I am writing today to Jeremy Hunt demanding the Government blocks the creation of wholly-owned subsidiary companies by NHS trusts, and undertakes a full review of the guidance on the relevant tax requirements of NHS trusts and foundation trusts.
At least eight NHS trusts have set up private companies in recent years and transferred over thousands of facilities staff away from NHS contracts. A recent investigation by Health Service Journal has said that as many as 8,000 posts could be affected in the 16 trusts where plans are being drawn up, on top of 3,000 who have already been moved at eight other employers.
NHS bosses have justified the move by saying it saves them thousands in VAT bills, but unions have said it is being used as a means to drive down terms and conditions, as well as posing a long term threat to the NHS pension.
Now Labour is demanding that the Government intervenes to protect the rights of NHS staff.
I am writing to ask you to block moves by hospital Trusts to establish wholly owned subsidiary companies, and to ask that you undertake a full review of the guidance on tax requirements of NHS trusts and foundation trusts with regard to wholly owned subsidiary companies.
You will be aware of developing moves amongst Trusts to establish subsidiary companies to run a considerable range of services. Trust executives have justified the move by saying it saves them thousands in VAT bills, but trade unions have said it is being used as a means to drive down terms and conditions, as well as posing a long term threat to the NHS pension.
As you know there are widespread concerns about privatisation in the NHS and given the recent debacle over Carillion, without ministerial intervention many fear Trusts are ‘heading down Carillion street’ with little public scrutiny of the implications of what these proposals will mean.
Whilst, initially, the staff involved could retain their right to existing terms and conditions, they will cease to be NHS employees and new staff will not be employed on NHS terms and conditions. The move therefore undermines national pay scales and the NHS pension. It means an unacceptable two tier workforce opening up and Labour believes these jobs should be brought back in house. An investigation by Health Service Journal has said that as many as 8000 posts could be affected in the 16 trusts where plans are being drawn up, on top of 3000 who have already been moved at 8 other employers.
There is also no long term guarantee that the subsidiary company will retain the contract to provide services in the future, so there is a back door route to privatisation of a considerable number of services. It makes no sense whatsoever that NHS trusts are trying to save money by transferring their own staff out of the public sector. It’s a sign of just how stretched the finances of the NHS have become that hospitals are reaching for ever more complicated schemes to try and save money. Its yet another pernicious consequence of the desperate financial squeeze you have imposed upon the NHS.
Ministers so far have shown indifference to real concerns that many NHS staff have about these latest developments but I hope you will intervene and put end to this new outsourcing trend.
I look forward to working with you to protect the rights of these valuable members of the NHS family.
Jonathan Ashworth MP
Shadow Secretary of State for Health