Wonderful. Good afternoon, everybody. Just checking everybody can hear me at the back. I'm conscious there's a lot of people in the room. Can you hear me back at the room? Good. Excellent. Good afternoon and welcome to our Capital Markets update, our second in less than a year. Thank you all for coming and supporting us today, both those of you in the room and many of you who are dialing in online. There's clearly a lot of interest in our company and our sector right now, and we very much appreciate you being here with us today. I'd also like to extend a special thank you to many of you dialing in, including our shareholders, those dialing in from overseas. The transaction with Assura has created a lot of interest, increased liquidity in our shares, and this has created an opportunity for new, high-quality investors in our company.
We very much appreciate your support, particularly during this time. It was in fact only last October that I stood here in front of you before. We had a very positive Capital Markets day, and the overriding message from today's update is, following the government's 10-year plan published two weeks ago, PHP is now primed for growth. We strongly believe the 10-year plan is good for PHP. Our results announced this morning evidence we've reached inflection point for our sector with a significant growth opportunity ahead. With everything that's going on in our marketplace at the moment, we felt it was important to give the market an update on the things that we believe are important about the terms of our proposed acquisition of Assura, and with the publication of the 10-year plan for the NHS issued only a couple of weeks ago.
I'm absolutely delighted to be able to welcome Sir Jeremy Hunt, former Chancellor, Foreign Secretary and Secretary of State for Health, who's joining us today for a fireside chat on healthcare and many other interesting topics. Thank you, Jeremy. I'm equally delighted to be joined by Dame Claire Gerada, who's been a practicing GP now for over 30 years and is a former President and Chair of the Royal College of General Practitioners. Thank you both for being with us this afternoon. Sir Jeremy will also provide some color around what's happening in this fascinating world at the moment, with a bit of geopolitics thrown in for good measure, I'm sure. I'm sure you'll all be interested to hear their views. Before we get started, just a little bit of housekeeping from me, if that's okay.
As you all know, we are in an offer period at the moment, and there are limitations about what myself and Richard can talk about this afternoon. There will be an opportunity to ask questions, and management are extremely well rehearsed now on the takeover code rules. We'll let you know, and I'm sure you'll treat that with respect when we're asking questions later on. Onto our agenda for this afternoon. I think we have a very interesting agenda for you. We'll ensure to get through everything on time, give you the opportunity to ask questions, as I mentioned, both during and after the fireside chat. Firstly, I'll describe what I see as a very positive market backdrop at the moment, a significant opportunity for further growth ahead. Richard will give an overview of the financials we published this morning. It's a strong set of results.
During a week that Assura also published a very positive performance. For both companies to have published such good results in the same week strengthens the belief that we have come through the bottom of the cycle and are well positioned for future growth. At a busy time for the company with corporate activity, we remain focused on delivering value for shareholders, and you'll definitely see this in Richard's presentation later. We'll also look at the recommended combination with Assura. There are a couple of areas we'd like to spend a little bit of time on this afternoon. One is around capital structure and the future debt position, as we recognize this is a very important area, making good progress with our plans for disposal of assets into a strategic joint venture, and I will provide a confident update on that.
We'll move on to the NHS 10-year plan, specifically looking at how that impacts us today and, more importantly, how we think it will have a positive impact on our company in the future. This government is committed to reforming the NHS. Moving patients into primary care is a key foundation of that plan, and this is a key driver of our growth and creates opportunities for us to add value. I think it's worth just reflecting for a moment, reminding ourselves, particularly for our new shareholders and those new to the story, why PHP is in such a strong position and why we are confident about our future. Our population is getting older. We're living longer. It's resulting in a demographic tailwind which drives demand for healthcare infrastructure.
Because of that, we've seen enormous pressure put on hospitals in a way that is clearly unsustainable, and the shift towards waiting lists, towards the importance of waiting lists at a phenomenally high in primary care, is going to be a key part of the future. Now, sadly, a lot of the premises in the sector are not fit for purpose. We still have doctors working out of what is little more than front rooms of what would be described as domestic Victorian properties. It's a far cry from what is required. Now, we own a really high-quality property portfolio that's fit for purpose and one that's got very attractive rental returns, but more importantly, also provides an outstanding environment from which to deliver community care. The bulk of our rental income is government-backed, whether here in the U.K. or in Ireland.
The reliability of our income has enabled us to deliver a fantastic track record in terms of growing our secure dividend for 29 consecutive years. We're seeing rental growth, which will continue to grow in the future. Richard's got a really good slide on this. We're now starting to see double-digit increases in London rents approved by the district valuer, making new schemes more attractive, such as Kilburn Park, which we're going to showcase you a little later on. We've got secure long-term income streams with a WALT close to 10 years. We continue to see new leases being taken at between 20- 30 years. This reflects the quality of the portfolio that we own and their importance for the future. Finally, we maintain a strict control on costs. We have a very efficient capital structure.
This is important because one of the topics that investors have raised with us is that on the combination with Assura, our leverage will move up temporarily. I can assure you we are already working on deleveraging plans, and we'll share more of that later. Plus, we'll deliver the synergies that we have announced. Now I'll pass on to our CFO, Richard Howell, for the financial update.
Thanks, Mark, and good afternoon, everyone. I'm going to run through the key financial highlights from the first half of 2025 to give a more detailed look at rental growth, obviously a key topic for investors. At the start of July, we announced a trading update with the key half-year numbers, so most of this information has been in the market now for a couple of weeks. We're also going to review the capital structure of the combined group later in the presentation, so I'll come back to this very important topic later. The first half of 2025, another period of robust performance. The group's annualized rent roll now stands at GBP 158 million, and the first six months of the year, net rental income was up to GBP 78.6 million, an increase of GBP 2.4 million, or just over 3%.
This reflects GBP 1.9 million of additional income from rent reviews and asset management projects and GBP 800,000 from the acquisition of the Laya Healthcare facility in Ireland at the start of the year, offset by a small increase in non-recoverable property costs. After interest and administrative expenses, adjusted earnings increased by GBP 1 million to GBP 47.3 million, an increase of 2.2%. Capital expenditure on acquisition of Laya Healthcare and asset management activity took the loan-to-value ratio to 48.6%, but still within the group's 40%- 50% target range.
The group's portfolio now comprises 517 assets, valued at GBP 2.8 billion, and after several years of valuation declines, the improving rental growth outlook and stabilization in property yields resulted in a positive revaluation surplus of just under GBP 20 million, with rental growth in a period generating an increase of GBP 29 million, offset by the impact of a small outwards movement in net initial yields of just 3 basis points, or a deficit of GBP 9 million. The revaluation surplus was a key reason for the increase in adjusted net tangible asset value per share to GBP 1.062, and if we include the dividends paid, we generated a total accounting return of 4.5% in the six-month period.
PHP has continued with its progressive dividend policy and to date has paid or declared three quarterly dividends equivalent to GBP 0.071, or a 2.9% increase over 2024, and this will mark the 29th year of consecutive growth. Dividend cover was maintained at 100% in the first half, with these results supported by the robust portfolio metrics, with occupancy close to 100%, 88% of our income paid for by the U.K. or Irish governments, and a long WALT weighted average lease term of over nine years. The average cost of debt for the group remains at a competitive 3.4%, unchanged from the 2024 year-end, with 100% of our net debt fixed or hedged out. We also have one of the lowest EBITDA cost ratios in the sector, and we saw this fall further to 9.8% as a result of a cost reduction program we completed last year.
