Unions welcome pause in creation of “subco” companies by NHS trusts
A short note buried in the Provider Bulletin published by the regulator NHS Improvement has provided a belated and welcome relief from efforts by trusts across the country to chisel savings at the expense of privatising their support staff by creating “wholly owned companies” – widely known as “subcos.”
The Bulletin instructs trusts throughout England to halt their plans:
“Please pause any current plans to create new subsidiaries or change existing subsidiaries.
“We'll be consulting on a new regulatory approach to this in October and following the consultation we will be issuing new guidance.”
The health unions have been challenging the creation of subcos for the past year, with an intensifying series of confrontations which have seen a subco plan blocked in Bristol, one dropped after repeated strikes at Wrightington, Wigan and Leigh, and another dropped in Mid Yorkshire to avert a 3-day strike. Last week threatened action by UNISON led to Tees, Esk and Wear Valleys NHS Foundation Trust scrapping plans to transfer around 600 staff to private firm Tees, Esk and Wear Valleys Estates FM Ltd.
Further conflicts were taking shape as the NHS Improvement announcement was made.
However in between the successful resistance a number of subcos have been established, in the case of Calderdale and Huddersfield because despite a strong majority ballot vote for strike action insufficient staff had voted to comply with current anti-union laws.
NHS Improvement must tell trusts not only to drop plans still in the pipeline, but must review and reverse the privatisation that has already taken place, that has stripped thousands of staff of their status as NHS employees and opened the danger of a 2-tier workforce with new employees on inferior conditions.
Responding to NHS Improvement’s announcement UNISON head of health Sara Gorton said:
“This whole policy has been a damaging distraction. Valuable resources that could have gone on improving care have been wasted.Saving money has been the sole motive for outsourcing jobs to private companies. Cash-strapped trusts have seen it as an opportunity for solving their financial woes.
“But they didn’t anticipate the outrage among staff and including porters, cleaners and those in catering who want to stay in the NHS. Recent threatened action by UNISON at Tees and industrial action at Wigan successfully stopped subco plans in their tracks.
“The NHS is already set to face another tough winter. Trusts must now plan ahead and work with unions to make the best possible use of resources.”
Unite, too, has hailed ‘a significant victory’ in its campaign to stop NHS trusts in England setting up wholly owned subsidiaries designed to avoid paying tax.
The news came as Unite members at East Kent Hospitals University NHS Foundation Trust and York Teaching Hospital NHS Foundation Trust were gearing up to take strike action in separate disputes about being transferred to a subsidiary company.
Unite is concerned that trusts are forming these wholly owned subsidiary companies in England so that they can register for VAT exemption and compete on a level playing field with commercial competitors who register for VAT exemption for their work in the NHS, when NHS trusts can’t.
Unite national officer for health Colenzo Jarrett-Thorpe has written to NHS Improvement chief executive Ian Dalton saying that the creation of these subsidiaries is not ‘the correct prescription for financial efficiency in the NHS’, after years of budgetary constraint which has put the NHS in England ‘under serious and unprecedented pressure’.
Unite is calling for:
- HMRC to close the tax loophole, so NHS trusts are not forced to consider outsourcing NHS services to private limited companies in the form of wholly owned subsidiaries.
- NHS Improvement on behalf health and social care secretary Matt Hancock to immediately call a moratorium on the further establishment of private limited companies by NHS trusts in England, even with trusts that have gained board approval.
In his letter, Colenzo Jarrett-Thorpe added:
“The increasing tendency of NHS trusts to create wholly owned subsidiaries in the form of private limited companies could lead to a flood of dozens of Carillion type situations across England.
“We believe any VAT tax saving could ultimately turn into fool’s gold, if the tax loophole is closed by HMRC.”
Commenting on NHS Improvement’s intervention, Colenzo Jarrett-Thorpe said:
“We regard this as a significant victory in Unite’s long-running campaign to stop the creation of such subsidiaries – and then to reverse them. We believe this is in the best interests of patient safety and our members who wish to remain employed by the NHS and not outsourced to an outfit where their pay and employment conditions could be seriously eroded.
“Clarity is needed from the NHS Improvement statement yesterday on wholly owned subsidiaries since this may be able to help resolve the industrial disputes in East Kent and York regarding employee transfers to wholly owned subsidiaries on 1 October.”
Unite members will be taking industrial action in East Kent between 24-28 September and in York where there is a 48 hour stoppage between 27-29 September.Read more ...