Subsidiary companies are failing to generate new business or income for the NHS, says a report released today (Wednesday) by UNISON.
The findings explode the myth that the companies – known as subcos and set up to bring in extra revenue – are winning external contracts to drive profit, the union says.
The report, by Trinava Consulting, found most of the work done by subcos comes from the NHS trusts that set them up and much of the profit is generated from squeezing staff pensions.
UNISON says the growth of subcos has been an increasingly controversial feature of the NHS landscape, with trusts using them a mechanism to make savings by driving down pay and pensions for new staff.
In September last year, the government announced a policy change* on subcos. Ministers said any future transfer of NHS workers into subsidiary companies would be approved only where there was clear union support for the move and NHS conditions were protected.
Days after the announcement, three trusts in Dorset abandoned plans to shift 1,700 mainly low-paid support workers to a subco.
UNISON wants to see staff at existing subcos brought back into the NHS, where they will be guaranteed access to a better pension and other benefits, such as enhanced development opportunities.
UNISON general secretary Christina McAnea said: “This report explodes the myth subcos offer anything other than a way to deny staff the same pay and conditions as NHS workers.
“Any profit is courtesy of contracts with the trusts that originally set them up and claims of efficiency are simply down to a VAT loophole that’s likely to be closed anyway.
“Farming staff out to subsidiary firms undermines the principle of a single NHS workforce and creates unnecessary anxiety for employees.
“The NHS relies on support staff to keep hospitals clean, safe and running efficiently. They deserve to be treated like other health workers.
“Subcos have never been the right way to deliver health services and it’s time to return staff stuck in subcos back into the NHS.”
Report author Vivek Kotecha said: “Despite running for many years, few subcos have won any significant external customers. Their profits come mainly through skirting around tax and employment rules.
“Likely changes to VAT rules and restrictions on altering workers’ terms and conditions put the future of these profits in doubt and there’s no reason to encourage NHS trusts to set new ones up.”
Notes to editors:
– Subcos are companies owned by trusts but set up at arms-length as non-NHS bodies. NHS trusts set up subcos to allow them to outsource support services and their staff, like those in facilities or administration.
– *The guidance states: “Over the past year, concerns have been raised about subsidiary models that involve transferring NHS staff into new organisations. Unions, particularly Unison, have been clear that this risks undermining the principle of a single NHS workforce and creates unnecessary anxiety for staff. We have listened carefully to those concerns and the secretary of state has been clear that we must take action.”
– In its New deal for working people, Labour promised to “bring about the biggest wave of insourcing of public services in a generation.” The Labour manifesto said the new deal would be implemented in full.
– The report, Assessing the finances of NHS subsidiary companies, can be found here and was funded by UNISON’s Campaign Fund.
– UNISON is the UK’s largest union with more than 1.3 million members providing public services in education, local government, the NHS, police service and energy. They are employed in the public, voluntary and private sectors.
Media contacts:
Dan Ashley M: 07508 080349 E: d.ashley@unison.co.uk
Anthony Barnes M: 07834 864794 E: a.barnes@unison.co.uk
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