Billions of pounds of NHS land and property is being sold off. Have we learnt nothing from the disasters of the past?

I felt a sense of foreshadowing yesterday: as word broke of the government losing billions by selling off military homes on the cheap, the NHS confirmed plans to privatise heaps of land. No one batted an eyelid.

But it needs thinking about: we’re on the verge of making another monumental error.

As the FT reported:

“In 1996, the Ministry of Defence sold 55,000 homes for married members of the armed forces to Annington Property Limited…for £1.66bn. As part of the ‘sale and leaseback’ deal, the MoD then rented the homes from Annington on 200-year underleases.”

Now, this wouldn’t be entirely stupid for a private company – it could be a way to release equity and limit risk. But the government doesn’t need to release equity – it can borrow at a rate of 1.4%. Nor did it need to limit risk – it owned these houses out-right, and can’t really go bust.

The sale, under John Major’s Conservative government, was meant to free up cash to improve the quality of housing for servicemen and women. It turned out to be counter-productive: the total loss of selling off these homes and renting them back has been up to £4.2bn, according to the National Audit Office.

Lost value

This is where we begin to see similarities with the NHS announcement. Figures from March 2017 show NHS Trusts declaring £282m in ‘surplus’ land. The year before, Trusts sold off £116m in ‘surplus’ land.

There is a concerted effort to whittle down the health service to its bare bones. But here’s the catch. As property experts Knight Frank note:

“Average urban development land prices…are up 6.3% year-on-year [from 2016-2017]. “Values in these markets, which include sites in five of the UK’s key cities, have risen by 23% since the start of 2015 [to July 2017].”

Let’s look at that the other way. A very crude calculation suggests NHS land sold off in 2016 would be worth at least £123m with the average rise in value.

Of course, that’s a notional loss. But it needn’t be notional, because here’s the point: land is extremely valuable – and it’s getting more so. It is scarce, and the public sector has a lot of it.

Sweetening the privatisation pill

The sweetener this time – similar to the MoD’s excuse in the 1990s – is that NHS staff will get ‘first refusal’ of homes built on the land. But instead of off-loading the assets to private developers in direct transfers, here’s another idea. Rent it out.

Why not get housing associations or councils to build the homes for social rent? They will get an income, and the NHS will too through lease income on the land. Better still – our beleaguered NHS staff would get genuinely affordable housing.

But there’s another issue: the NHS will need more land in the future, not less. The population is growing, and we have an ageing population. Demand is therefore rising, and since we haven’t abolished geography, that requires space – even when we account for some building ‘up’.

Getting angry

The lessons from the MoD sell-off – and basically every privatisation over the past two decades – is that while the headline figures look big, they don’t matter for long. The value of what was sold off rises, and billions are lost in the long run in potentially sustainable revenues.

It’s unclear how much will be sold off this time, but it’s likely to be much more than the £300m declared by NHS Trusts. This is part of short term revenue-raising to implement the Naylor Review – which is attempting to raise around £3bn by selling land and property.

The key question is this though – why is no one talking about this? Because the ideology of privatisation remains, despite Labour’s best efforts, pervasive and unchallenged.

Same old mistakes

There are more sell-offs to come. Watch out for the second Naylor Review – we don’t know when it’s coming out, but Robert Naylor himself has suggested its conclusions might be controversial.

Campaigners We Own It told this site the announcement was ‘extremely worrying’:

“It seems they’ve learnt nothing from the collapse of Carillion if they are pushing ahead with plans to raise capital for the NHS through private investments. “Selling NHS land for a bit of quick cash is not a sensible way to run a health service. The government should be increasing the capacity of the NHS, not squeezing it into an even smaller space.”

You can already see the NAO reports in ten years time. ‘Short-sighted’, ‘poor value for money’, ‘repeating the mistakes of previous privatisations’.

I’m happy to be proved wrong. From experience though, I don’t think I will be. With a million other battles going on however, it’s unlikely Ministers will think twice before pushing this through.

Josiah Mortimer is Editor of Left Foot Forward. Follow him on Twitter.

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