Press Notice No. 47 of Session 2005-06, dated 4 July 2006
FORTY-SEVENTH REPORT: NHS LOCAL IMPROVEMENT FINANCE TRUSTS (HC 562)
Mr Edward Leigh MP, Chairman of the Committee of Public Accounts, said today:
"The Local Improvement Finance Trusts (LIFT) initiative is a £1 billion programme of public and private investment in the provision of new primary care premises. Whether it represents value for money no one yet knows. It is essential that the Department of Health and Partnerships for Health speed up their development of a mechanism for evaluating LIFT. What we really need to know is whether the expected benefits to patients justify the cost of using LIFT to provide the new facilities.
"Providing new, purpose built buildings for GP and other primary care services is obviously going to be more expensive than carrying on with older premises. The danger is that procurement under LIFT might lead to funds being diverted away from other primary care needs. Business cases for LIFT projects prepared by Primary Care Trusts must clearly compare the cost of LIFT to that of other procurement methods. They must make transparent what the LIFT route would mean for spending on other primary care facilities and services."
Mr Leigh was speaking as the Committee published its 47th Report of this Session, which examined whether LIFT to date had been implemented effectively.
The Department of Health launched Local Improvement Finance Trusts (LIFT) in 2000 to address long standing under-investment in primary care facilities. Primary care premises had historically been provided under a variety of arrangements - private ownership by GPs, private sector leases and central NHS provision. Less than half of the existing stock of primary care premises are purpose built. LIFT is a new form of Public-Private Partnership (PPP) that invests in new build primary care premises. LIFT aims to improve the overall quality of the primary care estate in England, and to create a more standardised market for private sector investment. In doing so it aims to improve and expand on the services available through co-location of services and offering services traditionally only available in hospitals.
A national joint venture, Partnerships for Health, was established between the Department of Health and Partnerships UK (itself a joint venture between the Treasury, Scottish ministers and the private sector) to oversee and invest in LIFT. Partnerships for Health takes a 20% shareholding in each local joint venture company (LIFTCo). A further 20% of the shares in the LIFTCo is owned by stakeholders in the local health economy and the remaining 60% by a private sector partner, selected through competition.
LIFT aims to attract £1 billion of private investment into primary care by 2010. Start up funding of £195 million was made available by the Department. The total capital value of the first tranche of buildings in the first 42 schemes was £711 million, with an average LIFT building costing around £5 million. The first LIFT building opened in autumn 2004 and 51 local LIFTCos had been established across England by December 2005. These joint venture companies have exclusive rights to develop new primary care premises in their local areas over 25 years, using a standardised procurement process, subject to value for money tests.
Although the partners in the LIFTCo contribute equity, some 90% of the capital for developing LIFT properties is provided through debt. The properties are owned by the LIFTCo and income is earned through rental payments from tenants such as Primary Care Trusts, GPs, pharmacists and Local Authorities. Primary Care Trusts usually reimburse GPs' rents in full, but generally do not reimburse independent contractors such as pharmacists.
Tenants occupy space in LIFT buildings under Lease Plus Agreements (LPAs), which differ from conventional leases in important respects, making direct comparisons difficult. Rents under LPAs, for example, cover the whole lifecycle cost of the building as the landlord (the LIFTCo) is responsible for maintaining the premises to an operational standard throughout the asset's life. The risk profile differs in other ways too, for example, rent increases under LIFT are limited to the increase in the Retail Prices Index (RPI) unlike under a conventional lease.
Priorities for LIFT are identified through a local strategic plan which is initially developed by the Primary Care Trust, and then becomes the responsibility of a Strategic Partnering Board. The Strategic Partnering Board comprises key stakeholder organisations within the local health economy. It both holds the LIFTCo to account and commissions new developments.
to view Report