Debate: Limited companies

This resolution passed 

Under the Health and Social Care Act 2003 (Parliament, 2003) NHS Foundation Trusts became legally defined as independent public benefit corporations, enabling them to be free of some central government controls. One freedom is to create subsidiary companies to provide patient or support services.

As a result, a number of NHS Trusts are reducing their running costs by exploring new ways of working for their estates and facilities departments. This involves setting up a limited liability company. A new private company can be used to provide services to other public service organisations in the region, including local authorities and NHS Trusts.

The motivation for setting up such companies is to help NHS Trusts meet their savings target, by introducing new arrangements that do not employ staff under Agenda for Change (AFC) terms and conditions, do not provide access for all staff to the NHS pension scheme and also benefit from the operation of VAT within the new company. In essence, the former NHS services will continue in some form but will now be ‘off the books’.

A staff member whose employment is transferred to the new company will no longer be an NHS employee. Even if their current terms and conditions and working arrangements are protected by the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) (Parliament, 2006), this may only have a short-term effect.

As a result of staff being transferred to new subsidiary companies, more ‘NHS services’ are being delivered by private companies – albeit ones set up by an NHS body. This means that, for example, cleaning, procurement, portering, parking and patient transfers could be adversely affected.

NHS bodies are spending time and energy on setting up these companies to save costs, and to avoid or diminish the impact of VAT when HMRC has stated that VAT will come out of public expenditure.

Employees and their trade unions are concerned that these changes are a move towards increased privatisation and open the door to changing NHS terms and conditions by reducing wages and pensions for thousands of NHS employees. This will inevitably drive down the standard of services.

In Wales, NHS services are provided by seven geographical Health Boards and two specialist Trusts. The NHS Wales Shared Services Partnership (NWSSP) provides procurement services, ranging from pharmaceuticals and food through to utilities and medical consumables, and provides procurement expertise in specialist project areas (NHS Wales Shared Services Partnership, 2008).

The Welsh Government is not encouraging the outsourcing of services on a national basis, nor the conversion into limited companies as described in this Matter for Discussion. Nevertheless, there are examples of moving NHS services into the private sector within NHS Wales. For example, in the Betsi Cadwaladr University Health Board a consultation is underway with an option to move dialysis services into the private sector. 

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