Trusts across England are spending millions on outsourcing staff to new arms-length private companies, shows data obtained by a leading health Union.
A Freedom of Information request by Unison shows trusts are spending large sums on consultants to advise them on setting up wholly owned subsidiaries and moving staff across. By setting up these new arms-length firms, NHS organisations can cut their VAT bills.
“The amount of public money being frittered away on transferring NHS staff to private companies is a disgrace”
While staff who transfer to the new companies retain their terms and conditions, the set-ups mean trust can also save money by reducing the pay and pensions of any newcomers.
The arrangements are generally around support services such as cleaning and portering. However, there are examples where clinical staff have been involved – as previously reported by Nursing Times.
Unison’s research – published to coincide with the start of the union’s annual health conference in Brighton – saw the union approach 31 NHS trusts.
Data from the 21 that responded shows many have paid hundreds of thousands to consultants for advice on establishing subsidiary firms. The amount spent by 15 trusts willing disclose spending was more than £3.2m.
“They are not private companies, they are wholly owned by the NHS trusts”
Unison fears such outsourcing arrangements risk creating a “two-tier workforce” and the Royal College of Nursing has expressed similar concerns.
One trust in the South West has moved clinical staff from a day surgery service into a new subsidiary company, according to the RCN, and there are fears more could follow suit with potentially less favourable terms and conditions for nurses and others.
“It is something that is growing,” the RCN’s regional director for the South West told Nursing Times in an exclusive interview last month.
“The RCN’s position is we don’t support fragmentation of the NHS so it is something we want to watch very carefully,” said Susan Masters.
Unison’s head of health Sara Gorton said staff were “likely to be far worse off” under the new arrangements.
“The amount of public money being frittered away on transferring NHS staff to private companies is a disgrace, especially at a time when there’s such a huge squeeze on resources,” she said.
“These wholly owned subsidiaries are creating a two-tier workforce where new staff are likely to be far worse off in terms of their pay and pensions,” she said. “There is also no evidence that these new companies improve efficiency or productivity.
sara gorton unison
“Porters, cleaners and other staff chose to be part of the NHS team, not to be contracted out and treated like second-class employees,” added Ms Gorton.
The issue has attracted criticism from Labour, which claimed the creation of wholly owned subsidiaries amounted to “back door privatisation”.
“It makes no sense whatsoever that NHS trusts are spending so much money transferring their own staff out of the public sector,” said Labour shadow heath secretary Jonathan Ashworth.
“This transfer of staff to effectively private companies amounts to a back door privatisation and creates a two tier workforce with fair pay and conditions undermined,” he said. “Ministers should block this process now.”
However, NHS providers have hit back saying wholly owned subsidiaries have been part of the NHS for many years without it being an issue.
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“Wholly owned subsidiaries have been operating entirely without controversy in the NHS for many years. They are set up for many reasons which vary depending on local circumstance and need,” said chief executive of the NHS Providers organisation, Chris Hopson.
“They are not private companies, they are wholly owned by the NHS trusts that set them up,” he said. “They are not outsourcing, they are being set up in many cases to avoid outsourcing to the private sector.”
The firms were not simply being set up to “avoid tax or cut staff pay”, added Ms Hopson.
“Terms and conditions of existing staff are protected,” he said. “New staff may join under different conditions – for example, earning an individual or team bonus – but this enables trusts to attract people with scarce and valuable skills who would otherwise stay in the private sector and be unwilling to work for the NHS.”
He said unions were included in discussion around setting up such companies and there was extensive consultation with staff.
Meanwhile, he said it was only right that trusts sought professional advice on establishing wholly owned subsidiaries.
“Unison argues that trusts need to consider the potential consequences of setting up these companies. Trust leaders agree,” he said.
He added: “They take appropriate professional advice to ensure that they are considering all the options, risks and benefits, and that the process is well managed. They are rightly required to ensure that the cost of any professional advice is proportionate, appropriate and value for money.”
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