We've continued with our disciplined approach to investment, with a focus on driving income from our existing portfolio, from rent reviews and asset management projects and development opportunities, primarily focused on Ireland. Now turning to rental growth, a very important topic for us, area of focus. Like-for-like rental growth from rent reviews and asset management projects delivered an extra GBP 2.2 million of annualized rent, or an increase of 1.4% in the first six months of the year. Now, the rent reviews we completed delivered most of this increase, with an increase of GBP 2.1 million of extra income, an increase of 8.6% over the previous passing rent, or 3% on an annualized basis. Importantly, open market value rental growth continues to improve, with an annualized increase of 2.3%, and Assura reported a very similar number at the start of this week.
However, we are now starting to see open market rental growth accelerate, with the first reviews from 2022 -2024 starting to come through when inflation was at elevated levels. We completed 37 reviews from this period, which delivered an increase of 12.3% or 3.6% on an annualized basis. The improving rental growth outlook is also supported by Assura's annual results announced earlier this week, and they report an extra GBP 4.5 million of income for the full year, or an uplift of 6.1%. Additionally, we continue to progress an advanced asset management pipeline of around 43 projects, where importantly, rents are growing by around 15% from an average GBP 195 per square meter to GBP 223 per square meter, which are still very affordable rents and have little chance of challenge in the future.
We continue to see strong rental growth reversion potential in both portfolios, with a growing momentum in the future rental growth outlook. In the interest of time, we'll be taking questions on the results at the end of the presentation, so I will now hand back to Mark.
Thank you, Richard. Very insightful and really positive momentum on rental growth, which is hugely encouraging. Since we stood in front of you at last October's Capital Markets Day, a lot has changed, and we've come a long way. We've been in extensive discussions with the board of Assura, and we were delighted when they recommended our offer on June 22, which we announced on June 23. I'd like to talk you through why we think the combination of these two companies is extremely compelling, with significant strategic and financial benefits to both sets of shareholders. Firstly, we believe there's a real earnings-enhancing opportunity for shareholders by delivering cost, operational, and asset management synergies. We also expect that our cost of capital will come down. We've estimated annualized run rate synergies of approximately GBP 9 million.
Given PHP's operating model, we expect to continue to have one of the lowest EBITDA cost ratios in the sector. We're also targeting having low fixed costs long-term debt facilities. We were very pleased that Fitch recently reaffirmed the investment grade rating on Assura's debt at the time our offer is due to complete. We will be able to deliver scale benefits with a very large social infrastructure portfolio. The portfolio will be covered largely by government-backed income, and we will retain strong financial discipline going forward. We will be one of the largest U.K. listed REITs, giving us greater index weighting, liquidity, and investors the opportunity to invest in one of the leading assets of its type in the U.K. in a sector with strong structural growth potential.
There is a growing realization that we have to improve the quality of the U.K.'s healthcare infrastructure and do it in a way that's for the public good. The combination of PHP and Assura plays to this. We believe the private sector will continue to play an important role in delivering quality community primary care assets and supporting the government with its plans. We see further significant valuation and rental growth uplift, particularly when the district valuers start to look at what the market rent is going forward and encouraged by government to support investment. Finally, it goes without saying that PHP has an undeniable track record going back many, many years. We really do believe that we've one of the strongest management teams in the sector, and we're very committed to the future growth of the business.
We're confident in delivering all of the scale benefits we've set out to shareholders, and with an M&A track record of getting on with integration, driving synergies, doing this the right way, and benefiting from the best of both people from both companies, the combination of the two companies is good for the market and both sets of shareholders. One or two things which we'd like to point out. We're going to maintain a progressive dividend policy payable on a quarterly basis. We're targeting between 80%- 90% of our income to be government-backed. Now, ours is very much a story that's focused around secure income and rental growth. We're looking at 3%+ growth on a risk-adjusted basis. We think this is very attractive on long-term secure income. As I mentioned, we're seeing continued demand for longer leases, typically 20 + years , giving us long-term visibility.
There'll be an opportunity for a small amount of risk-controlled development in the future. We do need to see district valuers move rental values in the right direction for this to happen. There are encouraging signs this is happening, especially in London. As I mentioned before, we're starting to see double-digit rental growth now in London, but the schemes to be tendered in London may need third-party support, such as local authorities, to get them off the ground. Recent activity is certainly a move in the right direction and encouraging. We need to see similar moves outside of London in terms of rental values, but we do believe this will come, particularly now that Wes Streeting has said publicly that areas in need will be prioritized. In Ireland, our development pipeline is progressing nicely.
Tucked away in the appendix, slide 25, you can see that three live projects have recently advanced. I just want to touch on the financial framework for the future. As I said, we're very much targeting investment grade, BBB+ or better. With the size and quality of the portfolio, this is very achievable. The combined group would start off with an LTV of approximately 55%, above our target range of 40%- 50%, but the intention is to bring that down through asset disposals into a strategic JV and to do this promptly. We've always managed with a financial discipline. There's no intention to change that approach, and the combination with Assura will give us access to a wider pool of capital, which we believe can be obtained at a lower cost. Richard, I'm just going to bring you in just to talk through the capital structure.
Thanks, Mark. We've obviously had a very busy six-month period to address the various financial requirements for the enlarged group and the combination. I'm going to focus on what we've achieved to date and perhaps more importantly, what are the next steps, assuming the combination goes ahead. We continue to receive strong support from Capital Markets for the proposed combination. Interest from the debt market in particular has been strong, and good support has been received from both existing and new debt lenders. This is evidenced by the new GBP 1.2 billion bridging and backstop facility with City Lloyds in Out West. The new facility will be used for three different purposes. Firstly, to pay for the cash component of our offer, GBP 408 million. Secondly, backstop various debt facilities subject to change of control events or have short date maturities across both companies.
Lastly, provide the enlarged group with around GBP 300 million of undrawn liquidity to enable us to carry on with our development and asset management activities. Fitch have also confirmed that Assura will remain investment grade following the combination, and consequently, the GBP 900 million of their listed bonds will remain in place, and no change of control event will take place. We've also obtained change of control waivers on GBP 416 million of Assura debt, facilities respective to their revolving credit facility and their GBP 266 million term loan with Barclays, used to finance a private hospital acquisition last year. We've also restated this facility for a further two years, with extension options out to 2029. In the background, we continue to progress discussions of private placement loan holders and other banks, including several new potential lenders, all keen to be involved with the combined group.
We expect Capital Markets to remain receptive and open to the combined group, as they have done historically for both PHP and Assura on a standalone basis in the past. Assuming the combination takes place on the 12th of August, there are several important next steps which we need to continue working on. As Mark's already mentioned, reducing leverage back to 40%- 50% target range continues to be a key priority for the PHP team, and Mark is going to discuss some progress being made regarding joint ventures and disposals in a minute. However, we also focused on refinancing and terming out the balance of the bridging facility together with refinancing Assura's short-dated private placement loan notes. Work continues on various options around this, which are being progressed.
