THE HERALD can reveal that Hywel Dda UHB will earn at least £3m from the grant of Costa Coffee franchises in Bronglais, Glangwili, Prince Phillip and Withybush Hospitals. The income earned by the Board from the Costa Coffee franchises could be even higher, as the agreements are for fifteen years’ duration with a break clause after ten years.
Annual index-linked payments amount to £270,000 per year plus a profit share if sales at Costa Coffee cross an agreed threshold.
In July 2015, the Health Board published its intention to invite expressions of interest from companies to provide café and retail services. Despite wide coverage in local media and online during the summer, when the Royal Voluntary Service provision ended at local hospitals at the beginning of 2016, many seemed to be taken by surprise by the turn of events.
The costs of change of layout and construction have been absorbed by Costa Coffee as part of the franchise agreement. The investment across the Health Board area in the facilities is in excess of £1.5m.
The Herald understands that the income generated as a result of the franchise agreements will be used to provide frontline health services.
Arrangements commercialising the provision of catering and retail opportunities in NHS facilities are nothing new. In England, Marks & Spencer has come under fire for refusing to cut its prices in hospital shops. The retail giant, led by its millionaire chief executive Marc Bolland, charges more in hospitals for popular items such as flowers than it does on the high street. In addition, catering franchises for English hospitals are advertised at trade fairs focussing on the franchise market.
NHS Trusts in England and Health Boards in Wales have to be increasingly concerned about finding ways to supplement the income they receive from central government, particularly in England, where so-called ‘real terms’ increases in health spending come with massive strings attached and take no account of increased staffing costs for NHS Trusts.
Meanwhile, in Wales, the cuts in the grant paid to the Welsh government by the UK Treasury is likely to have a similar effect on ancillary services here.
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