- Wholly owned subsidiaries are an organisational and governance form that NHS providers can legally adopt to manage part of their organisation. They are used in the NHS for different purposes to deliver a variety of services – from catering to outpatient pharmacies and estates management.
- In many cases wholly owned subsidiaries are being used to put into operation national initiatives such as the new care models set out in the Five year forward view, and responding to recommendations in the Carter Review on productivity in NHS hospitals by sharing services and back office functions.
- Wholly owned subsidiaries deliver a variety of benefits to the NHS. In many cases they are an alternative to outsourcing services to the private sector; it would be inaccurate and misleading to say that they are being used to avoid VAT or as a backdoor to privatisation.
- Wholly owned subsidiaries enable trusts to reinvest savings back into the NHS to improve patient care, income which would otherwise flow to the private sector.
- Wholly owned subsidiaries also offer a range of employment and pay flexibilities for staff by offering a different mix of salary and pension benefits.
- Where a transfer of NHS staff to the subsidiary is required, unions are recognised in the negotiations and staff are extensively consulted with, ensuring that any transition is smooth and has limited impact. Terms and conditions of employment including continuity of service are protected in accordance with TUPE legislation.
- Creating a wholly owned subsidiary enables trusts to offer the flexible employment needed to attract staff who would otherwise be unwilling to work in the NHS. This is particularly the case for harder to recruit staff groups such as estates and facilities management where the NHS is competing with private sector companies.