These are focused primarily around a new convertible bond of around GBP 300 million, we've already received PHP shareholder approval for this level, new private placement options, and also to potentially tap the listed bond market. Lastly, as originally planned, to convert part of the bridging facility to a new revolving credit facility. As we discussed at the last Capital Markets Day in October last year, we also plan to accelerate the process of moving PHP's existing secured debt structure to an unsecured basis, starting with GBP 450 million of its revolving credit facilities, which we'd originally earmarked for 2027-2028. I'm currently restricted from providing any forward guidance on the future capital structure, but we intend to provide further information in due course. Lastly, I would like to thank the various banks who have and continue to support the proposed transaction.
It is much appreciated, and we look forward to working together in the future. I will now hand you back to Mark, who's going to go through disposals and JVs.
Thank you, Richard. Joint venture and disposal strategy. We're making good progress with joint venture partners on our disposal strategy. We've already engaged with a number of highly credible counterparties and are moving swiftly through this process. A shortlist is being finalized, and our preferred structure remains a strategic JV, as we set out at our Capital Markets Day last October, and we are targeting a short-term completion. As a consequence of these actions, we expect to reduce our LTV into the 40%- 50% target range through the receipt of these proceeds. Now, as part of our JV discussions, we are thinking strategically about the private hospitals, where we think the growth prospects are good, as we saw earlier in the week from Assura's results.
With a waiting list in excess of 8 million, we see guaranteed growth in rents supported by high demand, and our preference is to retain an economic interest in private hospitals in a strategic joint venture. We continue to evaluate all options, including a sale. As a reminder, Assura has an existing JV with USS, which has to date acquired GBP 159 million of primary care assets with a publicly stated capacity for GBP 400 million. Finally, the good progress we have made on delivering a strategic joint venture partner has been helped by the fact that we set this out as an objective at last year's Capital Markets Day, and there are an increased number of global and U.K. funds looking at U.K. healthcare, who like the security of the income stream and the potential for growth.
Now, just sort of going through the technicalities of the transaction, this slide will be very familiar to most of you in the room today who we've been meeting with in the last few weeks. Just to recap, our recommended offer to Assura shareholders is part cash, 25%, which equates to GBP 0.125 and a special dividend, and 75% in PHP shares. There's also a mix and match facility available to those shareholders who choose to opt for that. The daily closing look-through value of the PHP offer has consistently remained ahead of the consortium since 16th of May, over two months ago. I'd like to thank all existing and new shareholders for your continued support. Final bullet on this slide is following our FDI approval. There are no further regulatory clearances. Our transaction is not conditional on CMA approval, and this work stream is also progressing well.
Next steps, Assura's shareholders are urged to accept our offer and to do that as soon as possible. We can therefore go unconditional, so please do take action. Unlike a scheme of arrangement, we do need shareholders to take action and actually accept the offer. This is not a scheme. This is not a vote. It's an offer. We are very grateful to our shareholders. 99.3% of those voting at our general meeting approved the Assura transaction on July 1. Thank you for your support. Finally, the deadline for accepting our offer is August 12, just over two weeks away, and the mix and match facility will remain open until the date our offer becomes unconditional. For those Assura shareholders that would like more shares or more cash, you should act on this promptly. Now, moving on to the 10-year plan.
It's very clear that primary care and neighborhood health centers, like PHP's, will be at the core of relieving pressure on hospitals. These neighborhood centers will provide a broad range of services in a local community setting, and the government has quite rightly targeted the areas of greatest need and health inequalities. This is something that we welcome, and with over 500 primary care assets across the U.K. within the PHP existing estate, we are well placed to help the government deliver its plan. This plan is still developing, particularly on how funding may work for new development, but we can see that there are opportunities within the existing budget, how this can be reallocated, and how we can help expand the services offered out of existing hubs through our asset management program.
The private sector will play a big part, and it will no doubt become clearer in the future. I'm sure Jeremy and Claire will have some very insightful views on this later on at the fireside chat. We will be able to mobilize quickly. We have the relationships, the skill set to deliver the improvement in care that is needed. The message is quite clear, and the strategic shift of hospital care into the community settings, SEDAR, and the plan is a credible one, and more on that 10-year plan a little later. We're now just going to move to three case studies. Many of our existing centers already operate on a multidisciplinary basis. We've got some tremendous examples of this.
Purpose-built buildings such as Eastbourne, which was developed back in 2021, is a real-life example of the government's plan to deliver healthcare infrastructure in neighborhood locations, delivering a wide range of patient services and transferring services away from hospital settings to modern purpose-built community spaces. Eastbourne has the look and feel of what the government is calling a new neighborhood health center. It's been a great success, led by Dr. Mark Gaffney, a friend of PHP. Next to Wakefield, where we have a live example of doing this on site here right now and today, this is the Trinity Medical Center in Wakefield. It's a well-established community asset. It was built over 25 years ago. Patient demand has grown significantly during our ownership to over 27,000 patients. Trinity now employs over 100 medical staff, includes 16 GPs, eight nurses, plus other healthcare professionals.
Trinity offers a wide range of NHS and additional patient services, including routine GP, long-term condition clinics, nursing, preventative services, family health, mental health, minor surgery, and procedures. This high patient demand has allowed us to recently invest in the asset, and our current asset management will deliver a new 25-year lease, additional space in excess of over 2,100 sq ft , a new pharmacy building, additional double-digit rent, and importantly, a creative profit on cost of over 13%. The reason we've showcased this asset today is we feel, and we're doing this on site as we speak, that this is close to what a neighborhood health center of the future will look like. We're extremely well placed to do many more of these from our existing portfolio around the U.K. as the government moves patient services from hospitals into the community.
Finally, before we go into the moment you've all been waiting for and the fireside chat, maybe give Sir Jeremy and Dame Claire a moment to gather their thoughts. I think we're all mic'd up, so we're good for that. We're going to show you a video clip of Kilburn Park Medical Center that we've developed. We opened this literally a few weeks ago. Our Development Director, Tony, was there to cut the tape. The themes from this creative new development case I'd like you to take away are this is a community asset, huge social impact, increased patient demand now and in the future. House building and regeneration, in this case, I think it's 2,500 new homes, is creating the opportunity for a new neighborhood health center. You'll hear reference to a local authority that's proactive, that's helped us deliver this. We're creating critical U.K. social infrastructure assets.
I think you'll see this in the video. We're moving patient services from hospitals into primary care, which is something at PHP we are very good at. If I may play the video.
We first became involved in the project back in 2018, and it's arisen as a longstanding requirement as part of a wider estate regeneration by Asland and Baruch Brent. They're regenerating their South Kilburn estate, which is about 2,500 dwellings. They've been doing so over a period of the last 15 years. This phase is called Peel Precinct, and it's designed as the civic heart of the redevelopment of the estate.
It's been a project that's been around for a very long time, and Brent is, as a Councillor, one of the more proactive in terms of working with the NHS in terms of placement. The original concept was that it would be a facility big enough for three GP practices. As it turned out, Kilburn Park actually merged with another practice, so they're currently in occupation, but there is significant capacity within the building to grow. There is an additional capacity for a growth of about 6,000 on the patient list in terms of dealing with future growth linked to the regeneration of the area.
