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Unions want NHS trusts to jettison any plans to set up private subsidiaries

Wholly-owned NHS subsidiary companies harm staff's pay and conditions, unions claim

Wholly-owned NHS subsidiary companies harm staff's pay and conditions, unions claim


Picture: iStock

Health unions have called on NHS trusts to abandon any plans they have to set up wholly-owned subsidiary companies.

NHS Improvement (NHSI) has already asked NHS trusts to ‘pause’ their plans to establish new companies while it undertakes a consultation about how they are set up. The consultation proposes trusts should be required to submit business cases to NHSI before setting up subsidiary companies.

These subsidiary organisations have lower VAT liability and enable NHS employers to sit outside Agenda for Change – hence the unions' opposition to them.

The practice of NHS trusts transferring staff to these private employers was condemned by nurses at RCN congress this year.


Sara Gorton. 
Picture: Barney Newman

'One-team approach is in jeopardy'

Unison head of health Sara Gorton said dividing staff between trusts and subsidiaries would have an effect on patient outcomes: ‘Care and treatment relies on all staff working as one team. When a workforce is divided, this one-team approach is jeopardised.

‘NHS Improvement's decision to halt the use of subsidiary companies was a step in the right direction. But all trusts should be bound by this and it needs to be made permanent.’

Ms Gorton argued there was no evidence private companies improved efficiency or productivity but instead they were being established to reduce trusts' VAT payments as well as the pay and pensions of new staff.

'Privatisation by stealth'

Unite national officer for health Colenzo Jarrett-Thorpe is also critical of subsidiary companies, stating his union would be making a ‘vigorous and well-argued’ response to the consultation.

‘We believe that plans for wholly-owned subsidiaries should be abandoned as they are not the best way to maintain patient services and jobs. It is another avenue being used to privatise the NHS by stealth.’


Colenzo Jarrett-Thorpe. 
Picture: Neil O'Connor

The ability of NHS foundation trusts to create subsidiary companies was established by the National Health Service Act 2006, with these companies being set up to deliver services such as healthcare and estates management.

NHS trusts may only establish subsidiaries for income generation.

'Legitimate role to play'

NHS Providers, which represents all English NHS trusts, said there had been many misleading claims about the use of subsidiary companies, stating it was time to recognise their legitimate role in the NHS.

The NHS Improvement guidance on how subsidiary companies are reported and approved is due to be published in December this year. The consultation closes on 16 November. 


Further information

NHS Improvement: Consultation on our proposed extension to the review of subsidiaries


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