A taxpayer-funded scheme is allowing GPs to pocket windfalls running into millions of pounds from their surgeries, an investigation has found.
Doctors are permitted to buy buildings for their surgeries which are then ‘rented’ back to the Department of Health, often for far more than the mortgage repayments. The surgery is then sold off – either to another doctor or a developer – when the GP retires and they are allowed to keep the profits from the sale of the building.
An investigation by the Bureau of Investigative Journalism and the Daily Telegraph has uncovered details of the secretive scheme, which currently costs the Government more than £630m each year.
GPs have boasted that they have made six or even seven figure windfalls from the system – the costs of which have soared by more than 70% in just six years.
The terms of the arrangement are even more generous than the controversial system which allowed MPs to profit from the sale of taxpayer-funded properties.
A typical surgery may have been bought for £150,000 a decade ago. A GP could claim tens of thousands of pounds in ‘notional rent’ annually which is used to clear the mortgage. They could then sell the property today for more than £500,000, and often substantially more, and keep the profit.
Public concern
The disclosure is set to lead to renewed public concern over the taxpayer-funded largesse enjoyed by some GPs, amid reports that the best-paid doctors can earn far more than the Prime Minister.
Last week doctors still voted to consider striking in a row over pensions – which would be the first industrial action for more than 30 years.
The Department of Health is the only major Government department to be protected from spending cuts, although many experts believe there is a significant potential for cost savings to be made. Under reform plans, GPs are to be given even more control over health budgets.
The NHS paid GPs £630m in rent for their privately-owned surgeries last year, an increase of 70 per cent since 2004, when the figure stood at £370m.
The total cost to the Department of Health in the past five years has been £2.5bn.
Around 86% of GP premises are either owned by doctors or by private companies and are paid for through the ‘notional rent’ scheme.
BMA encourages GPs to buy their surgeries
The British Medical Association actively encourages its members to buy their own surgeries and promises that the investment will yield ‘real capital gains’.
James Wharton, a Conservative member of the Commons Public Accounts committee, accused GPs of ‘fiddling the system’ and said he would ask the National Audit Office to open a ‘full and comprehensive investigation’ into surgery funding.
‘People are obviously going to be extremely concerned to see that taxpayers’ money is being used in this way. For too long these people have profited too easily at the expense of the taxpayer and the government should look at this system and see whether it can be changed to ensure better value for money,’ he said.
‘I will be writing to Margaret Hodge, the chair of the Public Accounts Committee, to request that she asks the National Audit Office for a full and comprehensive investigation into this system.’
A Department of Health spokesperson said: ‘This system incentivises GPs to expand and improve services so that people have proper access to modern facilities. It represents the cost to GPs of renting or owning the premises, and is a cost that would met by government direct if GPs did not.’
Read case studies from this investigation here.
Additional reporting by Sophie Clayton-Payne from the Bureau and Holly Watt from the Daily Telegraph
Heidi Blake works for the Daily Telegraph. Read this article in the Daily Telegraph
July 4th, 2011 at 11:14 pm (#)
Somebody , somewhere has to provide the NHS with premises and they have to be paid for somehow. 44 years ago nobody in banking or the city was interested in providing capital hence the cost rent/notional schemes both of which are ruthlessly overseen by HMRC Valuation office. GPs are estimated to have personally invested between £3 and £4 billion into premises money which otherwise the tax payer would have had to find. The costs of Health care have to include the costs of accomodation from which to practise
GPs unlike hospital PFIs cannot purchase and sell good will and our rents are taken to be professional income thus diluting our real pay for doing the medicine. Unlike a real business I cant adjust my prices , I cant cherry pick the market I cant be a limited liability company I cant do a pre pack and when it all goes wrong i am an unlimited liability partnership and creditors have the shirt off my back and the GMC revokes my registration
My personal free gift to the NHS over the past 26 years of surgery provision has cost me scores of thousands of pounds because the second mortgage to pay for the surgery was money that I could not spend on my CGT free main residence!
I am not poor but I am not wealthy either compared to my academic peer group from school, and despite the 1996/2004 out of hours deals i will still have worked 157,000 hours compared to the average 80,000 of most people.
(Some elements of this post were deleted as they breached the guidelines on publication. For more information, please contact the Bureau).
July 7th, 2011 at 1:15 pm (#)
As a GP I feel compelled to put this ‘hype’ into perspective. Firstly the system has been going since 1966, so there is nothing new reported in this article. The position is that GPs have been encouraged to build newer and better premises over the years by a system called ‘cost rent’ where they take out a mortgage to build or improve premises and the NHS pays the interest provided the building is used for NHS care. The GP still has to pay off the actual principal of the loan, so is not getting a ‘free’ building. Of course inflation has helped to increase the nominal value of the buildings over the years, but the downside is that the GPs carry all the risks of ownership, including the very real risk that our purpose-built premises with restricted planning permission become redundant and difficult to sell for one reason or another (eg as a result of the construction of a polyclinic nearby). I accept that some lucky practices building in central London have seen appreciable capital gains, but others are sitting on losses. Like any business, whether working under contract to the government or not, a GP surgery may profit or lose from owning a building. All government contractors will price in the cost of mortgages in their contracts and it seems bizarre to single out GPs as ‘profiteers’. This article looks very much as though it has been spun to the press for political reasons, which may explain the apparent bias.
July 23rd, 2011 at 7:43 pm (#)
It is refreshing to see TRUE investigational journalism alive and well somewhere. Here in America it has just about been done away with as media monsters gobble up any outlet that might spark an investigation that could lead somewhere like this one has. Even Huffington earlier this year sold out to AOL/Time-Warner leaving the USA without any significant non-conglomerately controlled major media outlet. The rest of the world should take notice of this travesty as with its subsequent censorship the rest of the Globe is both at risk and future peril as our government and corps do things WITHOUT public knowledge or consent! Our secrecy will be the globe’s next REAL threat.