We have a range of patients from all over the world with all sorts of languages. It was a very deprived area, and I think part of the regeneration is changing that level of deprivation. We are looking forward to inviting a lot more of the new residents that have moved into the buildings that surround us. The old center was in a Victorian building. The old building was listed, and we couldn't make adaptations, so we were restricted to using one floor for anyone that had a walking stick or used a wheelchair. Now all of our patients can access all the rooms.
We have here a range of room sizes which enable different uses for the same patient-facing rooms. We've also a flexible working space for clinical staff, which enables the incorporation of digital and remote consultation as part of their day-to-day conduct.
At the moment, we've got around 7,000 patients, and we can certainly scale up to 13 on-site consultation. We can probably take on more now that we've moved into a bit more of a digital consulting world. The response has been so positive. Everybody really enjoys the decor. Everyone's very happy with the sort of professional level of the rooms. Obviously, there's a lot more IT in this building, so we've got excellent call systems, self-check-in. There's a lot of information we can pass on to patients now.
The intention of this type of services is to really look at avoidance, so really much more around same-day access in terms of allowing patients to come here for urgent appointments rather than having to go to A&E. The aspiration in terms of building in that capacity in terms of the sizing of the facility is to make sure that as we build up to those numbers, there is that enhanced range of services to try and prevent people going from the hospital in the first place.
I think Tony and I have worked alongside each other six or seven years. We've both been part of the program from conception to first design to delivery. We have sort of been partners along the way. It's been a very good relationship. I found them really helpful.
In the context of this scheme, it's very important that we partner with third-party developers such as PHP in terms of bringing forward schemes that are of the right standard and actually give us that delivery option moving forward in partnership in terms of then delivering the facility. One of the things that the previous practice didn't have was a treatment room, so they couldn't do tissue viability, for example, which is important to diabetes. That facility is now available with the support spaces that are required. It does allow the practice to extend that range of services and actually start to look more specifically now that they have the facilities right as to what they can take on board and deliver properly.
It's delivering on the agenda of broadening and deepening services in the community. What this particular facility enables is for a greater breadth of services to be delivered. The practice here works very closely with the local primary care network, and that is gradually evolving into neighborhood health, which is the government's intention for the delivery of services through primary and community care. What that means is that for service users, for patients, they can access a far greater variety of services local to them rather than having to go to a hospital.
It's been a very successful building, open to first-rate companies, which are tenanted, and I think everyone's delighted with the outcome.
Excellent. On that very positive note, I'd like to invite Sir Jeremy and Dame Claire Gerada up to the stage. Round of applause. Oh, it's nice to settle in and relax. That was quite tense. I don't think we made any mistakes.
As tense as I am, all that language, I don't have a clue what he said. Nor had Jeremy, by the way. I asked him.
Yeah, I think we kept it to the script. I think we did okay. It's my pleasure to introduce Sir Jeremy Hunt, who's a distinguished figure in British public life. Before becoming a politician, Jeremy, I think you were a very successful businessman. I think you ran your own educational publishing business, which you may have sold at a nice valuation. Well done to you for that.
As big as your way.
You also set up a charity to help AIDS orphans in Africa, which you continue to play an active role. Having served four Cabinet roles, which I believe is extremely unique and impressive for over 10 years, Jeremy, of course, is well known to many of you in the room and very highly regarded as a former Chancellor. What is sometimes overlooked is that you held the role of Health Secretary from 2012- 2018. I believe you're the longest serving Health Secretary in modern history. Is that correct?
I have the scars on my back, yes. Claire was a big... I crossed swords with Claire many times when she was President of the Royal College of GPs , but we became firm friends.
My long record is saying that Jeremy is actually the best Health Secretary that we've ever had. I say that even knowing that Bevan was a fabulous Health Secretary.
There we are. Look at that. I hope someone's recording this. There's a reason why we're sat in the middle, but isn't there a need for that now? I'm glad we got that out of the way. I think your combined experience at the Heart of Treasury, Jeremy, together with your tenure in health, makes you exceptionally well placed to speak at today's Capital Markets event and take questions from the audience later. To my right, it is a great privilege to introduce Dame Claire Gerada, a very prominent leader in British primary care. Claire's been a practicing GP for over 30 years. In a moment, you may tell us how many appointments you've done during that time. It's an incredible number. Claire's also the former President and Chair of the Royal College of General Practitioners.
During this time, Claire was an outstanding leader in expanding GP-led treatment, mental health, and rebalancing, amongst other things, investment from acute to community. That's the introductions. We're going to have a fireside open chat. I've got some pre-prepared questions, which I don't think you've seen. That wasn't the plan. I'm going to try and ask you some questions. The audience, feel free to get your questions ready. We have an iPad, which I think I might have left over there. I have to get that. No, it's under there. We've got questions coming in from the virtual audience as well. I'm going to start with you, Jeremy, if that's okay. Obviously, we're very interested to hear your thoughts today about the economy, the 10-year plan, all of this sort of stuff. Maybe that will come a little later. It's sometimes forgotten that you were the Foreign Secretary.
No doubt, during that time, you met some very interesting personalities. You know, we operate in public capital markets, and it's amazing how our share prices can be impacted by one tweet from Donald Trump. Maybe just tell us a little bit about your experiences as Foreign Secretary, some of the people that you met, and any interesting insights you can give to the audience this afternoon.
I think I have to say that the most interesting person I met in that period was Donald Trump because he was in his first term. One of the moments I remember most vividly was when he came for his first state visit. We're now making plans for his second state visit. I had to stand on the tarmac at Stansted Airport to greet him when he arrived in Air Force One. The plane landed, and the door didn't open. We were standing on the tarmac, the line of VIPs waiting to greet the President of the United States. We all assumed that the reason why he wasn't getting out of the plane was because he was freshening up after an overnight flight or something like that. Finally, the door opened, and he came out.
It turned out what had delayed him was that he was on his phone having a Twitter war with Sadiq Khan, the Mayor of London. Literally the first thing he said to me was how much he hated Sadiq Khan. That was his first words on arriving in the U.K.. I think there is actually an insight about how Trump works, which is worth remembering. Whether you love him or loathe him, he is on TV, on social media for two to three hours a day. That is his thing. It's how he operates. That's how he performed this extraordinary comeback to get himself reelected. When you think of all the things that were hurled at him and all the court cases he had, he still managed to get through. The reason is because he's talking to people. He's talking to his base for two to three hours a day.
I think what that means is there's a lot of unpredictability because he'll say something one day, and then he'll change it the next. The markets this time around are learning to cope with that. They're actually seeing that although you get these daily dramas, and they really are daily dramas, in fact, in terms of economic policy, he's turning out to be a bit more pragmatic than perhaps people originally thought. I think we're seeing this following the kind of the shock of Liberation Day. We're now seeing trade deals with the U.K., with Japan, probably settling down to a 15% deal with the EU, a deal with China on rare earths and chip exports. We are going to end up with a higher tariff world than we had before, and that is regrettable, particularly for the U.S. economy. It is a lot calmer than we perhaps thought.
I think that's the big adjustment that everyone is making.
