Row brews over NHS subsidiaries

23 Apr 18

A health service membership body and union are locked in a row over controversial NHS subsidiaries.

NHS Providers has hit back at Unison’s accusations that wholly owned subsidiaries in the health service are “backdoor privatisation”.

The union published results from a freedom of information exercise at the start of last week, which showed 15 NHS trusts had spent £3.2m on setting up wholly owned subsidiaries since 2010.

It claimed NHS trusts were “new companies” that were “shelling-out huge amounts of money on consultants [who were] advising trusts on the setting up of wholly owned subsidiaries, to which staff are then outsourced”.

The union said that the bodies “appealed to trusts because they can reduce their VAT payments, and cut the pay and pensions for any new staff recruited”.

Unison’s head of health Sara Gorton said the subsidiaries were “creating a two-tier workforce where new staff are likely to be far worse off in terms of their pay and pensions”.

Staff working for the subsidiaries can be on terms outside the NHS’s standardised Agenda for Change pay scales. 

A spokesperson for Unison told PF they believed non-NHS contracts will be a “stepping stone” to contract changes higher up the pay scale.

Subsidiaries are being set up mainly for facilities management. Workers they employ tend to be porters and cleaners, rather than healthcare professionals.

But Chris Hopson, chief executive of NHS Providers, strongly refuted Unison’s criticism, saying it was “inaccurate and misleading”.

He said the entities were not “private companies, they are wholly owned by the NHS trusts that set them up”.

They had been “operating entirely without controversy in the NHS for many years”, Hopson said, and were “set up for many reasons which vary depending on local circumstance and need”.

He added: “They are not being set up solely to avoid tax or cut staff pay.

“Terms and conditions of existing staff are protected.”

He explained although they do provide some tax advantages, trusts cannot use them solely for VAT gains and that subsidiaries offer a range of employment and pay flexibilities.

Hopson also said new staff may join a subsidiary under “different conditions” but this enabled trusts to attract people “with scarce and valuable skills who would otherwise stay in the private sector and be unwilling to work for the NHS”.

On the issue of management consultants he said that trust leaders take “appropriate professional advice to ensure that they are considering all the options, risks and benefits” and that they ensure the “cost of any professional advice is proportionate, appropriate and value for money. ”

Unison vowed to “step up” the fight against the wholly owned subsidiaries towards the end of last week, at its health conference in Brighton.

The union said one delegate at the conference had called them the “biggest threat of privatisation seen in a generation”.  

Unison North West regional organiser Sean Gibson has also recently said wholly owned subsidiaries were a means of “backdoor privatisation”.

Fact file

Legislation allowing NHS trusts to create wholly owned subsidiaries was created under the last Labour government and trusts have been actively setting the vehicles up since 2010.

NHS trusts need the permission of the secretary of state to set up a wholly owned subsidiary, whereas foundation trusts, as legally independent public benefit corporations, can set them up on their own.

A number of NHS trusts have rejected plans to create a wholly owned subsidiary. In February 2018, more than 1,000 staff at Southmead hospital signed a petition against the plans.

Union members at Wrightington, Wigan and Leigh NHS foundation trust also voted to reject the plans and asked the union for a strike ballot by 93% in a 79% turnout. This ballot will run for the next four weeks.

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