Years of service charge disputes 'have undermined GP funding and recruitment'

Long-running disputes over service charges have cost GP practices in NHS-owned premises 'huge amounts' of time and money and left them unable to recruit or plan ahead, a leading accountant has said.

Medical centre (Photo: Richard Johnson/Getty Images)
Medical centre (Photo: Richard Johnson/Getty Images)

Around 1,250 GP practices in England operate from premises owned by NHS Property Services - a DHSC-owned company set up in 2011 to manage and improve NHS estates.

Part of the company's remit was to move the management of NHS estates onto a more commercial footing, a move that saw some practices facing up to six-figure increases in service charges.

Practices have disputed the charges - with the BMA threatening legal action - but the National Audit Office estimated earlier this year that the outstanding bill had risen to £173m, equivalent to almost £140,000 per practice in NHS-owned premises.

Wasted GP time

Specialist medical accountant Andrew Pow, executive board member of the Association of Independent Specialist Medical Accountants (Aisma) and a partner at Mazars UK, said a 'huge amount of wasted GP practice resource' had gone into service charge disputes.

Most of these disputes remained unresolved, he warned - leaving practices unable to plan and in some cases unable to recruit to fill vacancies.

Mr Pow said: 'In terms of costs, significant amounts of practice management and GP time have been involved in going through the detail of service charges - where available, challenging it and meeting with NHSPS. Many practices have employed lawyers and surveyors to fight their cases, with costs - and there are also emotional issues in having debt collection chasing you.'

GP practices that work with Mr Pow have been advised to put aside an amount equivalent to premises costs they used to pay to primary care trusts in the past, but added that if there was 'excess liability, then that's a potential cost to find'.

Service charges

Any practices that had put nothing aside, however, 'could be sitting on four years' worth of service charges'.

He added: 'This causes a big issue when a partner retires - because there are unknown liabilities hanging over them, and it is not very attractive to new incoming partners. I have known cases where people won’t join because of the uncertainty.'

The removal of subsidies paid by primary care trusts or other organisations in the past as NHS organisations changed had created a 'huge mess', Mr Pow warned. He said commissioners had failed to identify old subsidies that were paid to support practices' premises costs, warning that the government needed urgently to 'come up with an affordable and fair solution for practices'.

BMA GP committee chair Dr Richard Vautrey said: 'Our members consistently raise issues about premises, which we know are having a serious and growing impact on surgeries across the country.

GP recruitment

'Premises issues now mean that the risk of buying into a practice is slowly outweighing the advantages that go with it – and at a time when we’re losing GP partners, this needs to be urgently resolved.

'Earlier this year, the BMA set out in a letter of claim why we believe NHSPS is acting unlawfully around service charges and we continue to explore legal avenues to resolve this.'

An NHS Property Services spokesperson said: 'NHSPS is committed to working constructively with our customers to ensure all tenants are able to agree tenancy details and charges to create a properly regulated, transparent and optimised estate for the benefit of our customers and their patients, now and in the future.

'NHSPS and its customers face a number of legacy issues inherited by NHSPS such as the absence of formal rental and service agreements. The recent House of Commons public accounts committee report rightly identifies that these issues must be resolved for NHSPS and its NHS partners to reduce billing issues and recover income.

'NHSPS are currently meeting with all customers to review annual charges and aim to resolve any billing issues as quickly as possible. It is important that bills are agreed and paid so tenants can have certainty of their financial position, and so that we can continue to reinvest in the NHS estate. The provision of local premises subsidies or their withdrawal is outside the remit of NHSPS, and we cannot comment further.'

NHSPS said it was 'working with stakeholders to explore more flexible occupancy documents that can be offered to GPs' along with 'simpler occupancy agreements, which will in many instances only cover the rental elements, with a view to concluding separate agreements for service charges and facilities management costs subsequently'.

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