Very interesting, very insightful. Thank you. Do you think on the subject of trade deals, do you think I was watching your recent podcast with John Bolton, I think it was, and he was describing that the one thing that Trump wants to achieve almost more than any else in this term is a super trade deal with China. Do you think that's something that he thinks about a lot and is it achievable?
I think it is something that he really wants, but I think he has to contend with the fact that the Chinese are absolutely phenomenal negotiators. I know this because my wife is Chinese. By the way, I did want to say she was Japanese, which got me into a lot of troubles.
We didn't remember that.
Yeah, the reality is that would be the biggest deal of all from his point of view. I think he would still like to do that, but I'm not sure how likely that is. I think we're more likely to end up with this reciprocal, you know, 25%, 20%, 15% deal that he seems to be settling with.
Excellent. Very insightful. Thank you. Claire, just moving on to you, I said earlier that you've been practicing GP now for over 30 years. In that time, I'd like you to tell the room how many consultations you've done and any sort of highlights you can share with us.
I actually started working in general practice when I was a 15-year-old girl, when I used to be a Saturday girl at my father's practice. He was a single-handed GP that went on then to be multi-handed. I can remember him moving into his first health center. That's very typical, very, you know, the conversation of today. I started my own practice, in my own practice, on February 17, 1991. I'd been to the interview, which was a few months before, and they said, "Don't get pregnant for two years so that you can settle in." I actually arrived pregnant when I started my work. In 1991, you wouldn't be allowed to say that nowadays. I calculated fairly conservatively that I've had about 250,000 consultations during that time. Starting off at five-minute consultations, then we went to seven and a half-minute consultations, and now we're at about 12.5-minute consultations.
I've seen an awful lot of people. I feel the time, even though I'm in an inner-city GP, that I am part of the parish. Those of you who live in London know that London's made up of lots of little villages. I am part of the village of where I live and work and see now generations of patients, including the ones I had, the story I have, which was I remember my bike being stolen from outside the surgery, and I could see it. I could see them, I see the young lad stealing it. I ran, and I knew where he lived, so I ran to his home and demanded my bike back. He actually gave it because he didn't realize it was my bike, and I was, of course, his GP. He's now well into adulthood with his own children.
It's been a wonderful, wonderful, joyful job. Hopefully, when we come to discuss the issue of community hubs, you'll see that community hubs are not a new idea. They've been around since about 1939, but we have now the perfect set of opportunities to sort of do it properly and actually to build these community places where we can live, work, play, and all the sorts of things that actually bring communities together.
Fascinating. Very impressive. Congratulations, 250,000 consultations. What a career that you've had. Jeremy, if it's okay, I'm going to ask some healthcare type questions. I suspect when the audience come in later, they'll want to talk to you about your time as Chancellor particularly. I should have mentioned earlier, we were very pleased and impressed that you accepted our invitation this afternoon to speak to the audience immediately. I understand that it took you 30 minutes to accept the invitation to be Chancellor. You didn't even have Liz Truss's phone number. Maybe you can tell us about that a little later on. The 10-year plan is an important topic for discussion this afternoon. We know that you've supported primary care historically in your role as Health Secretary. Could you talk to us about the 10-year plan?
Is there anything in that plan that you think is encouraging for us as an investor in primary care real estate?
Sure. I think the first thing to say is it's really important to understand why having a 10-year plan is really significant. The NHS is the largest employer in Europe, 1.5 million people, fifth largest employer in the world. It's a bit like the five-year plans launched by the Communist Party in China. People sometimes write them off and say, "This is just words." The truth is that the Communist Party in China has to get the message out to more than a billion people, and those words echo everywhere. What this 10-year plan does for the NHS, and it's only the second one the NHS has ever had, is it sends a signal about the direction of travel. It's not just over the parliament, it's over 10 years.
The strategy in it is very similar to the first 10-year plan, which was launched by Simon Stevens in 2019, this idea that prevention is better than cure. We need to treat people upstream. It's a good thing that it's consistent with what's happened before. From Wes Streeting's point of view, he has got control over GBP 190 billion, which is the budget for the Department of Health and the NHS. If that was a country, it would be about the 45th biggest GDP in the world, about the same size as Hungary or Portugal. It is a huge investment. That's why you have this weird thing when you're Health Secretary, where at one stage when I had my own junior doctor's strike, I was the most unpopular politician in the country. You have absolute power.
If I visited a hospital quite regularly, and I used to find this completely ridiculous, they would literally repaint the corridors that I was going to walk down before my arrival. What he's saying in this 10-year plan, which I think is very relevant for you, Mark, and for PHP, is that we have got to move care out into the community. The challenge in this is that the budget for the NHS is going up by about 3% a year, which is not much more than the last parliament, quite a bit below the 3.6% long-term average and a long way below the 8% of the early 2000s. Why this is going to happen is two reasons. First of all, the 250 neighborhood health centers that have been promised are for the government going to be the most visible example of a changed and improved NHS.
They have got a lot of political capital at stake to get these buildings up because they really want to point to these buildings. There will be a lot of energy into making it happen. Secondly, their overriding, their biggest single political commitment is to bring down waiting times. You might say, surely that's hospitals, but as Claire knows better than anyone else, a proper neighborhood health center stops people going to hospitals. This is what's going to stop the NHS waiting lists growing. They will have a very key strategic impact for the government in bringing down the waiting lists by stopping people needing to go to hospitals. For that reason, I think it's actually pretty exciting news for the business that you were just talking about.
Thank you very much, Jeremy. That's very, very helpful, very insightful. Claire, as you know, you spent a great deal of your time speaking to people on the front line. What do you think the 10-year plan means for general practice?
General practice is in a strange place at the moment. I know this is being taped, so forgive me if you're a GP listening to this. GPs like to whine. They like to moan. In fact, if you Google, as I did once, you know, end of the NHS as we know it, GPs finished. The first time it was ever mentioned was 1946. Since 1946, it's very difficult to say what they think. Actually, talking to GPs, we are now for the first time seeing light at the end of the tunnel. The idea that the 10-year plan is very, very primary care focused. As Jeremy said, it's shifting. It's going from treatment to prevention, analog to digital, and from hospital to community. Actually, the most exciting bit, I think, is the investment in new premises.
It's the recognition that if you want to deliver good care, if you want to do anything well, you have to have a space that's fit for purpose. Until recently, I consulted from a refurbished disabled lavatory. Okay, didn't smell any more, but that was my consulting room. It doesn't feel right to be consulting, let alone having patients. I think we are seeing now the green shoots, the excitement again. There is still a lot of uncertainty for my profession. The whole debate is at the end of the partnership model. What does it mean, neighborhood budgets? What does it mean for who's controlling these budgets? What does it mean for GPs with special clinical interests? Are we actually going to see the transformation that's been highlighted in the plan?
We have been there before many times when we've been promised that change is going to happen, and then it doesn't happen because either we get another election or something doesn't. It is, for me, a very exciting time, and for many of my colleagues, an exciting time.
Thank you very much. Very, very interesting. Jeremy, going back to you, in your time as Health Secretary, you supported a GBP 1 billion primary care infrastructure fund. I just wonder if you could just tell us a bit more about this and whether there's something that Wes Streeting and the current government should be looking at.
