Ups and downs of LIFT

While the state of the NHS continues to dominate headlines and the Procure 21 initiative moves another step forward, those working in the health service sector now have another issue to consider: the development of the Local Infrastructure Finance Trust (LIFT).

What is LIFT all about? Basically, it is a way to build or refurbish primary healthcare facilities, such as health centres and doctors' surgeries, and facilities for services provided by the local authorities and other related service providers. So, for example, a new health centre incorporating a doctors' practice might also include a pharmacy, an aromatherapy centre and a facility used by the social services department.

The idea is that the local stakeholders in the health/social services sector all get together and agree something called a "strategic services development plan" (SSDP). This receives formal approval by the Strategic Partnering Board. The board comprises the local stakeholders and the local health authority, the primary care trusts and the local authority. The SSDP will contain a detailed outline of a first wave of schemes, along with proposed indications about subsequent schemes. The idea is that the SSDP then releases the schemes as they receive Strategic Partnering Board approval.

In the meantime a LIFTco is formed. This is a separate legal body (whereas the Strategic Partnering Board is not) made up of a private sector partner, the same local stakeholders that form part of the Strategic Partnering Board and Partnerships for Health, a public-private partnership between the Department of Health and Partnerships UK. The precise shareholding in LIFTco is unknown at present, but the private sector will always have more than 51% of the available shares, the remainder being held by local stakeholders and Partnerships for Health. The board of LIFTco is designed to ensure that it is controlled by the private sector partner.

LIFTco enters into a strategic partnering agreement with the health authority, local authority and primary care trust. It does not enter into the agreement with the Strategic Partnering Board, given that this appears to have no legal identity of its own. LIFTco then enters into supply-chain agreements to carry out the construction work, sale agreements in relation to land and a "lease-plus" agreement with the end users, such as a doctors' practice and the primary care trust. The lease-plus arrangement is basically a lease with whole-life costing and an inclusive rent that covers facilities management services. There is a basic payment mechanism linked to availability that can be used to monitor the delivery of the FM services. There is no penalty point system (unlike a full-blown PFI), but LIFTco will monitor performance and there will be agreed cure periods for default by the private sector provider.

It is uncertain at present precisely how long a LIFTco will last – this may be determined by the amount of work that it lets out and the duration of each project.

The first six test areas are: Barnsley, Camden and Islington, City and East London, Manchester, Salford and Trafford, Newcastle and North Tyneside, and Sandwell. Four of the first six schemes in the first tranche were launched at a conference held on 30 January and will be advertised in the Official Journal shortly, with the remaining two following in March and April. Thereafter, a further 12 schemes will go out for advertisement later in the year. These have recently been announced and cover a number of areas in central and southern England. A third tranche of 24 schemes will be announced in the autumn.

Perhaps the primary point of interest will be whether it will be possible to convince the disparate groups that make up the local stakeholders to unite under the LIFT banner. This, it seems, is the major hurdle. In addition, there are suggestions from some potential private sector bidders that GPs, for example, should not be allowed to become part of LIFTco at all.

Although the structure of the shareholders' agreement that governs this aspect of LIFTco would prevent the public sector from exerting undue influence over what is essentially a private sector operation, it does highlight the necessity of ensuring that both public and private sectors are wholly committed to the LIFT initiative.