The Naylor Review – where it fits into NHS England’s 5 Year plan

In June 2017 we wrote an article for the National Health Action Party about the consequences for the NHS of the Naylor Review. In light of the revelation that £220m has been raised by NHS Trusts in land sales in the last year, this article returns to the Naylor Review and where it fits into the bigger picture of the seismic changes happening to the NHS. In the background a consultation is taking place into changes in the General Practice contract to enable the creation of Accountable Care Organisations with very little fanfare.

The Naylor Review was published in March 2017. It examines how the NHS in England can raise cash from its premises. Its findings are in line with the requirements set out in the Sustainability and Transformation Plans (STPs) which were introduced in December 2015 to fast forward NHS England’s Five Year Forward View (5YFV).

Despite its serious implications, the Naylor Review attracted little attention until Theresa May was interviewed on television and made the statement that the government was backing it.

Two things theoretically under-pin the thinking behind this Review.

1) The need to free up public land to build much needed housing to solve the housing crisis.

2) The new models of care described in the Five Year Forward View have different infrastructure requirements so surplus land can be disposed of and the profits used as an incentive for Trusts to meet targets required by the Sustainability and Transformation Plans.

This blog deals primarily with the issues and assumptions raised around public land sales and asks whether Sir Robert Naylor is dealing with them honestly.

Sales of public land are not new – there has been an accelerated programme of disposals or transfers into private companies since 2010. But there are unanswered questions about the necessity of the transfers, the transparency of the deals and the value for money (or lack of it) they represent. Is there evidence to suggest that dispersing public assets into private hands is a real objective of these plans, rather than the long-term benefit to the public service?

Is the sale of public land the key to meeting housing needs?

On the morning of Theresa May’s keynote speech to the Conservative Party Conference the Huffington Post reported that according to senior party sources, “Britain’s biggest council house building programme in a generation is set to be unveiled… The Prime Minister will make housing a central focus of her address as she wraps up the event in Manchester, with radical plans to use public land to embark on a new drive to creating more flats and houses.”

In the event the ‘biggest council house building programme’ was a damp squib, but £8bn was proposed for more help-to-buy, with encouragement for more private sector building. ’We, as a government, will make sure the land is available’ said Mrs May.

May and Naylor presumably assume the public will not question the need for ‘surplus’ public land, including NHS land, to be used to provide housing and that it will dampen potential objections to disposal. Current estimates are that the maximum amount of housing that could be built on released public sector land would be some 160,000 homes. This is whilst private sector developers currently own between them enough land to build some 600,000 new homes. There would appear to be no critical need for the release of any public sector land. However the release of public sector land may increase profitability for the private sector, especially if the sites are in prime locations.

Notably, it is in London that Naylor thinks he’ll find the majority of the properties that will provide the £billions he is expecting. Charing Cross Hospital in London, for example, may be reduced to just 14% of its existing area and the rest sold off for development. He has a second report on London estates, unpublished for reasons of “commercial confidentiality.”

The reality for investors looking at development properties is that central London hospitals occupy valuable sites; long derelict, small town general practice surgeries do not. Naylor’s review emphasises the combination of sales of existing estates and the introduction of private finance to create newbuilds as key to changing the estate to meet the ‘new models of care’ set out in the 5YFV.

Naylor claims that NHS land is unused and can be sold to mould the NHS into the 5YFV’s vision of accountable care.

The Review intimates that large swathes of NHS land and assets are lying around unused and that this is what will be sold off. Naylor describes the land as ‘inefficiently used’ or ‘unused’. 

This belies the objective of the Review which is set out in Section 7: property sales are to be designed with the 5YFV delivery in mind. Section 7.3.4. ‘Levers and incentives to support primary care’ says “Given the independence of the primary care sector which is largely already privately owned, active consideration should be given to how GP practices can be given incentives to move into new facilities, supported by substantial private sector investment. NHS Commissioners and regulators have considerable latent authority to insist that premises be fit for purpose. These powers could be used far more explicitly to ensure that new investment is in line with the 5YFV and to force the pace of investment in or exit from inadequate premises. (……) for example by reducing the payments for properties not meeting the future service strategy to encourage moves.”

To paraphrase that passage, GPs must move out of their old properties which they own into new ones which they will not own. They will be forced to move if they do not do so of their own accord.

Furthermore, 7.4 recommends (Recommendation 10) “STP estates plans and their delivery should be assessed against targets informed by the benchmarks set against this review. STPs and their providers which fail to develop sufficiently stretching plans, should not be granted access to capital funding, either through grants, loans or private finance until they have agreed plans to improve performance against benchmarks.”

In other words selling odd bits of land or unused buildings just to raise the money will not meet the demands of the Review. Only changes in usage of existing services will.

As Dr Kailash Chand says in his Head to Head with Sir Robert Naylor published in the BMJ (27 September 2017), “We should be standing firm against these changes before they are made and demand that there is transparency, accountability, and a thorough evidence based assessment made of public service alternatives to this proposed dispersal of public assets into private hands.” 

The private sector cetainly benefits from this increased transfer of estates out of public hands. Assura, a commercial property company, which specialises in renting premises to GPs sees NHS funding as security in times of economic uncertainty. It states in its annual report that the funding provides ‘significant growth built on a secure and long-term income stream’. Secure funding for the NHS should ensure its key responsibilities: providing a safe, high quality, accessible, comprehensive health service to the country as a whole, not buffering private sector profits from market risk.