As Claire says, you know, in the end, the constraints you have are workforce and capital. Those are the two big things that we're going to need to unlock this. Capital is always the poor relation when it comes to the NHS because, as I know from my time as Chancellor, you know, we spend as a country about GBP 100 billion a year for our total capital budget. It sounds like a lot of money, but there's a lot of competition. There's nuclear power stations, there's the defense budget. The NHS capital budget has gone up from about GBP 11 billion to about GBP 13 billion a year, which is a 20% increase. That's very good news. That was what Rachel Reeves announced in the spending review. There's a lot of competition for that.
You've got the RAC hospitals, the hospitals which have these RAC problems in their structures, that's about GBP 5 billion. You've got the IT program, which is about GBP 10 billion. You've got the backlog of hospital maintenance, which is about GBP 11 billion. For this to work, which I think is a very interesting proposition for you, Mark, I think we are going to see a new version of PFI, which is the previous Labour government's initiative to try and attract private sector capital. It will have to be better value for money than the last version because, you know, we can't end up with a situation where I think the Queen Elizabeth Hospital, 14% of its total budget was paying fees for its PFI deals. It'll have to be different.
I think it's very clear from what Jim Mackey, the Chief Executive of the NHS, says that they recognize that in the capital projects that we have in the private sector, there is going to need to be more private capital and more partnership to deliver these new neighborhood health centers.
Can I add something to that? If that's all right. I did the Edinburgh Fringe a couple of years ago. I was a stand-up comedian. Yeah, exactly. It was called 50 Minutes to Save the NHS. I went back to every single party manifesto since 1946 and just looked at what the health issues were. Repeatedly, and it was all political parties, they promised new hospitals. It went from 400 new hospitals to 180 new hospitals to about 200 new hospitals. Then we had Boris Johnson, I think it was 40 new hospitals.
What's exciting about this, notwithstanding we have to repair the hospitals because some are built on sinkholes and all sorts of things, what's exciting is actually, for the first time in my career, really and truly, we're seeing a commitment to build new, what we call community hubs, health centers, Darcy centers, whatever you want to call them. Actually, that is exciting because that will transform the care that our patients receive. It'll transform the care that you receive because with digitalization, more remote care, we probably need far fewer high street practices, so far fewer small practices, and far greater community hubs that are able to serve populations, I would say, of 30,000- 50,000. The ones you've shown were 28,000, but actually, by the time you get, you know, expansion of the population.
Then capitalize on the pharmacists, which we have far more high street pharmacists that if you want to see a patient closer to home, instead of having to, you know, with your pushchair, get on two buses. I think this is exciting. I think what clearly we've got to do, the improvement of some of the hospitals. I'm going to say we don't need as many hospitals. We don't need outpatient departments. There's a lot of functions that happen, other than mental health hospitals, by the way, which I think we need more beds. I think this is an exciting time. Clearly, you're at the front of it.
Absolutely. Totally agree, 100%. Obviously, a lot of this comes down to money. You're in a very unique position, having been the CFO of the country and being a former Health Secretary. We often get asked, you know, it's all very well, you know, these plans are very credible. You know, who's going to pay for this? The argument that we make often when asked that question is, and I've heard you say something similar in previous podcasts I've been watching recently, when a patient goes into hospital, because a lot of the issues that you've both described, it's now costing the government, I think, between GBP 400- GBP 500 a patient. That's not a strict like-for-like comparison, but according to government data and recent announcements, when patients are coming into primary care, that's costed G BP 40- GBP 50 a patient. There's a cost-benefit dynamic that we can help solve here.
Do you think that's a credible argument and a credible response?
Absolutely. What you're trying to do with these, and the reason why I think these neighborhood health centers are so strategic for the government is, if you have, let's say, a 90-year-old lady with early stage dementia and she has a fall, what will happen more often than not in the NHS is a 999 call, an ambulance will come, she will go to A&E, but because of her state, she will then stay in hospital for a very long time. That, by the way, will be very bad for her health. I think Claire might correct me if I'm wrong, but I think a dementia nurse once told me that every extra week you're in hospital is a month off your life expectancy because it's not a good place to stay for a long time.
It costs, I think it's even more, but when I was Health Secretary, the number I had in my mind was GBP 500 a night for a hospital bed. If you can avoid her having to be admitted through A&E because she has a better community health service, more contact with her GP, best of all is to prevent the fall happening in the first place, and we are getting much better at that than we were, but also to work out what alternatives might be to hospital provision. The other huge area of opportunity, which Claire touched on just now, is outpatient appointments. These are the appointments where basically a GP wants to get consultants' advice but doesn't actually know if an operation is necessary or not. That is actually a huge chunk of the 8 million waiting list appointments.
If you could give people that expert advice or that scan or whatever it is in a neighborhood health center, you're going to see numbers peeling off those waiting lists. That's why I have a high degree of confidence that we will see these, despite all the financial pressures, we will see these neighborhood health centers built. I think the other thing which we haven't talked about, but I think is also an important part of the mix, is the government is trying to make some big reforms to the planning process to make it quicker to get permission to put up new buildings, and that should also be something that is a positive.
Absolutely. When we showed the Kilburn Park Medical Center development earlier, that was very much a function of regeneration and housing development. With 1.5 million new homes as part of the government's five-year plan, we think that creates the opportunity to create these new neighborhood health hubs. We have the expertise. Before I take the questions to the floor, could I just finish maybe just on digital? You have made some, I thought, really interesting remarks and clearly well-rehearsed and understood remarks about digital in general practice, Claire. We could see from the video in Kilburn Park earlier that there are more digital appointments taking place. We see from the assets that we own, we see it in Wakefield, we see it in Kilburn, we see it in other places that we're now creating these digital spaces for GPs to do consultations within the medical center.
How should we think about digital? Obviously, it's one of the three pillars of the plan, isn't it? Moving patients from hospital to primary care, prevention and cure, but also digital is a key part of the plan. Do you have some insights you could share there?
Oh, I mean, my practice, I'm a shareholder and a pioneer of something called eConsult, which is an asynchronous, and it's really important you get this in your head. It's an asynchronous way of consulting safely. With
A health provider. It's not a video. Video is just another way of doing a telephone or a face-to-face. It's just, and we can say, we can do now. I said about 10 years ago, when we started this, and I was laughed at, that I think 75% of all consultations can be done remotely. That's asynchronously. I was laughed out of it, you know, and then we had the pandemic, and of course everybody started doing it. We can do from registration to discharge remotely. The whole pathway can be done remotely. People say, what about the elderly, etc. It's about 8% of people that are not digitally literate. We never designed the NHS for the illiterate. When I started general practice, a good proportion of my patients couldn't read or write, but we didn't stop innovation because they couldn't read or write.
We just made sure that we helped them in other ways. When you're starting, there are ways, some of the physical things, so I think you need to be building premises now with soundproof spaces where you can consult in a soundproof environment, which many places lack completely, including, I think, what you showed there. You have big open spaces, where we know that big open spaces you don't really need anymore. We certainly don't need waiting rooms anymore, that sort of size. We've got to make sure that with digitalization, you do start to, I think digitalization, by the way, is the future. I think remote and remote care, and the remote system is what's going to tie everything up together. When you're building, you have to bear this in mind. You don't need the spaces for reception spaces.
