Important first steps on the NHS estate

On the day NHS England published Next steps on the NHS five year forward view, the Department of Health published Sir Robert Naylor’s review on NHS property and estates.

The two documents are very different – while NHS England’s focuses on the delivery of an existing strategy, Sir Robert’s report sets out the vision for a new one. This is good news; as our evidence review, conducted to support Sir Robert’s review, highlighted, the NHS has been without an overarching estate strategy for a long time, and in the past it has been unclear as to where overall leadership for estate strategy lies.

The Naylor review comes at a time when capital investment is at its lowest level in real terms since 2005/6, with capital budgets frequently diverted to fund day-to-day activity – a trend likely to continue until 2019/20.

What does it say?

The Naylor review identifies the estate’s immediate priorities as delivering the NHS five year forward view (Forward View) and addressing poor buildings and backlog maintenance, requiring capital funding of £10 billion. This investment, says the report, is urgently needed, but should be linked to better strategic planning capability.

With the £10 billion gap in mind, the review highlights the financial opportunity presented by unused or underused NHS land and buildings, although it suggests that private investment and public funding will also be needed. The opportunity from capital receipts is estimated to be at least £2.7 billion (up to £5.7 billion with some risk mitigation, or with ‘more radical reconfigurations’, particularly in London), with another £500,000 to £1 billion to be saved annually on estate running costs. A second key opportunity is developing new housing – not only to fulfil the Department of Health target but, the review proposes, to provide homes for NHS staff.

Of course, the key question is how to realise these opportunities. The review highlights two longstanding obstacles – the failure of financial mechanisms to encourage organisations to release land, and the limited availability of appropriate expertise. To address the first, the review sets out measures to incentivise embedding capital plans within sustainability and transformation plans. On the issue of expertise, it proposes bringing together the functions of NHS Property Services and Community Health Partnerships into a new NHS Property Board with a strong regional presence to help develop estate strategies locally.

What happens next?

Many of these recommendations are welcome. They provide a clear direction of travel for the estate and, through the new board, promise strategic leadership and expertise. Linking local estate strategies to STPs places the estate at the forefront of the NHS’s efforts to deliver the Forward View. Though they require further development, plans to prioritise land sold by the NHS for homes for NHS staff are also promising as a means to tackle the housing shortage and, potentially, help staff recruitment in areas where house prices are high.

But the review is only the start. As it puts the recommendations into practice, the property board will need to work through many old – and some new – challenges. For example, encouraging estate-rich organisations to release land for the wider benefit of their STP – with benefits potentially accruing to other organisations – may prove difficult. The review suggests that creating accountable care organisations (ACOs) would help align incentives across different NHS estate owners, but if organisations retain their own financial responsibilities this may remain a challenge – particularly where primary care is involved. And even if ACOs are a solution, none of the nine potential accountable care systems (those most likely to develop into ACOs) identified in the Next steps document are in London – the area identified by the review as offering the greatest financial opportunity. (Naylor has suggested there are five London sites with a potential value of more than £1 billion.) Working through such issues, and recognising this will take time, will be critical in translating the review’s recommendations into action.

In time the work of the property board will need to extend beyond the review’s proposals. For example, while the recommendations focus on releasing NHS estate, capital is not the only priority, and disposals are not the only way to unlock value. The board will have a role in identifying opportunities for ongoing revenue generation – and, in doing so, supporting the NHS estate to generate wider economic and social value. Parts of the NHS are already exploring how surplus land can be used to build, for example, biomedical health campuses, providing a flow of rents. There is also scope to go further in relation to housing, and its role within STPs. Both local government and housing associations have key skills the NHS could draw on in areas such as property development, planning and understanding local housing needs. Moreover, creative use of the NHS estate could help provide access to housing for people beyond NHS staff, supporting the health and wellbeing of many, as well as offering sustainable income for the NHS.

Unlocking value from the estate has eluded the NHS for many years. Doing so in the current climate is unlikely to be easy, and aligning the NHS’s estate plans with those across the wider public sector, particularly through the One Public Estate initiative, will be key. But it’s important that these challenges don’t distract from the overall direction set out by the Naylor review, and the important progress these first steps represent.

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#549883 niall mcnevin
Founder / Managing Director
Paragon Regeneration Ltd

Interested in the NHS Estate

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