Table 4.3.2
GP FUNDHOLDER SURPLUSES USED FOR CAPITAL
DEVELOPMENT IN PRIMARY CARE, 1996-97 AND 1997-98
£ million
| ENGLAND | 1996-97
| 1997-98 |
Expenditure
| 39
| 53 |
Footnotes:
1. Figures for 1996-97 include GPFH Savings spent on, Premises Improvements for GMS, Computers to support GMS and Computers to support GPFH.
2. Figures for 1997-98 include GPFH Savings spent on, Premises and Equipment.
3. The source of data is FIS(FHS)4 part C for 1996-97 and part D for 1997-98. Figures for 1997-98 are provisional.
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Payments to General Practitioners for GMS Practice Premises
3. The Statement of Fees and Allowances (SFA) sets out
the arrangements by which pay"ments are made to general practitioners
for the general medical services they make available to their
patients. What follows is a brief description of the arrangements
which assist GPs towards the cost of providing practice premises
under the Rent and Rates scheme (SFA paragraph 51) and the Improvement
Grant scheme (SFA paragraph 56).
Rented Premises
4. Under SFA paragraph 51, doctors who rent practice
premises for the provision of GMS including those who occupy health
centres, are reimbursed the actual rent charged by the landlord
or the current market rent (CMR) as assessed by the District Valuer
(DV), whichever is the lesser. The CMR is the rent which the DV
considers might reasonably be expected to be paid for the premises
concerned at the valuation date and is normally reviewed 3-yearly.
This assessment is made in the light of knowledge of the area
and rents charged for similar properties to that under consideration.
In making the assessment, the DV will have regard to the terms
of the standard lease in SFA paragraph 51 Schedule 4. While landlords
may carry out upward only rent reviews, CMR assessments are based
on the general nature of the GP property market in the area. This
means that CMR assessments may go down as well as up.
5. In the past, some GPs have rented "shell"
property from private sector landlords which the doctors have
had converted into practice premises for the delivery of GMS.
However, there is now an increasing interest by the private sector
in providing purpose built premises either for sole occupation
by GPs or in joint occupancy arrangements with other primary care
providers. The Department is finalising guidance to be issued
to Health Authorities on this type of NHS-private sector partnership
which will also provide advice to GPs and private sector developers.
As with any occupancy agreement, GPs should obtain legal and other
professional advice before entering into this type of long term
personal commitment, particularly where this will involve multiple
occupancy arrangements.
Owner-Occupied Premises
6. SFA paragraph 51 also embraces the Cost Rent Scheme
which assists GPs who borrow money to build new or carry out substantial
work on existing practice premises. Instead of a CMR, cost rent
reimbursement provides payments towards the cost of servicing
the loan. While the scheme is usually accessed by owner occupier
GPs, the scheme is also available to GPs who rent premises. There
are three categories of project that qualify for Cost Rent and
in each case the premises may be main or branch surgeries. The
categories are:
(i) Newly erected purposes-built premises
(ii) Premises acquired for substantial alteration
(iii) Existing premises which are to be substantially
altered.
"Substantial alteration" must involve structural
work either by extending the premises or by internal modification
of the building.
7. The cost rent a doctor receives is linked to the cost
of the capital borrowed. Cost rent reimbursement levels will be
"fixed" or "variable" normally reflective
of the bank interest rates attached to the loan. These "prescribed
percentages" are set using Bank of England rates plus a margin
for administrative costs. In this way, cost rent payments assist
GPs in their borrowing costs and are not varied to reflect any
changes in the value of the property.
Calculation of Cost Rent
8. There are several complex formulae to take account
of varying circumstances which include new premises to be owned
by the practice, new premises rented from a third party, premises
bought for substantial modification, substantial modification
of existing premises owned by the practice and so on. They all
attempt to assess reasonable land and building cost in terms of
a minimum investment for GPs and it is assumed that GPs will borrow
the capital required to undertake the project. To this land and
building cost is applied the prescribed percentage—a figure
set by the Department based on prevailing interest rates. The
resulting amount, or one based on the cost rent Schedule cost
limits whichever is the less, produces the annual cost rent payable
to the GP. Having raised the capital and built the surgery, the
land and building belong to the practice with GPs responsible
for ongoing repair and maintenance and disposal of their interest
in the property.
The Cost Rent Schedule
9. The Schedule sets maxima on the size of premises and
associated building costs used to calculate the level of reimbursement
available under the scheme. To the building costs are added professional
fees, planning consent charges, VAT actually incurred etc. Cost
limits control the amount taken into account within the cost rent
calculation for building costs. To the national cost limits set
by the Department, HAs apply Building Cost Location Factors published
in SFA 51 Schedule 3 to reflect local building costs. GPs who
contain their cost rent commitments within the maxima of the scheduled
cost limits effectively receive an interest-free loan or, at least,
a subsidised interest rate on the capital actually or notionally
raised for the project.
Notional Rent
10. GPs in receipt of Cost Rent reimbursement, may opt
at any time to receive a notional rent based on Current Market
Rent for the property, again assessed by the District Valuer.
This provides GPs with a payment set at a level reflective of
a rent that might be charged for similar property in the area.
Payments do not include an element for VAT which might be levied
in normal landlord-tenant rents. GPs in receipt of cost rent are
unable to resume those payments when they exercise their option
to receive notional rent payments. Notional rent payments are
also normally reviewed on a 3-yearly basis to reflect the current
market rent for similar GP property in the area. The scheme also
allows for payments to be reviewed when GPs carry out any additional
capital work on their premises.
Improvement Grant Scheme
11. The Improvement Grant Scheme provides a contribution
towards the capital cost of improvements to practice premises.
In the main, grants will be awarded for existing practice premises
but the scheme allows premises not previously used for GMS to
be considered. HAs have discretion to approve grants of between
33 per cent and 66 per cent (up to 90 per cent in the London Implementation
Zone) of the cost of improvements in accordance with the provisions
of the SFA. Examples of projects which might be carried out under
the scheme include the provision of additional rooms, (eg a suitable
room for minor surgery or practice manager) enlargement of existing
rooms, additional or improved washing toilet facilities, improved
access for the disabled, improved lighting, heating and ventilation,
provision of car parking, double glazing and security systems.
Expenditure
12. Tables 4.3.3 and 4.3.4 show non-cash limited spend
and cash-limited spend on GMS Premises for 1995-96 to 1997-98.
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