If you want to turn those reception places into group spaces where you can have group consultations, face-to-face. You need to make sure that you're building the system for the future that enables us to do much more remote work in the practice itself. By the way, I have to say that general practice has led the way in digital innovation. We've been the silent part. We've had to do it because we've had GBP 100 per patient per year to deliver care, which isn't a lot of money. Jeremy gave us a little bit more when he was Secretary of State for Health, but it's.
You twisted my arm.
I twisted his arm. The only way we've been able to deal with increased demand and more or less flatline funding is through innovation, through digital e-prescribing, asynchronous consultation, all the AI that we're using at the moment, including AI transcription and all of those things. That is the answer, and you've got to build it. Before you do move on, I think the examples you've used there are exciting because they're brand new builds, but I think they're not, you need to go further. Actually, the whole point about a community hub, so Jeremy's lady with early stage dementia, she needs to be able to go to have tea or coffee or whatever in a space that maybe does have health providers. This isn't about just providing healthcare, but has health providers online. You can start to notice deterioration without having to have a consultation.
We should be co-locating wellbeing services with sickness services, and we should be able to put spaces, for example, children and playgroups with elderly, maybe playing music and dance or whatever. I went to Shanghai before the pandemic, and they're building these sorts of health centers, community hubs, and I think that's the next stage rather than just really a health center.
Absolutely. Thank you very much. At that moment, I'm going to give the audience an opportunity to ask questions. I think we've got roaming mics, but just as we're finding those and everyone's getting their bearings, there are some questions coming in online as well. I think we've got over 100 people dialing in remotely. Before we go to the room, the first question is from Brewin Dolphin in Dublin, a longstanding shareholder. How safe is the dividend? Will this rise? Can you answer that one for me? I'm not.
I think I can leave that one to you, Mark.
What can I say about that? We can't give projections. For the avoidance of doubt, neither Sir Jeremy Hunt nor Liam Cleary can talk about the combination of us and Assura. We've got a 29-year track record of growing our dividend. If you look at our track record, we acquired Medics in 2019. History tells us when we're able to deliver benefits of economies of scale, that does give us an opportunity to enhance and accelerate our progressive dividend. I think I've answered that. Thank you to Brewin Dolphin in Dublin, a longstanding shareholder. I think what we'll do, most of these questions are healthcare related. We'll come back to these because we spent a bit of time on that already. I'm just looking around the room. Can you put your hands up? If you're a shareholder, we'd love to know because we'll prioritize your questions.
Gentlemen in the front here, if we could just.
No, there was one over there, Mark.
Please, if you're a shareholder, please say.
Thank you very much. Yes, we're shareholders, Richard Knight from Allianz Global Investors. Question for Jeremy. Because you've been both the Chancellor and Health Secretary, are you optimistic about the ability of not particularly this government, but any government to really reform the NHS significantly enough to make it live within its rising demand environment that we all know about in an area of kind of constrained budgets?
Look, it's very tough. There's no doubt about it because there are so many extraordinary new treatments coming online. I mean, we haven't talked about it today, but genomics is absolutely fascinating. One of the things in the 10-year plan is that the U.K. is going to aim, or England is going to aim, to be the first country in the world where we actually put the decode of the genome of every single baby born on the NHS. When that is put alongside someone's medical record, we will know an enormous amount about the illnesses someone is susceptible to and what could be done to prevent that. It costs money. You need people to interpret that data. It's a challenge for all countries. It's a challenge in France and Germany.
They have a slightly different funding structure, but one way or another, all of us are going to have the opportunity and the desire to spend a lot more on health because we are beginning to enter an age of longevity. We're all wearing, you know, wearables. I think the NHS has got some advantages as well as the kind of well-publicized disadvantages. The NHS has got, thanks to the electronic health records that have been developed in general practice, the best longitudinal health records of any health system in the world. The EMIS health records and the Systm One health records that we have in England are absolutely world-class. That means that when it comes to research and development, they're a real treasure trove.
I think that you can look at other sectors of the state, like for example, state education, and you can see that we have found a way to raise standards to some of the very best in the world. I think personally what the NHS needs to do is more decentralization because I think one of the things that stops innovation in the NHS is that hospitals have 18 different targets, monthly targets. GPs have 44 targets they're working towards. This creates quite a lot of stultifying bureaucracy, but I actually don't think the NHS is in any worse position than other healthcare systems.
Thank you. Thank you, Jeremy, for saying that. I would say to you, it was not about reforming the model of healthcare delivery, the NHS, which is actually one of the most efficient in terms of, you know, we're about half the cost per annum as the German system, nearly half, they're double. It is certainly a lot cheaper than the French, etc. I think the big reform that has to happen is to us, to improve health literacy, to start talking to children about what health is about. It's about moving treatment to prevention through the individual. Now we're all starting this with our wearables, but that has to be right across the population. Otherwise, we can't have a bottomless pit of health money. We are going to have many exciting things, but we can't spend more money on health because it's taking it.
It's about us, and it's about educating us around healthcare and about keeping healthy and reducing. There's a 15-year gap on average between first becoming ill and dying. In that 15 years, we're costing the state a lot of money. We're very unhappy. We've got a great deal of morbidity. We have to reduce that gap to one or two or three years. That's beholden on all of us. We're all going to die, and we'll spend most of our healthcare money on the last year of our life, but we've got to reduce that 15-year gap.
Very good. Thank you. I think Stuart just over there.
Thank you. I'm not a shareholder. Jeremy, I just, one question I have for you is much excitement talked about the 10-year plan. You then said that Simon Stevens came out in 2017 or 2018. There's a new 10-year plan before his 10-year plan finished. How do you get the consistency to deliver when actually a 10-year plan is not really a 10-year plan?
It's a fair point. It was actually at the end of 2019, so it's even more recent than that. I think the strategy is identical in the new 10-year plan. I think it is reasonable for the government to publish a new plan because we had the pandemic. The pandemic, although the previous plan had full support, was written by the NHS really more than by the government. It was written by Simon Stevens, and it had exactly the same principles that we've been talking about today. The pandemic was the biggest shock to the NHS in its history. That is really the root cause of the challenges that we're seeing in the NHS today. I think it's reasonable to have a reset. I actually think that what we're seeing in this new 10-year plan is positive and pretty sensible.
Absolutely. Until recently, I was Chair of something called the NHS Assembly, which was there to keep the NHS executive on track to deliver the last 10-year plan. The last 10-year plan had much more detail in it around specific diseases, had cancer targets, had real granularity around, for example, gambling. It had a lot about digital. There isn't a great deal of difference between the last 10-year plan and this 10-year plan. I suppose this accelerates and takes new areas. The last one didn't mention premises, didn't mention rebuilding processes. It's not that it wasn't delivered. I think this one builds onto this.
Excellent. Thank you. Good question. Thank you, Stuart. Any further questions? We've got one at the back there.
