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Masthead Healthcare Property and Projects

Judge to give directions in NHS trusts business rates dispute

A judge was due this week to give directions in a case being brought by a group of hospitals who claim they should not be liable for business rates.

The hospitals think they could collectively save some £300m a year were they classed as charities and so eligible for charitable rate relief in the same way as are most private hospitals.

More than one in four of all private hospitals in England and Wales are registered as charities, allowing them 80% business rates relief, while those in the NHS must pay business rates that have increased with last year’s revaluation.

Property consultant Bilfinger GVA is acting for a number of NHS trusts in these cases.

The dispute was raised in parliament in March by shadow local government minister Jim McMahon, who said: “Up to 100 NHS hospital trusts are appealing their ratings liability to their local authorities.

“At the moment, they are being supported by a company called Bilfinger GVA, which is being paid a percentage fee of whatever is saved in that potential successful appeal.”

He said up to £1.6bn a year was potentially needed for back-dated payments over six years if the NHS trusts were successful in any legal action.

Mr McMahon deplored the idea that money from the Treasury given to trusts to pay business rates could be lost to local government and returned to trusts with property consultants taking a fee in the process.

“How can it be right that we are having a net reduction in the money that will be available for public services because money is going out to consultants?” Mr McMahon asked.

“Surely a better way of doing that would be either to have a restriction on the ability to use external consultants charging a percentage fee on any potential savings, or to have some kind of mediation service within Government to resolve these issues between different departments.”

Communities minister Rishi Sunak said the issue “has reached my desk, I am monitoring it and am in discussions about it with the Local Government Association”.

He added: “I think I agree with [Mr McMahon’s] broad point that if there are to be large transfers of financial resources between different parts of Government, it is appropriate that that is done through the Government and the normal matter of a spending review, with the priorities being worked out through Parliament rather than through ad hoc decisions of courts.”

York Teaching Hospital NHS Foundation Trust, one of the main movers of the legal case, declined to comment.

Mark Smulian

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