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‘Get a grip’ call

Trusts snub NHS Improvement guidance on wholly owned subsidiaries
Hajera Blagg, Friday, September 21st, 2018

Bosses of two separate NHS trusts, which are facing strike action next week, have defied guidance from NHS Improvement to pause the creation of new wholly owned subsidiaries.


Unite yesterday (September 20) declared a significant victory in the fight against NHS privatisation after NHS Improvement announced trusts should pause any plans to create new wholly owned subsidiaries designed to avoid paying tax.


NHS Improvement, a body that oversees trusts, said it would be consulting on a new approach and would then issue guidance to trusts.


But now today (September 21) both York Teaching Hospital NHS Foundation Trust and East Kent Hospitals University NHS Foundation Trust have confirmed that they still intend to push forward with plans to transfer estates and maintenance staff to new subsidiaries despite NHS Improvement’s announcement.


Unite national officer Colenzo Jarrett-Thorpe slammed bosses of the two trusts.


“These acts of defiance by these two trusts seriously undermine the credibility of NHS Improvement and, ultimately, do not reflect well on the health and social care secretary Matt Hancock who needs to get a grip of the situation,” he said.


“NHS Improvement will be seen as a toothless tiger if trusts treat its directives with contempt, as appears to be the case at East Kent and York.”


Unite officers from both York and East Kent said that their local trusts had confirmed they were going ahead with their wholly owned subsidiary plans.


“This is a snub to NHS Improvement with its influential national remit,” said Unite lead officer for health in Yorkshire Chris Daly of the trust in York.


“The trust has been without a permanent chief executive since May and this may explain some of the poor decision making currently taking place,” he added, as he made clear that there was still “time for the trust to row back from its ill-considered proposal to transfer staff out of the NHS ‘family’” – and so avoid strike action.


Unite regional officer for the Kent trust Michael Cott likewise criticised trust bosses, saying that their decision is “very disappointing and flies in the face of the sensible advice from NHS Improvement.”


VAT loophole

Unite has long waged a battle against wholly owned subsidiaries, which involve transferring part of the workforce to a private arms-length company set up, owned and run by individual trusts. Setting up subsidiaries has stoked fears over possible ‘Carillion-style’ meltdowns that could lead to job losses and the ‘salami-slicing’ of service provision.


“There is strong evidence where wholly owned subsidiaries have been set up that once staff are transferred to the private limited company, new employees are not given access to the NHS pension scheme and are offered inferior Agenda for Change terms and conditions,” Jarrett-Thorpe explained.


“This is where these companies seek to make savings, by short changing hard working staff,” he added.


Unite believes NHS trusts are motivated to set up wholly owned subsidiaries 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 has called for HMRC to close this loophole.


Before NHS Improvement’s statement yesterday (September 20), Unite has successfully challenged the setting up of several wholly owned subsidiaries through industrial action and community campaigning. In July, Wrightington, Wigan and Leigh NHS Foundation Trust backed down after staff downed tools with the support of the local community.


Local campaigns

Most recently, Tees Esk and Wear Valley NHS Trust dropped plans to set up a wholly owned subsidiary, which followed other NHS Trusts, including Leicester, Mid York, Leeds and North Bristol, similarly abandoning proposals to transfer staff to subsidiaries.


“In each instance, local campaigns brought together staff and the community to declare that the NHS means a NHS for all and calling out wholly owned subsidiaries for what they are – backdoor NHS privatisation masquerading as an exercise in financial efficiency,” Jarrett-Thorpe noted.


But the fight against wholly owned subsidiaries is far from over as staff from both York Hospital and East Kent trusts gear up for two separate walkouts next week.


Last week in York, Unite teamed up with Unison and community campaigners in a protest ahead of next week’s strike at York Teaching Hospital NHS Foundation Trust, with the support of local politicians.


Clifton Ward Labour councillor Danny Myers wrote a letter to the local York Press backing the strikers and urging York Hospital Trust to reconsider their plans.


A two-tier workforce resulting from a wholly owned subsidiary, Myers wrote, “leads to lower productivity and lower morale.”


“Why would a hospital take such a risk with the delivery of our healthcare?” he asked.


“Labour demands an end to the tax loophole that allows NHS Trusts to reduce their VAT bill by taking hundreds of support staff off the NHS payroll.”


Myers urged the Trust to “take a leaf out of the book of Wigan Hospital who also proposed this type of outsourcing but reversed their decision when it was clear that staff and public opposed such a move.”


Moratorium call

In a letter this week to NHS Improvement chief executive Ian Dalton, Jarrett-Thorpe also reiterated Unite’s demand that HMRC close the tax loophole that is prompting so many Trusts to set up wholly owned subsidiaries.


He put forward Unite’s call for NHS Improvement, on behalf of the health secretary Matt Hancock to place a “moratorium on the further establishment of private limited companies by NHS trusts in England, even with trusts that have gained board approval.”


But in the meantime the fight against backdoor NHS privatisation goes on – there are already 40 announced or already up-and-running wholly owned subsidiaries in the health service.


“Unite says we must call time on wholly-owned subsidiaries specifically and NHS privatisation generally,” Jarrett-Thorpe said. “NHS means NHS.”


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