Following hot on the heels of the new NHS (GMS - Premises Costs) Directions (the Directions), which came into force on 10 May 2024, NHS England has published its primary care capital grants policy. The policy fleshes out, by providing a framework and guidance, the power granted in the Directions to make grants to GP contractors for premises developments and improvements and should help all interested parties navigate the requirements to obtain a capital grant for a new improvement or development proposal.
It is crucial that a contractor, being an entity which holds a GMS or PMS contract, first provides a Project Initiation Document, provides all of the required due diligence documents and enters into a grant agreement with NHS England and the ICB before becoming legally bound to begin the development. NHS England is forbidden from providing financial assistance retrospectively to projects which have already begun or where the GPs have already signed a contract for the development.
The proposed development must be one of the type listed in Direction 8 but cannot be one which is listed in Direction 9. NHS England must consult the LMC about the proposal and satisfy itself that the proposal will support the delivery of services under the GMS contract and that the proposal represents value for money, taking advice from the District Valuer as required. The policy repeats the content of the relevant Directions and then goes on to set out how the NHS investment will be protected. This will be by way of a grant agreement and, in some cases, with a legal charge secured on the property.
Protecting the NHS Investment
All approved projects will now be recorded in a grant agreement to be entered into by NHS England, the ICB and the contractor. Legal charges will be required for freehold premises except where the grant amount is lower value (£144,000) and NHS England is satisfied with the practice's financial covenant strength. Even if a legal charge is not required, a restriction will be placed on the freehold title, which will have the effect of preventing the premises from being disposed of without NHS England's consent. The purpose of the charge and the restriction is to:
- Ensure the premises are used for the agreed guaranteed minimum use period (which period reflects the value of the grant);
- If the practice wants to change partners or merge with another practice, those incoming partners will agree to be bound by the grant agreement;
- Secure the repayment of the required proportion of the grant, if the guaranteed minimum use period will not be fulfilled.
There are three different standard form grant agreements available for use: freehold with legal charge, freehold without legal charge and leasehold.
The policy provides best practice guidance to the effect that draft grant agreements must be shared with contractors and they should appoint legal advisors, both recommended to be early in the process. The policy also provides useful guidance on the division of responsibilities for progressing a proposal and the role of each of the parties, i.e. the GP contractor and the NHS system, the region and the national team.
Other developments
The policy also provides guidance for developments proposed by local authorities. NHS England uses s2 of the NHS Act 2006 to make capital payments to local authorities for primary care schemes and the local authority will be required to enter into a standard form "s2 contract" with NHS England. The policy states that legal advice must be sought on the s2 contract. The local authority must agree to NHS England entering a restriction against their freehold property, which will have the effect of preventing any dealings with the property without NHS England's consent.
For developments by NHS Property Services Limited and Community Health Partnerships Limited, the relevant power to make financial provision for premises projects is contained in s223 NHS Act 2006. The policy notes the considerations which must be given when NHS England is considering making use of this power.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.