If only we could see more headlines like this!
The news comes at a time when it is evident we need investment in NHS property.
I am not snobbish about the LGPS (greater Manchester) employing Black Rock to get work done which will benefit its members.
Nor does this look a bad investment. The NHS estate is attractive to investors because it provides long-term inflation-linked returns that are underwritten by the government. The NHS reimburses GPs for the cost of renting the surgeries.
We know how creaky the system has become by our own experience, what is lacking is the capital to get things set up the right way and that should not be sitting in our pension schemes doing no social good . There has to be a more dynamic way to sort out our urgent problems than through funding gilts.
BlackRock has invested in NHS GP clinics as a landlord for 20 years but does not deliver any healthcare services. However, the government has approached private investors such as BlackRock to finance the rollout of up to 200 neighbourhood health centres, with the aim of having one in every community by 2035.
What is important that this is not handing over the NHS to American private equity but working with it.
Earlier this year, NHS landlord Primary Healthcare Properties fended off a takeover bid from private equity group KKR and instead merged with rival Assura in a £1.8bn cash and shares deal.
The combined company owns one in seven doctors’ surgeries in the UK, as well as dozens of healthcare centres, hospitals and dental practices.
The deal was investigated — though cleared — by the Competition and Markets Authority amid concerns that the consolidation could lead to higher rents for the NHS. BlackRock said it set its rents every three to five years, and would take into account inflation in construction and maintenance costs. Yields on the investments are expected to range from 5 to 7 per cent, a person close to the talks said.
There are good examples and not so good. The FT are right to point out that where our pensions are involved there is protection for patients and profit for pensioners. We accept that BlackRock are a major force in the financing of our retirement but also that they need to work with our large pension funds to replace the Government.
I hope we will see more such innovative deals being done to improve the infrastructure of this country’s NHS.
Hello Henry,
An example of pension funds keeping the NHS going?
Possibly, with the reported current financial state of the NHS, BlackRock/GMPF are the NHS’ only option…‘as the UK Government seeks private finance for the refurbishment etc’.
BlackRock, being a World leader in investment management, will no doubt be capable of extracting every penny that it is due from this deal. If it proves to be a disappointment, possibly they will off-load the investment to someone else (also foreign). Would you expect otherwise?
However ‘Private Finance Investment’ is not a new initiative. As I recall this was introduced by PM Tony Blair when he found that the Public Services were in the same desperate state that they are now. To a fanfare, deals were arranged for new Police Stations and Schools. Twenty years on, would those same Authorities be keen to renew such arrangements. From what I read, I doubt it. Only the Treasury know the facts but are they going to admit that, because their is nothing in their bank, they willingly sign-up to such contracts knowing them to be doubtful. Why is it that the NHS is unable to obtain bids from their MDs to takeover retiring GPs surgeries and therefore, are obliged to accept bids from the foreign Investment Houses etc and increasingly, to also staff such Health Centres etc. Perhaps the ongoing daily news regarding the long-running dispute between the Government and the BMA explains that.
Looking at your blogs over the recent month you have referred to ‘Mandating’ and you have cautioned against certain detail. Similarly other media e.g. CityWire & City AM, have also carried articles warning against it as being a ‘wolf in sheep’s clothing’ e.g. Reform Party. Why is it that many of these wealthy entrepreneurs are eager to get their hands on public money? Perhaps it’s because, as we frequently read, of governments failing from ‘penny wise; pound foolish’ policies.
Under Mandating what would Trusts be expected to finance?
• National railways? HS2 certainly stands as an embarrassment to the UK. I suggest that the EU will have planned, constructed and introduced a high-speed railway from Italy to Athens long before the people in the Leeds region get an improved train service into London. Car drivers, spending a lot of their time queuing at traffic lights etc and in Motorway tailbacks, cannot see any need for improving the designed railway journey time by twenty minutes. The UK airlines will no doubt agree…? Additionally, in these days of ‘AI’ our national railways cannot introduce an economic and attractive fare structure for the network. Presumably that profits the Airlines as well.
• Boris Johnson’s (Thames Estuary airport and) numerous hospitals? Agreed, the Americans and Australians are reportedly gaining a significant presence in UK Health Care. I read that their prices to the NHS for standard operations etc are forever increasing. Needless to say there are many NHS Patients who, in order to escape pain, willingly pay such private charges. Perhaps it’s the Treasury’s unpublished policy? Notable that the Americans twice voted in a President on a ticket to ruin their health service for the poor, which he eagerly doing. Perhaps someone will soon be voted in here with a similar ambition.
You have also advertised for a trustee to join a Pension Trust. However, whilst I know very little about it, I wonder whether the ‘mandating’ situation makes a Trustee’s position somewhat invidious. If they are responsible for ensuring that the Trust obtains its appropriate benefits, how will they manage that if a Government siphons off a sizeable percentage of their funds? Can changing Governments be fully relied upon to pay the expected interest when due? Where, in difficult times, will they get the interest from: the Lottery, or Pensioners’ taxes from leaving the tax threshold so low?
I am surprised that we have not heard views from your University associates on this subject.
Meanwhile do enjoy your Easter, especially if you are in Scotland.
Kind regards,
Tim Simpson