When will the premises funding drought end?

NHS work continues to move from secondary to primary care, with potential investment in GP premises to follow. Marina Soteriou reports.

(Photo: istock/emma platt)
(Photo: istock/emma platt)

Primary care has been starved of serious premises investment for a decade, GP leaders say.

NHS services continue to move out of hospitals into primary and community care, however, and practices are bursting at the seams.

'The DH cannot dodge the question of investment in GP premises any longer,' says lead GPC negotiator on premises Dr Peter Holden. 'If this is not forthcoming, it can forget about the NHS saving money.'

If the NHS is going to meet the Nicholson challenge of saving £20bn, services are going to have to continue to move out of expensive hospital settings.

'If it wants us to do more, we have to have the premises to do it in,' says Dr Holden.

For the first time in a decade, premises cost directions - NHS rules governing primary care premises - changed last month as the abolition of PCTs took effect.

The directions (see box below) bring gains and losses for practices, but offer few answers on whether there will be an investment in primary care premises. The GPC says they are 'interim' and continues to press for changes, but has not revealed what it wants to alter. The Celtic countries are likely to adopt similar changes in coming months.

As for investment, the GPC admits it has 'no idea' whether development funding is imminent.

For England, at least, a glimmer of hope came this month when NHS Property Services, which has taken over the management of PCT-owned GP premises, revealed that a 'capital programme' for estates investment would be rolled out this year.

The total value of the programme has not been finalised - NHS Property Services is going through accounts and estates inherited from PCTs to calculate the size of its war chest.

The proportion destined for primary care, too, remains unknown. Dr Holden has previously called for a £250m-a-year government investment.

Unlocking the money

In England, following the health service reforms, NHS England's 27 area teams have taken control of premises funding. There is money in the system to invest in primary care, says KPMG's head of public healthcare Andrew Hine, whose firm is currently working with a quarter of CCGs.

GP commissioners should be working with area teams to get that money released, he says.

NHS clinical commissioning community lead Dr James Kingsland agrees. 'CCGs should be investing in GP premises if they are redesigning a care pathway that will save money,' he says.

But Londonwide LMCs director Dr Michelle Drage fears funding will not be able to flow out of secondary care to general practice because hospitals have more leverage with commissioners.

'Primary care isn't a priority area for investment, but it is a priority area to take on more work,' she says.

There is a 'slim chance' of central government saying investment should follow the work, so CCGs and LMCs must lobby area teams to make it happen, she says.

'Just shifting 1/20th of the 85% of NHS funding that goes to secondary care would add 50% to the primary care budget and that is the trick CCGs need to pull off,' she says.

Mr Hine adds: 'The question isn't "Should we do this?". The question is, "How are we going to do it?".

'There are complex things that need to be worked through, but development of primary care is critical to being able to manage future demand.'

Third-party developers

Head of the practitioners' group at Hempsons solicitors and joint chairwoman of the Primary Care Premises Forum Lynne Abbess says it seems unlikely there will be any new LIFT developments other than those already in the pipeline.

LIFT - NHS local improvement finance trusts - projects have helped build more than 200 primary care premises since 2001, attracting around £1.5bn in private funding along with more than £200m of public cash.

But Ms Abbess says the only option now for practices wanting to expand is to get the backing of a third-party developer or to put up the money themselves.

'Third-party developers raise the capital but they need the commitment of rent reimbursement,' she says. 'There won't be very much investment from new money within the first two years of the reforms. The government has made that clear.'

Dr Kingsland went down the third-party developer route for his Merseyside practice. He says that as long as GPs are guaranteed notional rent, going with a third-party developer is a good option.

Now his practice has to plug an annual £10,000 gap between the notional rent it receives and what it pays developers. He is confident the costs can be met because the practice can take on more services.


The GPC says it is still in negotiation with the government about help for GPs to take out loans to invest in premises. But NHS England has ruled out underwriting private loans.

Dr Holden warns practices may not be able to offer lenders guarantees about long-term funding rises.

'What the government is doing with the any qualified provider policy is destabilising practice finances,' he says. 'Investment in premises is a long-term funding operation.'

Ms Abbess warns there are considerable risks for practices taking on development themselves because just finalising paperwork and planning can cost up to £100,000.

A better integrated NHS could be part of the answer. Islington CCG chairwoman Dr Gillian Greenhough says the north London group's relationship with secondary care is 'brilliant'. She is optimistic that investment will happen in primary care.

'All those integrated care plans will fall apart if primary care development doesn't take place,' she says.

Investment in premises has long proven to be a tough nut for the NHS to crack, but for primary care, it has now become an issue that can no longer be avoided.

Premises Cost Directions 2013 explained
  • To be eligible for financial support, practices must seek approval from an NHS England area team before starting development work, or agreeing a surgery sale and leaseback deal.
  • Premises improvement grants can now fund infection control upgrades, water meter installations, electronic storage facilities and connection to an emergency generator.
  • Improvement grants will not be considered for projects designed solely to reduce the environmental impact of premises.
  • NHS England is limited to funding between 33% and 66% of the total cost of development projects. Premises must remain in NHS use for 15 years to qualify for funding over £250,000.
  • The higher the cost of a project, the longer the delay before the NHS pays notional rent in full. Projects costing more than £250,000 mean a 10- to 15-year delay.
  • GPs with long-term mortgages and high fixed rates used to face penalties to move to cheaper deals. NHS England will now reimburse this.
  • Practices in rented premises will have to pay up to £2,500 for specialist valuers' fees every time they have rent reviews.
  • Reimbursable car parking spaces must be approved by NHS England.

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