08 September 2006
Trade unions have vowed to fight the government's plan to outsource more than 1,650 jobs and responsibility for 25% of the NHS's non-pay spend to the German-based delivery firm DHL.
The Department of Health's new contract with DHL was announced on September 5 and will take effect on October 1.
DHL will create NHS Supply Chain to manage the purchasing and supply of up to £3.7bn of NHS equipment and consumables such as bandages and hospital food. The function is currently provided in-house by NHS Logistics and the NHS Purchasing and Supply Agency.
Unison has already balloted its 1,000 affected members on strike action and expects to announce the result at the Trades Union Congress conference next week.
Karen Jennings, Unison's head of health, said: 'Why break up a winning team like NHS Logistics and sell it off to a German parcel company? It makes no sense when there is no doubt that [it] is an NHS success story. We will fight to keep these jobs in the NHS.'
A leaked memo to Labour backbenchers from Health Secretary Patricia Hewitt's specialist advisers, seen by Public Finance, stated: 'The unions have seen the full business case, with the exception of commercially sensitive financial figures.'
But Jennings told PF: 'Categorically, we have not seen the business case, despite repeated requests.'
The DoH claims the contract will save the NHS £1bn over its ten-year life span. But the savings are based on the expectation that NHS Supply Chain will supply over twice the volume and range of products currently provided through the two in-house organisations, from £1.6bn worth to £3.7bn.
The DoH claims that, based on cost estimates for the expansion, NHS Supply Chain will be able to make the NHS three times as many net savings as the current
in-house purchases would manage. But the DoH has not released the public sector comparator figure on which the savings are calculated.
Tony Harrison, research fellow at the King's Fund, commented: 'What we've learnt from the Private Finance Initiative and independent sector treatment centres is that the government finds it difficult to get these contracts right,' he said.
'The structure of the reward system and the baseline on which savings are calculated are crucial questions, and ones over which there is a lack of clarity.'
PFsep2006
