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The business case for the disposal of land and property assets is a crucial element of the process in implementing the Homes for NHS Staff policy.

Disposal of land and property are often challenging change programmes; delivering the Homes for Staff policy within this context adds to the complexity. Therefore, a business case, which includes a clear articulation of the delivery objectives and benefits of securing accommodation for staff is a significant component in successful delivery of the policy. It will promote efficiency of delivery, indicate best practice and support speedy decision making. Moreover, it will encourage effective engagement with all relevant parties.
When considering the optimal disposal route of surplus sites and seeking a relevant planning consent, estates leads are advised to consult with workforce colleagues to understand the various potential positive impacts of securing accommodation for staff. These may include:
- supporting recruitment and retention of staff;
- the opportunity to reduce costs associated with turnover of staff; and
- reducing the cost of providing temporary housing within the private sector for staff.
It is the key tool for managing the project through its proposal stage. It is a live document that will grow and develop throughout conception.
A business case is not just a financial document
- It ensures strategic objectives are set and understood from the outset.
- It provides a forum for multiple stakeholders to coalesce their views and bring forward key areas of agreement
- It functions as a central information repository for the project
- It ensures that multiple departments and approval forums are all looking at the same information
- It encourages detailed and thorough financial management from the earliest stages, as it encompasses the full range of potential spend
- It functions as the best way for approvers to provide the most detailed and thorough scrutiny of the project. This means that the most well considered iteration of the project will be the one brought forward.
Estate owners will be familiar with the requirements of HBN 00-08 (NHS Estate Code) when preparing business cases for sites that have been declared surplus and earmarked for disposal.
Regardless of the value of a site or the overall financial impact of a proposed course of action, it is good practice to apply the principles set out in the Estate Code. It is also prudent to observe the guidance set out in The Green Book: Central Government Guidance on Appraisal and Valuation updated by the Treasury in 2018, as well as referencing National Planning Policy Guidance (NPPG) on viability.
The purpose of the Green Book is to support informed decision making through evidence-based appraisals and evaluations. It is supported by a wider suite of documents including the Guide to Developing the Project Business Case 2018 and the Guide to Developing the Programme Business Case 2018.
NHS organisations should comply with the relevant capital regime. At project inception, it may not initially be clear as to the scale of the project or potential future spend. Even where a formal business case is not required in compliance with the capital regime, a business case can help to clarify these questions. Not only does the business case help to clarify these questions, but if spend turns out to exceed the threshold at which a business case is formally required, then preparation is already in place.
NHSI Capital Guidance also states that a cost-benefit analysis is required for all land disposals irrespective of value. The business case is a useful way to build on this baseline requirement.
It is recognised that there are variations to governance requirements for individual Trusts, Foundation Trusts, NHS Property Services and Community Health Partnerships as well as other government bodies. However, the good practice principles set out in these guidance documents are common to all estate owners and to projects of all levels of value and financial commitment.
The time and effort expended on the business case should be proportionate to the size and scope of the project
It is easiest for both writers and readers if the document is concise, keeping itself to what is reasonable for the scope of the project in question.
For larger, more complex projects, the business case should be accordingly detailed and thorough. This allows the document to function to the best of its ability and address the wider scope at hand.
The 5 Case Model set out in the Green Book is a good practice model for compiling a business case that considers a balance of social and financial matrices. It is structured as 5 clear pillars that can be built up over the development of the business case.
- The Strategic Case
- The Economic Case
- The Commercial Case
- The Financial Case
- The Management Case
The strategic case is the opportunity to make clear to all stakeholders the shared rationale for a land disposal / redevelopment. It should be the natural product of the consensus reached with relevant stakeholders through discussion and participation.
This sets out the desired outcomes and clear objectives of the project. This is particularly important in the context of Homes for NHS Staff delivery as there are likely to be several potentially competing outcomes and objectives. Some of these may be challenging to align. These multiple objectives will need to be balanced and the relative importance of these objectives needs to be clearly understood to achieve the optimum outcome.
These may include:
- achieving maximum financial value of underused land
- reducing costs incurred from staff turnover such as recruitment, training and agency costs
- retaining experience of high-quality NHS staff
- achieving maximum social value within the NHS workforce/the wider community.
Effectiveness is increased if the number of objectives is limited. It is better to have fewer, more achievable aims, rather than setting unrealistic targets. The case should fit with the wider strategic objectives of the estate owner’s governing body.
The case should give evidence of the challenge that is being addressed. This demonstrates why the proposed solution holds strategic merit. The identified issues will help shape the business case objectives.
For effective implementation the strategic case should be careful to take relevant government policy into account. This might include:
- Homes for NHS Staff Policy
- National Planning Policy Framework (NPPF 2019).
The second pillar of the business case should lead on from the strategic case. It should use the strategic objectives to consider what a good outcome looks like and set critical objectives.
It will then consider these objectives by setting out the long list of potential options for the project. Undertaking an options appraisal should be one of the first pieces of work carried out when compiling the business case. Even before the case begins to come together as a formal document, the options appraisal will be a useful tool in guiding stakeholder strategic thinking. Go to our feasibility section. Only options that are deliverable should be included in this list. It will save time and resources to discount clearly unworkable options early on.