Has the current model of the NHS failed?

The 5YFV is built on the premise that the health needs of the country have changed so extensively since 1948 that the service is no longer fit for purpose. It also states categorically that there will never again be a funding level sufficient to maintain the service as it is. This combination drives the change to an entirely different system.

Regardless of management and other changes, the basic structure of the NHS has remained largely the same since 1948. It has provided: local services in the form of GP surgeries close to home; accessible District General Hospitals providing planned and emergency integrated diagnostic, clinical and surgical services; specialist hospitals dealing with rarer conditions; teaching hospitals linked with universities developing new treatments and community ‘cottage’ hospitals offering an intermediate step between care at home and acute hospital care.

The Review emphasises the need to develop out of hospital care and to provide the necessary infrastructure to support increased care in the community. It explicitly states that it is the acute division of the service that is to be scaled back and the GP family practice model to be dismantled. Naylor argues that 57% of the cash that can be found from the sales which will pump prime these changes is in London.

The imperative to sell land is used as justification for the creation of Accountable Care Organisations, the ‘new models of care’ which will replace the traditional model and which are set to be rolled out across the country from April 2018. The assumption is that the Accountable Care Organisation structure which is being imported from the US is, as Dr Kalaish Chand puts it in his BMJ article, ‘a magic bullet’.

The Review claims that within each footprint those providers who have greater potential to raise money will share the benefits with those poorer and less well-endowed providers they are partnered with. However with the bulk of the cash being found from sales concentrated in London, it is not clear how these benefits will extend to the whole country.

Furthermore, the new models of care are experimental. Such a large-scale change without extensive consultation and testing jeopardises the NHS’s ability to provide safe care.  Historically, the replacement of traditional NHS delivery of mental health care led to disastrous consequences for patients. Yet the 5YFV relies on a similar care in the community model replacing many NHS services with an emphasis on self-care and non-clinical services.

 The GP sell off

Naylor’s analysis of the GP estate demonstrates a clear preference and expectation of mass transfer from public to private ownership and financing. Naylor himself was reported as being ‘delighted’ at the £3.3bn offer of private financing for new primary care facilities. According to the investors, the money could fund up to 750 new primary care centres but this is predicted to cost the NHS up to £200m a year in new rental charges.

Public estates are a lucrative investment for the private sector, but at the cost of a loss of available funds for the frontline care that our services exist to provide. PFI’s inflated costs are well known, but the increasing privatisation of NHS property is happening in other areas too. Property company Assura’s main NHS business is in rental property for GP surgeries. Assura declared its profits in 2015-16 as £28.8 million. Its profits for 2016-17 were £95.2 million before tax.  That’s up a staggering 230.6% in one year.

Naylor recommends exploring the use of little used regulatory powers to force GPs compliance. This is another burden on an already strained sector of the service. It raises the risk that more GPs will leave the service and exacerbate the skills shortage as a result quite apart from the huge and unnecessary cost to the NHS in rents.

So what’s it all about?

The reality of what lies at the centre of the Naylor Review is another move to privatise public assets (as opposed to services) and to simultaneously use the carrot-and-stick approach (sell and you will be rewarded, don’t sell and you will be punished) to force through the service delivery changes of the STPs.

In simple terms, the whole plan is just another version of PFI, burdening the service with more and more inflexible private property debt. This strains the funds available for service delivery whilst shaping it to fit private sector demands rather than public sector criteria.

Land sales and commercial rents being forced onto Foundation Trusts and GPs are not a way of securing the NHS’ future. It shows the strength of the desire to unlock the ownership of these assets and transfer them to the private sector that the Naylor Review recommends that Her Majesty’s Treasury should provide additional funding to incentivise land disposals through a “2 for 1 offer” in which public funds match disposal receipts. A bribe to encourage an NHS starved of funds to sell the family silver. And should the bribe not succeed there will be a penalty imposed for holding on to the assets.

Property developers should not be at the forefront of recommendations surrounding the public estate. When NHS services are put ‘at arm’s length’ we lose public ownership and control. So when a firm of international lawyers say, ‘With thanks to the British Property Federation, the key recommendations are around establishing a new and strategic NHS Property Board at arm’s length from DH [Department of Health] to act as the primary voice on estates matters.’, we should be concerned.

The Naylor Review’s vision of an accelerated sale of NHS property does not enhance health provision. Property developers stand to make profit from land acquired on the cheap. NHS Property Services Ltd has already commercialised the leases on the properties it acquired in the 2012 transfer and is implementing the imposition of commercial rents. The biggest transfer of properties so far took place in December 2016, when the company completed the transfer of the freeholds of 12 community hospitals in Devon into its ownership, with the last line of their press release stating ‘leases to regularise occupation are currently being finalised’. It is clear that in this context ‘regularise’ can only mean ‘commercialise’ and that rent increases will follow.

Although the NHS land sales are clearly being used as part of a programme of enforced change, they are not unique in the public sector. Across all departments land sales are being promoted as a solution to the housing crisis as highlighted by Theresa May in her conference speech. This appears to be evidence of a worrying trend to prioritise land values and property which give high returns to private investors over the provision of essential public services. The real risk for the NHS is that the more it moves from its core purpose, the less likely it is to be there to provide its services for future generations.