Selling unused NHS estate could reap £1bn

The NHS is sitting on around 264 football pitches worth of unused or underused land or property, which, if rationalised, could unlock £1bn of capital, a report by consultants EC Harris has found.

The report on the NHS estate revealed that, although the amount of underused or wasted space in the NHS estate reduced by 210,000 sq m in 2010/11, there remained nearly 1.9m sq m square still underused or unused.

The report said this was equivalent to the entire footprint of Sainsbury’s UK stores or 264 football pitches.

Conor Ellis, EC Harris partner in the health sector, said the NHS could unlock a capital sum of £1bn by disposing of 50% of this area, and save a further £1bn through better procurement and improved facilities management performance.

The report highlights the scale of the challenge faced by NHS Property Services, the government-owned company to be set up to take over up to £4bn worth of NHS property after the primary care trusts (PCTs) are abolished from April 2013.

Health secretary Andrew Lansley has said the new company would aim to cut costs by streamlining the management of the NHS estate.

Ellis said “radical and concerted action” would be needed to unlock the latent capacity of the NHS estate.

Ellis said: “The majority of remaining unused space is owned by Foundation Trusts and is therefore not accessible to the Treasury to dispose of or seek savings through leveraging procurement scale.

“This means that local collaboration is more important than ever, with neighbouring trusts needing to work together to maximise the opportunities available to them.”

The report also found that there was a huge gap in the performance of the best and worst performing trusts for facilities management. It said the best performing PCTs spend, on average, £58.84 per square metre for hard facilities management, such as maintenance and electrical work, whereas lower performing PCTs pay £205.22.

The report follows the government’s announcement, last week, that it had saved £130m on Whitehall’s annual property spending since April 2011 as part of the drive to cut costs.

Alan Kemp, EC Harris head of central government, said £130m of savings was a “step in the right direction” but was “still a drop in the ocean when compared to the circa £20bn total cost of running the public sector estate”.

“Most of the savings to date can be attributed to tighter control of new leases and new buildings as well as better use of the estate through initiatives such as the sharing of offices between different departments.

“However, there is still a vast pool of savings which remain untapped. We believe that a realistic target should be savings of between £400m-£500m which are achievable through making the best use of space on the government estate, mothballing empty buildings and moving to genuine flexible working.

He said departments that had already implemented such measures, such as the Department for Business, Innovation and Skills, have realised savings of up to 30% on their estate costs.

“The key question is whether Government departments have the appetite to work together effectively in order to achieve the available savings.

“A cultural change is needed; from commitment at the top level; from management to be willing to allow innovation into the process of estate management and use; and from the overall workforce to embrace new ways of working, such as flexible and home working options.

“Until this happens the Government is only likely to trim the edges of the problem as opposed to making significant cuts into the costs of its property.”