A bid to borrow £2.1million and save Seaton Hospital by turning it into a community health hub has been rejected by district councillors ‘at the first hurdle’.
The facility saw its inpatient wards closed in 2017 and currently only 35 per cent of the building is being occupied – a situation that is ‘not tenable financially’.
The Valley View Road site is currently run by NHS Property Services, but community group Seaton Area Health Matters had put forward plans to buy the building.
However, East Devon District Council’s (EDDC) cabinet this week rejected a recommendation from officers to agree to the principle of loaning Seaton Area Health Matters £2.1million to enable the purchase of the site.
Instead, members said that the group should make contact with Devon County Council (DCC) – as the authority with the expertise on and responsibilities for health services – to try and progress with the bid.
Supporters of the proposal reacted with disappointment after the decision was made, but have expressed hope that it can now be ‘rejuvenated’ by DCC.
Councillor Jack Rowland, chairman of Seaton Area Health Matters, said: “I’m obviously disappointed at the decision…however, this is not the end of the story.”
Cllr Dan Ledger added: “It’s highly disappointing that the current administration at EDDC has blocked this at the first hurdle.
“Personally, I believe they did this without full understanding of the proposal.
“This was an agreement in principle for a community project that will actively secure health and wellbeing provisions for Seaton and Axe valley residents for the long-term future.
“I really do hope the proposal can be rejuvenated and gain traction through DCC. If not, this will be another huge lost opportunity for the town, as well as further afield.”
Had EDDC agreed to the proposal, it would have bought the hospital from NHS Property Services and immediately sold it to Seaton Area Health Matters.
The group would have then repaid the council over a 40-year period.
EDDC’s strategic lead for finance had said in a report to the cabinet that said Seaton Area Health Matters is now in a realistic position to put forward a bid to purchase the hospital for the benefit of the community.
Outlining the proposal to members at Wednesday’s meeting , Cllr Geoff Pook, portfolio holder for asset management, said that the business plan was ‘low in detail and high in expectation’, but was put forward to show how the principle of a community-led scheme is viable.
He added: “We need to prove that we are a serious purchaser. Someone has to make the first commitment and that should be us.
“It will be complex deal and it will take time but, if we don’t do it, there is the danger of losing the deal.”
Cllr Rowland added: “Seaton is at the greatest risk of being closed as it has the largest percentage of empty space for any hospital in Devon.
“We have the necessary expertise to produce the business plan and we recognise it still needs additional work to be carried out on it.
“We are not seeking a decision on the loan, but a decision in principle, as NHS Property Services have asked us to demonstrate we can fund this.”
Cllr Ledger added: “We are not agreeing the loan but the principle of it. This allows them to do the homework and put meat on the bone but, if you reject it tonight, they cannot explore it further.”
Cllr Paul Arnott said: “It is to be congratulated that they have developed this initiative. Some people will worry about it, but this is a well-devised plan and it can be a pilot if you wish.”
However, Conservative councillors called for the plans to be paused as the bid was premature and the business case was not detailed enough.
Cllr Phil Twiss said: “Any proposals and negotiation with NHS Property Services should have, even at this very early stage, a more robust, detailed, and evidence-based business case provided at the ‘in principle’ stage, if it is to be viable.
“The business case as presented falls some way below what would be expected in the most basic terms and it is highly probable they will require strong and detailed evidence in order to proceed with negotiations on the sale and purchase.”
He said that the East Devon Conservative Group was questioning why the authority – with little experience of health – was being asked to underwrite and provide the funding rather than DCC.
Cllr Marcus Hartnell, a Seaton representative, said that while the hospital is valued by local people but added: “The charity will be saddled with a long and unpredictable loan and are we prepared to foreclose on a hospital charity if they default on it? This is not a robust and financially sustainable plan to deliver it.”
After nearly an hour of comments from councillors to cabinet members, discussions by the decision-makers began.
Cllr Kevin Blakley said he had initially been excited by the proposal, but added: “When considering the detail, the worries started to creep in with the security of the loan we are being asked to provide.
“Would we ever take possession of the hospital in the event of them defaulting on the loan?
“It would put us in an impossible position with a very high risk whatsoever and where there is no commercial reward. This is all risk and no reward and the business plan is very thin.”
Cllr Jess Bailey added: “If they default then taxpayers will have to meet the loan repayments. That’s a difficult position.”
Cllr Megan Armstrong was in favour of the scheme and said: “It is a really good idea. I think it’s brilliant. We should be brave and we should do this. It is an in principle decision and will come back to full council once the business plan is filled out, so I don’t see what the problem is.”
But Cllr Ian Thomas, portfolio holder for finance, told colleagues: “This is not a problem that we should own and it is not our prime responsibility. Healthcare is Devon County Council’s and I am pleased that our Conservative colleagues would be prepared to help Seaton Hospital if it goes that route.
“We have no expertise in this and I am wary of things I know nothing about, and this is not a priority in the council plan.”
Cllr Thomas said that the mechanism by which the deal would be done – in which EDDC purchases the property and then immediately gives it to a third party was ‘close to money laundering’.
He added: “We are providing a covenant to an organisation that doesn’t warrant it. A 40-year loan is an enormous risk and there is not a significant surplus in the running costs.
“Would it even be possible to consider closing the health facility if they default on the loan? I cannot see anybody preparing to do that.”
He instead proposed that Seaton Area Health Matters engages with DCC, adding: “It is important it happens, but this just isn’t our bag.”
Councillors voted in favour of Cllr Thomas’s proposal by six to one with two abstentions.