Attacks on wholly owned subsidiaries are misleading

16 April 2018

 

UNISON has published new figures based on Freedom of Information (FOI) requests and argues that NHS trusts are spending millions on outsourcing staff to wholly-owned subsidiaries (WOS).

The union argues that wholly-owned subsidiaries can reduce their VAT payments, and cut pay and pensions for any new staff recruited.

 

Responding to criticisms of NHS wholly owned subsidiaries, the chief executive of NHS Providers, Chris Hopson, said:

"Unison’s claims are inaccurate and misleading. 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.

"They are not private companies, they are wholly owned by the NHS trusts that set them up. They are not outsourcing, they are being set up in many cases to avoid outsourcing to the private sector.

Wholly-owned subsidiaries are not being set up solely to avoid tax or cut staff pay. Terms and conditions of existing staff are protected.

"They are not being set up solely to avoid tax or cut staff pay. Terms and conditions of existing staff are protected. 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. Unions are recognised and there is extensive consultation with staff.

"Setting up a wholly owned subsidiary can bring some tax advantages but trusts are clear that they can not use them solely for VAT gains, in line with official guidance. Private health companies can benefit from VAT exemptions in areas like pharmacy and NHS trusts can’t – an unfair advantage trusts have highlighted for years.

"Unison argues that trusts need to consider the potential consequences of setting up these companies. Trust leaders agree. 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."

 

Read our recent briefing on wholly-owned subsidiaries in the NHS

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