Unite members protested in York and Chesterfield yesterday (July 25) against moves by two NHS trusts to set up wholly owned subsidiaries to avoid paying tax, as part of a wider campaign to ban the practice nationally.
The union is concerned that the creation of such subsidiaries could lead to a ‘Pandora’s Box of Carillion-type meltdowns’, with adverse knock-on effects such as job losses and salami slicing of service provision.
Earlier this month, the campaign helped pressure the Wrightington, Wigan and Leigh NHS Foundation Trust to back down on its plan for a wholly owned subsidiary.
The Department of Health and Social Care announced recently that it was consulting on the issue with a view to strengthen “central oversight” of wholly owned subsidiaries by asking all NHS trusts to report to them via NHS Improvement of their intention to set one up.
However, Unite has been clear that the creation of wholly owned subsidiary companies should be halted.
NHS trusts are forming the 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 – making health workers fearful for their jobs and the future of services.
Unite national officer for health Colenzo Jarrett-Thorpe said, “The government’s proposal for a consultation on wholly owned subsidiaries is a step in the right direction finally, but it falls far short from what Unite is calling for.
“We want that 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 a private wholly-owned subsidiary of NHS trusts.”
Jarrett-Thorpe said the new secretary of state for health and social care, Matt Hancock, should enforce a moratorium on the further creation of other wholly owned subsidiaries while the consultation is taking place and for those that are in the process of being created to be paused until it is completed.
Jarrett-Thorpe added, “We also think any review should go further so it investigates outsourcing, procurement and commissioning by NHS trusts in England; and seeks the views of patients, employees, local authorities, and health and social care stakeholders.
“The review should aim to establish a fair and transparent ethical outsourcing procurement and commissioning framework which will avoid the mistakes of the past.”