NHS wholly-owned subsidiaries – difference of approach between Scotland and England

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Jackie Williams highlights the differences and similarities the NHS faces on privatisation north and south of the border

The dangers inherent in NHS trusts in England setting up wholly owned subsidiaries (WOSs) – in a bid to avoid tax – are increasingly apparent in terms of threats to patient services and jobs. Of this, we are rightly critical. However, how does the situation in England compare to other devolved nations, such as Scotland? While it would be easy to assess the situation in Scotland as being considerably different and less threatening to patients and jobs when compared with the rapid privatisation taking place in England, this is too simplistic. So, while the pace towards privatisation in England is fast and furious, in Scotland there is undoubtedly damage being done to the NHS, with the pace more akin to slow and steady.

There are major problems in the NHS in Scotland. These include a major PFI/NPD newly-built children’s hospital in Edinburgh that is lying empty, despite the NHS forking out £1.4m in repayments every month, an increased use of private patient beds when there is a shortage of others, outsourced services, patients fit for discharge that are forced to remain in hospital through cuts in community social care and adaptation provision and consistently missed waiting time targets for operations. An Audit Scotland report warned the NHS in Scotland is ‘not in a financially sustainable position’, with NHS boards ‘struggling to break even, relying increasingly on Scottish government loans and one-off savings’.

Workers in the NHS are also facing issues around recruitment and retention and a squeeze on pay. Indeed, Unite is presently involved in indefinite strike action by low paid pharmaceutical support workers at Tayside NHS. Yes, there are employee directors in Scotland as part of a ‘partnership’ approach. They perform a role in presenting the unions’ case. But this is increasingly under strain in several NHS areas in Scotland and there is growing demand from union reps and members for a return to collective bargaining.

In comparison, in England the privatisation process continues apace, despite the health and social care secretary, Matt Hancock, promising MPs in January 2019 that: ‘There is no privatisation of the NHS on my watch’. The facts undermine Hancock’s credibility here. Unite believes, as do many others, the prime ideology behind the NHS privatisation agenda is designed to drive down the pay and employment conditions of dedicated NHS staff.

According to its annual report, the Department of Health and Social Care (DHSC) handed a record total of £9.2bn last year to private providers such as Virgin Care and the Priory mental health group. That’s a 14% increase from the £8.1bn that went to profit-driven healthcare companies in 2014-15. More than 30 WOSs have been set up in England by 2018 – and to discover the impact of this worrying trend Unite, with its 100,000 health service members, is commissioning a report this autumn into the use of WOSs by trusts in England. We will pinpoint the cost implications and the potential colossal waste of money generated by the creation of an extra management layer.

We believe WOSs could be creating dozens of Carillion-type meltdowns among NHS trusts in England, with potentially detrimental effects on key health services and the employees that provide them. Unite is concerned trusts are forming WOSs so 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. However, the battle over WOSs is not all one sided as trusts in Leicester, Mid York, Leeds, North Bristol, and Tees Esk and Wear Valley have abandoned this flawed model. In each instance, local campaigns brought together staff and the community to declare that the NHS means an NHS for all and calling out WOSs for what they are – backdoor NHS privatisation masquerading as an exercise in financial efficiency. However, the struggle continues with the latest battleground at Frimley Health NHS Foundation Trust where 1,000 NHS staff could face being transferred to a WOS. Unite has repeatedly warned of the threat that trust bosses will hive off services, such as housekeeping, estates’ management, equipment maintenance, catering, procurement and security to a WOS.

Last year, the DHSC took steps to ensure that if a trust wants to set up a WOS it has to get approval and sanction from the health department via NHS Improvement (NHSi). The purpose is to ensure that a trust does not place itself at financial risk for setting up a wholly owned subsidiary. Unite welcomed this statement, but believes the government should go further. We want the HMRC to close the tax loophole as a matter of urgency. Though NHS providers promoted creating WOSs, it’s not the answer to years of chronic NHS underfunding and parlous finances.

There is strong evidence where WOSs have been set up that once staff are transferred to them, new employees are not given access to the NHS pension scheme and are offered inferior Agenda for Change terms and conditions. This is where these companies seek to make savings by short changing hard working staff and seeking to be more ‘commercial’ and ‘sustainable’ NHS companies.

WOSs are the forefront of a much wider policy struggle over the future direction of the NHS and the disaster of the Health and Social Care Act 2012 which has led to health in England being further privatised and fragmented. While it is clear that the pace and the level of the attack on the NHS between Scotland and England is different, we should not deflect from the damage being caused to this most important institution by governments on both sides of the border. Therefore, we must call time on NHS privatisation where it is.

Jackie Williams is the national officer for health for the Unite union.

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