Hi, Gravis Capital. We are investors in PHP and Assura and long-term supporters of the sector. We understand that larger community hubs are important, and that's the kind of infrastructure we need in this country. I think what we're seeing with Assura, KKR, private capital, public capital, willing to support the sector. You talked about PFI version three, other sectors talking about other funding models. If clearly funding is there, have a 10-year plan. What are the other roadblocks for building these new modern community centers? Is it to do with the way the NHS trusts are organized? I think we have over 200 trusts, if I'm correct. We have various integrated care boards. Are those roadblocks as well? Are the roadblocks that are stopping from building this new level of infrastructure?
Do you want me to kick off or join?
Yeah, go for it.
Yeah, no, thanks for asking that question. We've met many times and discussed this with you and Matthew and your colleagues over the years. It was quite deliberate that we showed you Eastbourne earlier and went straight on to show you Wakefield and Kilburn Park. For three or four years, in our sector, like many other REITs, we've all had to adjust to this higher interest rate environment. We've had significant build cost inflation, and it's been difficult to do Kilburn Parks and the Wakefields and the Eastbournes of this world. Gradually, unfortunately, the market is obviously adjusting to that. The district valuer obviously plays a key part in that now and in the future. We commented on that earlier, but I really like what Jeremy said earlier about the importance of this plan and the direction of travel that that provides.
We're clearly very confident, but we're on the ground and we're talking to people. We've got these relationships, these stakeholder relationships that go back many, many years. We've been doing this now for nearly 30 years, as you know. Planning is becoming more straightforward. I think you referenced that earlier. If you look at the challenges that this government faces, it needs economic growth. It needs investment. It needs to reduce red tape and get on and do things. Pleasingly from our perspective, since the election of 4th of July last year , I'm sorry, it was a tricky election for you, but we're so pleased you kept your seat and we know it was tight. This government has made the NHS its number one priority in terms of its preparedness to create a plan for the future, but to get the checkbook out as well.
When Rachel Reeves is raising new taxes, a lot of that money is coming into the NHS. Money only takes us so far. They can't just keep throwing money at the problem that doesn't deal or create a long-term solution. We're here to play that part. It's a privilege to sit next to two distinguished guests who understand this better than anybody. If you've got anything else to add, sorry, Jeremy.
All I would add is that, you know, when it comes to the broader question of economic growth, I think it's important to understand the NHS needs to be part of the solution, not just the problem that is draining away our tax money. It's 10% of the economy. It is the engine of our life sciences sector, which has become over the last decade the biggest in Europe, centered around Cambridge. Vaccines and treatments discovered in the U.K. saved 7.3 million lives globally during the pandemic. That's more than from any other country. There is something very exciting happening there. I think that it's also very encouraging that the life sciences sector was treated by my government and also by this government as one of its small number of strategic sectors that we really want to focus on in the U.K..
The NHS is an enormous local employer of women, and it generates revenue within a local community. I don't know about the barriers and all because I'm not an economist or financier, but certainly, as Jeremy said, it's the solution. We always think of the NHS as just a drain on the economy. It isn't. A healthy workforce creates wealth.
Yeah, absolutely. We see that, you know, in the assets that we own. Often one of the first bits of feedback that we get, and you could pick that up from the video at Kilburn Park, is that by creating a nicer environment, it's actually nice for the workforce. They often get overlooked in all of this. The staff retention stats go up, and there's a cost-benefit dynamic to everything that we're doing.
We've also got to remember I started general practice just after what was called the Tomlinson Review. I don't know whether you ever were part of that, Jeremy, but the Tomlinson Review looked at creating what we called intermediate care centers, which is community hubs by any other name. They only built two, both of them in London, both in Lambeth, and both I had access to as a GP. They were wonderful places and really had inpatient beds and day services, et cetera, et cetera. They were great. Hopefully that's what was going to be recreated.
Wonderful. Thank you. We've got time for one more question. We're going to go over here. We can see you afterwards if that's okay.
Thank you. I'm Claudio, and I'm a Director on the board of PHP as well as a shareholder. I had a question that picks up on the last theme. There is a mental health crisis in this country. I was curious to know how can the primary care centers help sort that and what kind of facilities do we need to think about, and what can the NHS actually cannot solve, and where should we focus from that respect?
An excellent question. There isn't actually a mental health crisis. There isn't. I think there's just, I hate to say this, there's an overinflation of mental health issues. You know, there's so many people that are self-identifying as being mentally unwell. We can maybe pick that up afterwards. We don't have enough mental health beds. That's the first thing. I think when we talk about hospitals, I'm not talking about hospital mental health beds. If anything, the move of care in the community, which the country has done brilliantly, absolutely brilliantly, has meant now that we haven't got enough beds, especially for the acute, the unwell. What can these do? In Lewisham at the moment, there's a pilot looking at what, again, we'll call it a community hub by any other name, which co-locates social care, housing advice, mental health services, primary care, physical health care.
It doesn't have beds, but you can stay there for the whole day and be observed. It does add value to this. I think, to be honest, it's a barn door obvious to create mental health 24/7 that's based in a community setting that doesn't necessarily have beds, but has a space that you can stay that co-locates with other services because what we've had over the last 20 years is a sort of splitting up of the individual into lots of different bits of their mental health, their housing problems, their social problems, their depression, their anxiety, their drug misuse. It can certainly help, and the future will hopefully be that.
Thank you very much. We're just running out of time now. I'm sorry we couldn't take your question. There are many more questions online, which we will respond to after today's event. We'll endeavor to do that this evening. I know many of you have further questions for myself, Richard, Sir Jeremy, and Dame Claire, who have kindly agreed to stay around after the presentation. Jeremy, I think you have a hundred copies of your book in the lobby, and you've kindly said that you'll sign those personally. Those who would.
I'm available for.
You can ask Jeremy and Claire any further questions at that point. I'm going to just do one final slide in a moment. I'll return to the lantern. Before I do that, can I just thank you very much, both of you indeed, for a very interesting and insightful discussion and debate. We're very grateful to you both for your time, the great public service that you've given the country over many, many years. Quite frankly, you know, the country does need great people like you to be great again. Thank you very much.
Great. Thank you.
Thank you.
Okay, just to wrap up, and thanks once again to everybody for attending this afternoon for your questions. I'm sorry we couldn't get to all of them, but we will absolutely endeavor to respond to all questions following today's meeting. This brings the end to the formalities today. I hope you enjoyed listening to our presentations, the discussion we've had, and you've got a really good feel now for the opportunity that we see ahead and the excitement that we have about the future. We've talked about a number of interesting topics. Strategic joint ventures is something that you will see us commit to in the future. Our discussion around disposals, we will deliver, and we are well advanced with a number of credible third parties. We'll continue to assess, evaluate our portfolio to make sure we've got the right assets at all times.
If I may, and finally, if I could leave you with some key messages to take home with you this afternoon. We published a good set of results today. We're well placed to generate shareholder value. The release of the 10-year plan is a huge positive for PHP. The combination with Assura would be transformational, creating a business with scale and a lower cost of capital. Rental growth prospects are compelling, and both our portfolio and Assura's are highly complementary to one another. Dividend growth is sacrosanct in this business for this management team. A 29-year track record of consecutive dividend growth provides the confidence our dividend will continue to grow as we power through 30 years and beyond. On that positive note, I'd like you to take away the final comment from me, which is PHP is prime for growth. Thank you all for coming.
Refreshments, book signing, and management available for further questions in the lobby outside. Thanks very much.