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NHS property company to take over £5bn of estate

The company being set up to oversee a large chunk of the NHS estate will have a portfolio of “several thousand” properties with a total value of around £5 billion.

NHS Property Services Ltd, known as PropCo, will dispose of much of the surplus estate currently owned by primary care trusts.

A series of Department of Health documents seen by CN’s sister title HSJ value PropCo’s likely property assets at “circa £5bn” and “c£4.5bn”.

Either figure is significantly higher than previous estimates, which valued the likely portfolio at around £2bn.

This suggests that most primary care trust-owned clinical sites now occupied by health trusts will be owned and managed by the property company.

In 2010 the DH valued the entire PCT estate at £5.2bn. DH guidance last summer said that PCT assets could transfer to NHS trusts where the trust was the main occupant and the asset was used to provide services.

The new organisation will employ 2,500 staff and have an interim structure for its first two to three years, led by a national board with four directors.

Beneath them will sit four “sub-national” directors and between 16 and 20 “patch estate managers” responsible for smaller geographic areas.

The company’s chief executive and chief operating officer will be on “very senior manager” contracts, meaning they can be paid a salary of up to £142,500 without requiring DH approval. The CEO must have RICS, engineering or accountancy qualifications, and/or an MBA, as well as experience of procuring construction
services.

Local managers will be employed on the top grade of the NHS pay framework, attracting a salary of up to £97,478 a year.

“Call off” contracts will be set up at the sub-national level with commercial partners to provide extra estates management capacity and plug any “gaps in skills”, the documents say.

“Ministers have confirmed they are content with the proposal of an interim model capable of operating for some 2-3 years, until the full commercial model can be developed,” one background document says.

A job summary for the chief executive officer said: “The company’s success will be dependent on integrating more than 160 teams, each from separate organisations, into one new, homogenous entity, but based on a sub national structure.”

The proposed 2,500 staff is higher than previously expected.  In January the DH calculated there were just over 2,000 estates and facilities staff working in PCTs.

The proposed staffing level suggests that existing PCT estates functions are expected to be transferred “lock stock and barrel” to NHS Property Services, Hempsons partner Graham Lea told HSJ.

“If you’re going to transfer the business you have to transfer all the staff, so you can’t make them all redundant. But that may come later.”

Few believe the company will need all 2,500 employees once it has determined how it will operate, raising questions over how any redundancy costs will be met.

Hilary Blackwell, partner at Capsticks said: “They might get landed with a lot of staff they don’t need or want – it’s potentially an enormous headache for the new organisation.

“If they don’t grasp the nettle before the transition, they will have to do it after. Who is going to take the financial brunt for reorganisation?

“The property company may not have a big contingency fund, and could get in a financial muddle quite quickly depending on the deal with the Department of Health and whether they’re underwritten.”

HSJ

HSJ

HSJ

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