Words: UNISON head of health Sara Gorton and health policy officer Guy Collis
For many hospital bosses, worrying how to balance the books is what keeps them awake in the small hours. NHS managers are facing relentless pressure to keep trusts from falling into deficit.
But the rise of subsidiary companies – or subcos – represents a worrying trend for the thousands of staff affected, and for the future direction of the health service.
The government has committed an extra £20bn for the English NHS, but this is merely a sticking plaster. The money does little to alleviate financial woes triggered by a history of inadequate funding settlements.
With resources stretched to breaking point, private companies – owned by the NHS trusts – are seen as an immediate money saver: trusts are liable for VAT, private firms that supply services to the NHS are not.
But these wholly owned subsidiaries, delivering a range of services including estates and facilities, effectively represent privatisation through the back door, and will contribute to growing staff shortages by leaving employees feeling even more undervalued.
The staff transferred to them are often lower-paid workers, which sends out a message that parts of the healthcare workforce are non-essential; that they’re disposable; that they can be removed from the NHS team without any impact on the quality of service.
They may still be working alongside their colleagues, but in a different uniform. Or they can be on inferior terms and conditions if they’ve been newly recruited by a subco.
Staff might still do NHS work, but they won’t be an NHS worker.
So while it’s easy to understand why managers see attractions to setting up a subco, just because it can be done doesn’t mean that it is the right thing to do.
Being part of the NHS is a source of pride for our dedicated members who work there – and for all the staff. It’s like being part of a close-knit family to which they actively wanted to belong.
Their sense of loyalty runs deep – which is why there’s been such strength of feeling against subcos by employees, shown by the many campaigns UNISON activists have run, under the banner Say No 2 Subcos.
Over the past two years, UNISON members – backed by other unions, the public and local politicians – have been forced to take industrial action at many of the trusts threatening to set up subcos, a number of which have backed down as a result.
But recently plans for new subcos have emerged, including in Frimley in Surrey and Bradford in West Yorkshire.
Following talks at conciliation service ACAS, strike action in Bradford was suspended in August to allow UNISON to put its case to the trust board. Frimley is very much a live dispute, with strike action recently announced for 18 to 20 November (see box).
Apart from creating anxiety among the workforce, subsidiaries are effectively a tax dodge. The Treasury and NHS Improvement have made it clear that seeking to exploit the VAT loophole should not be trusts’ main reason for setting them up.
And the money saved in reduced tax does not benefit the NHS. Instead, what happens is that other parts of the service have to make up the shortfall in receipts owed to the Treasury.
Moreover, such plans go against the prevailing direction of health reform and the latest push to make the NHS the best place to work.
The folly of the market
NHS Improvement issued revised guidance at the end of last year that should, in theory, have ensured that trusts were at least forced to demonstrate some form of staff buy-in or engagement before they were allowed to set up new subsidiaries or alter existing ones.
Healthcare staff hoped that this would put a brake on most subcos, but unfortunately this does not seem to be the case.
Both interpretation and enforcement have proved problematic and the issue as a whole is set to be re-examined soon.
The NHS Long Term Plan recognises the folly of the market measures imposed on the health service. It favours a more collaborative approach to service delivery, with the onus on the NHS working as a series of local systems rather than a range of providers operating in isolation.
The use of subcos undermines this, as trusts look to cream off tax advantages at the expense of the wider NHS.
The ongoing trend of trusts using subsidiary companies to bail themselves out of financial holes cannot be permitted to continue. NHS Improvement must improve its scrutiny of trust plans, and intervene to protect the ability of the NHS to retain its workforce.
We need branches to be alert to any sounds suggesting their trust is considering setting up a subco
In spring 2018, UNISON research showing that NHS trusts across England were spending millions of pounds outsourcing staff to such arms-length private companies.
A Freedom of Information request revealed that NHS trusts are shelling-out huge amounts of money on consultants. Just 15 of the 22 NHS trusts that complied with the request spent more than £3.2m between them.
Clatterbridge Cancer Centre in Birkenhead topped the list, spending more than £661,000 setting up a subco.
The Royal Free London and Gloucestershire Hospitals trusts had both already spent a minimum of £400,000 setting up subsidiaries. Airedale trust in Yorkshire had spent an estimated £343,000 outsourcing staff.
To put some perspective on those amounts, the £3m spent up to then on transferring staff could have paid the annual salary of around 200 extra hospital cleaners.
The NHS wants to be a model 21st century employer. The subco question will be a major factor deciding whether that vision ever becomes a reality – if healthcare staff continue to feel under threat and undervalued, it will never be achieved.
UNISON has had successes against subco plans, but that is always made easier if we can get in early to a situation and explain to staff – and board members – what such plans can mean.
So we need branches to be alert to any sounds suggesting their trust is considering setting up a subco.
Meeting the subco challenge in Frimley
Frimley Health NHS Foundation Trust is the fourth largest trust in the country. It announced in April that it was going to create a wholly owned subsidiary.
And that would probably be the largest subco in the country – 1,000 staff providing cleaning, catering, security, portering, estates and other facilities management services would be transferred out of the NHS and into this new private company.
This was going to happen in October, but successful UNISON campaigning means it has been rescheduled for February 2020 at the earliest.
The union got organised around the issue. The branch and regional organisers found a number of new reps, helping to create a high-profile campaign in the workplace, with posters, meetings and an organising committee.
Regional organiser Kieran Pearson reports that they held a series of demos at the three main hospital sites in August and September, with hundreds of members attending.
“We’ve recruited like mad since the wholly owned subsidiary was announced in April,” he says. “The branch has grown by over 300 members since then.
“They’ve also won the region’s campaign of the year award.”
A consultative ballot held in August and September produced a 70% turnout, with 99% in favour of strike action. The formal ballot was even better – a 72% turnout, with 99% in favour of action.
And since the trust has so far refused to change its plans, staff feel that industrial action is their only option.
To that end, strike action will take place at all three hospital sites – Wexham Park and Heatherwood hospitals in Berkshire, and Frimley Park in Surrey – from 7am on Monday 18 November to 6.59am on Wednesday 20 November.