High Court examines legality of contributions to NHS Trusts

13 Feb 2023

In R (University Hospitals of Leicester NHS Trust) v Harborough District Council [2023] EWHC 263 (Admin), the NHS Trust challenged the grant of planning permission for 2,750 homes on the basis that a contribution had not been secured to address the impact on its services arising from new residents.

The Trust, which runs a number of hospitals around the East-Midlands, is required to treat all presenting patients. However, it is paid for its services by the Integrated Care Board (previously Clinical Commissioning Group) on the basis of the previous year’s activities. It explained to the Council that none of the additional expenditure spent outside the current year’s funding is ever recovered in the following year’s funding. This leads to a harmful impact on the provision of commissioned services, through increased waiting times and other declines in standards of service.

The District Council refused the Trust’s offer because: (a) the Trust could switch from a block contract arrangement to a “Payment by Results” (“PbR”) contract or (b) population growth could be taken into account in the annual negotiations with the CCGs for a fresh block contract for the next financial year.

At the Hearing, the Council abandoned reliance on the Trust switching funding model but maintained that the Trust could correct any deficit in the annual negotiations.

Holgate J found the “short answer” to the claim was that the Trust had failed to demonstrate that population growth would not be taken into account in the annual negotiations with the CCGs (see paragraphs [131]-[138]).

Whilst assiduously avoiding resolving whether there would be a legal objection to such a contribution in general terms, the Judge made some observations about the principle of a contribution to an NHS Trust from a new housing development at [147]-[151]:

  • There is no general principle that commercial developments are required to bear their own costs. The observation by Lord Hoffmann in Tesco Stores Limited v Secretary of State for the Environment [1995] 1 WLR 759 at 776G-777A was not to be read as laying down a legal principle to that effect. That was not altered by the judgment of the Supreme Court in DB Symmetry Limited v Swindon Borough Council [2023] 1 WLR 198.
  • The funding of treatment in NHS hospitals may be distinguished from other state-funded services at a national level, such as welfare, for two reasons. First, in an area of net in-migration, any increase in the need for treatment and staff will be experienced in the relevant local area, not nationally. Second, because the patients would receive treatment even if they had not moved home, a local funding gap would only arise if funding for the relevant NHS trust did not adequately reflect a projected increase in population and/or the national funding system did not adequately provide for a timely redistribution of resources.
  • However, if there is a systemic problem in the way in which national health resources are distributed to local providers, that may raise the question of whether it is appropriate to require individual development sites across the country to make s.106 contributions to address that problem.

The Judge found that those issues merited “further consideration as a matter of policy outside the courts and even outside the planning appeal system”.

Dr Ashley Bowes (instructed by The Wilkes Partnership) appeared with Paul Cairnes KC for the NHS Trust (which is contemplating an appeal to the Court of Appeal).

A copy of the judgment can be found here.