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Premises costs directions 2013 explained

James Williams explains 10 key changes to England's NHS (GMS - Premises Costs) Directions, which came into effect on 1 April 2013.

More types of projects can be funded with premises improvement grants (Picture: iStock)
More types of projects can be funded with premises improvement grants (Picture: iStock)

The NHS in England has just released the new GMS – Premises Costs Directions 2013, which replace the 2004 edition of the guidelines.

Here are the 10 key changes at a glance:

1. Approvals for development and sale and leaseback projects

The new directions emphasise that financial assistance will definitely not be granted for development work if it has not been approved by one of NHS England’s (formerly the NHS Commissioning Board) 27 area teams.

If work were to begin on an extension before approval has been sought, additional reimbursement will not be given for the additional space created.

Moreover, it is now stipulated that the sale and leaseback of a GP surgery must also have prior approval from NHS England otherwise the inference is, again, that financial assistance will not continue.

2. Premises improvement grants

There are alterations to broaden the types of projects that can be funded with premises improvement grants. Alterations to improve a GP premises for infection control purposes will now be considered, for example new flooring.

Also now included are water meter installations, electronic storage facilities and connection to an emergency generator.

Surprisingly, improvements designed solely to reduce the environmental impact of premises, such as solar panels, air conditioning, replacement windows, doors or facades, will no longer be considered. Nor will any work required as a result of general wear and tear.

3. Funding for development projects

With regards to the funding of projects, NHS England is limited to funding between 33% and 66% of the total cost (as per the Premises Costs Directions 2004), plus any VAT for which the contractor cannot claim a refund.

For projects costing over £250,000, there must be a guarantee that the premises will remain in use for NHS services for at least 15 years.

4, Professional fees

There is now a limit of 12% of the total reasonable contract sum attached to professional expenses that may be reimbursed, for example surveyors, architects and engineers fees.

However, there is now a new category for project managers, capped at 1% - hopefully in recognition of the fact that GPs increasingly need more assistance from professionals.

5. Abatements

Instead of a 10-year abatement period, this is now based on either 5, 10 or 15 years, depending upon the capital injected that was not put in or borrowed by the contractor.

6. Mortgages

GPs with long-term mortgages and high fixed rates used to have to pay a penalty to move to a cheaper contract. NHS England will now reimburse this cost.

7. GP tenants

Practices who lease their premises will need to negotiate a rent with their landlord, and sign a memorandum recording this, before a rent reimbursement application is made. This means that the GP will need to engage with a specialist surveyor who will then liaise with the landlord’s surveyor on their behalf

8. Private income

The directions no longer contain the section which states that GPs need to declare their private income. However, the DH has stipulated separately that any practice found to be doing particularly high levels of private work will still find their reimbursement reduced.

9. Reimbursing car parking spaces

Stricter guidelines are now in place for the reimbursement of car parking spaces. The number of reimbursable car parking spaces must be approved by the Board and access to and egress from each space must be possible without the need to move other cars. This suggests that tandem spaces, which are often adopted in busy central locations, will no longer be approved for reimbursement.

10. Alternative use valuations

The ability to value a surgery in terms of possible alternative uses has been removed. Surgeries can now only be valued as a medical practice.

Onus on GPs

It is important to note that the onus is still on the GP practice to ensure that they have everything in order. If they do not follow the directions then they could be liable for significant sums. Therefore, it has never been more important to seek advice if you’re unsure.

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