The NHS is losing millions of pounds because GPs, clinics and hospitals see paying rent as “optional”, an investigation has found.
A study by the National Audit Office (NAO) found that NHS Property Services has no effective way of making organisations sign leases and is writing off millions of pounds in debt.
It said the service was set up in a way that prevents it acting like a commercial landlord – meaning it cannot take legal action, issue penalty charges, stop services or evict NHS bodies.
Furthermore, action against non-NHS tenants, including GPs, must be approved by the Department of Health and Social Care (DHSC) on a case-by-case basis.
NHS Property Services is owned by the Secretary of State for Health and Social Care, and consists of 2,900 properties worth 12% of the entire NHS estate in terms of floor space.
More than 60% of properties owned by the group are health centres, clinics and surgeries.
Some 31% of tenants are NHS trusts and NHS foundation trusts, while 18% are GPs.
NAO investigators found that since 2013/14, the percentage of tenants without rental agreements in place has increased from nearly two-thirds to 70%.
Many NHS organisations and GPs also seem to regard paying for their premises as optional, with almost £700 million either written off or still unpaid, the report said.
In 2018/19, the service only recovered 58.4p for every £1 it billed – and outstanding debt increased from £210 million in March 2014 to £576 million in March 2019.
Although GPs only occupy 18% of the properties, they owe 30% of the current outstanding debt, the study found.
Overall, between 2014/15 and 2018/19, the service wrote off £110 million in debt.
The NAO has now recommended that the DHSC works with the service to ensure its tenants agree rent payments and contracts by the end of March 2020.
Gareth Davies, the head of the NAO, said: “The service has slowly improved the way it manages its NHS properties.
“However, more than eight years after being created, it still lacks the powers it needs to run its affairs effectively, and the accuracy of bills is still disputed.”
Labour MP Meg Hillier, chairwoman of the Commons public accounts committee, said the report made for “uncomfortable reading”.
She added: “NHS Property Services Limited was undermined from the start as it did not have the powers it needs to work effectively.
“As a result it has written off or not collected almost £700 million since 2014.
“But Property Services is not blameless, almost £300 million of its bills have been disputed by its tenants.
“The Department must take urgent action to fix this broken charging framework for NHS property.”
Dr Richard Vautrey, chairman of the British Medical Association’s GP committee, said GPs leasing buildings from NHS Property Services “have seen their service and maintenance fees rise astronomically with no agreement and no proper explanation”.
He said it was right that GPs do not pay fees that “could risk the very future of their practices and the ability to provide care for patients”.
He added: “Indeed, this timely report, which helpfully highlights that there is no legal right or power to collect these payments, comes as we announce that we have written to NHS Property Services asking it to urgently address the service fee issue or we will consider legal action.
“It is simply not the case, however – as this report claims – that GPs see paying for premises as ‘optional’.
“Practices want to pay a fair and appropriate rent, but this needs to be reimbursed by clinical commissioning groups.
“A lack of funding in recent years means commissioners cannot keep up with sky-rocketing commercial rents demanded by NHS Property Services, and they’ve simply passed the problem and the cost to family doctors.”
A Department of Health and Social care spokesman said: “NHS Property Services has helped the NHS raised over £300 million since 2013/14 to regenerate healthcare facilities and support NHS staff to deliver the best possible patient care.
“We have already introduced a system to speed up payments and will establish a new process to resolve local disputes.”