When considering options for surplus land, and the Homes for Staff delivery that can be achieved through this, estate owners are advised to take account of:
- Regional and local planning policies such as The London Plan and area local plans
- Legal constraints such as restrictive covenants and other restrictions on title
- Site specific constraints such as access for construction, rights to light and service routes.
The business case should take account of the social purpose and value of the project.
Net Present Value (NPV) is a method of viewing money relative to time. In other words, what would be the monetary value of a future object/project/concept if all that monetary value was realised today.
Net Present Social Value (NPSV) considers the social costs and benefits of a project by assigning them a monetary value and applying the same discounting methodology. The Green Book therefore defines NPSV as ‘the present value of a stream of future costs and benefits to UK society (that are already in real prices) that have been discounted over the life of a proposal by the social time preference rate’.
By applying these principles to Homes for NHS Staff the social purpose is kept front and centre whilst simultaneously maximising financial return and efficiency for the service.
There are certain social metrics which are particularly applicable for Homes for NHS Staff business cases: (Green Book references in brackets)
- Quality of Life (QoL) – which includes mobility; ability to self-care; ability to carry out usual activities; pain/discomfort; anxiety/depression (A2.52-55)
- Travel Time – or Value of Travel Time Savings (VTTS) (A2.56-60)\
- Leakage – workers leaving a target area (or career) (A3.5)
- Productivity and Labour Supply and Demand (A3.6-10)
The preferred option should then be set out with clear evidence-based recommendations based on a robust set of assumptions. The Green Book recommends that this analysis should calculate the NPSV to inform the wider “Value for Money” argument. This would ensure a balanced assessment of likely risk and reward is reflected in the recommendations.
Once the preferred option is identified and it has been demonstrated that it provides “Value for Money”, it is important to examine the deliverability of the proposal considering market conditions and the operating environment. With regards to Homes for NHS Staff, a particularly relevant factor is the type of affordable housing and the extent to which the disposing organisation wishes to shape this. Where a clear business case exists in support of delivering Homes for NHS Staff, estate owners should consider how they can engage with other public sector partners to deliver these objectives. Homes England and the GLA are able to provide strategic advice, support and capital funding for projects aimed at increasing affordable housing supply that meet their funding criteria.
Registered providers and local authorities are committed to providing new affordable homes and can work with NHS estate owners to deliver the best commercial solution for a development site. They will understand how to negotiate the affordable housing offer with the LPA and may have access to grant from Homes England and/or the GLA through existing investment partner arrangements. This can serve to boost the overall level of affordable housing to be delivered whilst still delivering a market value receipt.
The commercial case is an opportunity to take a critical look at the realities of making the project work. By drilling down into the factors required to make the project a success, deliverability is more successfully proven.
When a site is being brought forward for disposal, estate owners should consider the relative merits of disposal with and without planning and the impact of available routes to market upon value. Obtaining planning consent prior to marketing will give NHS estate owners greater confidence that Homes for NHS Staff will be delivered by a future purchaser of a site by ensuring that contractual provisions in the Sale and Purchase Agreement are enforceable. However, in some instances, disposal without a planning consent may be appropriate and therefore appropriate professional advice should be procured.
This analysis is expanded to determine the affordability of the wider proposal through a detailed financial assessment that includes sensitivity and risk factors.
This is also an opportunity to demonstrate how the proposal aligns with key organisational and departmental financial budgetary processes and constraints.
For disposals an assessment of value is likely to include the following measures:
- Net Book Value – the value at which a company carries an asset on its balance sheet, taking into account the cost of the asset and its depreciation
- Market Value – the price an asset would fetch in a free and fair open market transaction
- Existing Use Value – the price an asset would fetch on the open market, on the understanding that it will only be used for its current use for the foreseeable future.
It is also important to include the cost benefits of less tangible factors as far as these can be determined such as:
- Costs of temporary housing for new recruits
- Value of reduced turnover of staff.
These factors can be measured and applied to a calculation of NPV and/or NPSV. The key assumptions underpinning these calculations should be clearly stated. It should also be outlined to what extent these costs can be mapped on to accounting and budgeting metrics (i.e. Statement of Financial Position (OFP), Income and Expenditure (I&E) and Cashflow statements, and spending control limits).
The management case is the final proof that the business case proposal should be brought forward. It examines the resource requirements on which the success of the project depends.
This section of the business case details who is involved in the project throughout each stage, from first inception to post-financial close. It should demonstrate that the project can be delivered to time, at reasonable costs and to a high quality. It will equally link back to the strategic objectives set out in the strategic case and demonstrate that their aims and benefits can be realistically achieved.
It is important to identify the resources required to deliver the available options including the procurement of specialist advice and dedicated project management where these are not available in-house.
The business case does not begin at the point of putting pen to paper. The NHS has had strong success in past projects when the concept of the future business case has been considered from the earliest days of the project’s inception.
Early stakeholder engagement for each of the 5 cases is key to the creation of a successful and effective business case
Useful stakeholders to consult include:
- Directors of Workforce
- NHS Estates Department
- Directors of Facilities
- Finance Directors
- Local Authorities
1. Engage early
2. Involve stakeholders in setting objectives
3. Strategy should be central to the business case
4. Options appraisals should only consider realistic and deliverable solutions
5. Value assessments should be holistic including revenue savings and social value
6. The business case is an evolving document