maintaining and developing new NHS facilities, and in addition selling 410 surplus properties and raising £347m by March 2019”.