The NHS faces a ‘Pandora’s Box of Carillion-type meltdowns’, if trusts continue to set up subsidiaries to avoid paying tax, Unite, the country’s largest union, warned today (Tuesday 16 January).
Unite has written to the health and social care secretary Jeremy Hunt calling for an immediate moratorium on further private limited companies being established by NHS trusts in England.
Unite national officer for health Colenzo Jarrett-Thorpe said: “We believe this could be creating a Pandora’s Box of dozens of Carillion- type meltdowns among NHS trusts in England. This would have a detrimental effect on key health services and the employees that provide these services.”
The union is concerned that NHS trusts are forming wholly owned subsidiary companies so that 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.
Unite, which has 100,000 members in the health service, wants Her Majesty’s Revenue and Customs (HMRC) to close this loophole. The union understands that there are at least a dozen such subsidiaries in England.
In the letter to Jeremy Hunt, Colenzo Jarrett-Thorpe said: “We have been advised of situations from Yeovil to Gateshead that the purpose for NHS trusts establishing a wholly owned subsidiary company was so that it could register for VAT exemption and thereby compete on a level playing field with commercial competitors.”
Unite said that the creation of these private limited companies has had a significant impact upon service delivery and can be considered unsafe for patient care. They also seek to create a multi-tier NHS workforce where new employees with these subsidiaries are paid less than those on the Agenda for Change pay and conditions.
The letter continues: “There have been several examples from Circle to Care UK and now the collapse of Carillion of how the agenda of outsourcing has led to the fragmentation of NHS services, serious breakdowns for services to patients and the quality of care, to the cost of patients, staff, NHS services and, ultimately, the taxpayer.
“The increasing tendency of NHS trusts to create wholly-owned subsidiaries in the form of private limited companies could lead to a flood of dozens of Carillion-type situations across England, if serious action is not taken by the government immediately.”
Unite has outlined a three-point plan that ministers should implement urgently:
- The government to compel HMRC to close this tax loophole, so NHS trusts are not forced to consider outsourcing NHS services.
- The health secretary and social care to institute an immediate moratorium on the further establishment of private limited companies by NHS trusts in England, even when organisations have currently started the process.
- A review of procurement and commissioning by NHS trusts in England - seeking the views of patients, employees, local authorities, stakeholders and the public - to establish a fair, transparent and ethical procurement and commissioning framework.
Notes to editors:
Over the past five years there has been more and more for profit companies win contracts to run NHS services or facilities. This has risen from 34 per cent of the total value of contracts awarded in 2015/16 to 43 per cent of the total value awarded in 2017/16 which amounted to £3.1 billion.
For more information please contact Unite senior communications officer Shaun Noble on 020 3371 2060 or 07768 693940. Unite press office is on: 020 3371 2065. Email: email@example.com
- Unite is Britain and Ireland’s largest trade union with over 1.4 million members working across all sectors of the economy. The general secretary is Len McCluskey.