NHS: First Step To Back Door Privatisation?

Health trusts which have set up alternative companies to employ NHS support staff have been accused of running a “VAT scam” and using it as a “back door” to privatisation.

The use of the new firms has been condemned by the GMB union, which has tens of thousands of members working as NHS staff. The union termed it “a race to the bottom” in employment standards which amounted to the gradual privatisation of a large swathe of NHS activities and staff.

One of several NHS hospital trusts to set up a “subsidiary organisation” is the Airedale Trust, at Keighley, West Yorkshire. Pete Davies, a GMB regional organiser in Sheffield told Felix Magazine that “alarm bells started to ring at our end” when union representatives reported back about the intentions of the Airedale trust.

He said local Labour MP John Grogan had sent a written question to the Treasury asking what the estimated losses of VAT revenue would be under the scheme “and what the implications for VAT receipts would be in the event that all foundation hospital trusts set up subsidiary companies for facilities management and pharmacy provision.“

No Answer

The MP’s question was addressed to the Chancellor, Philip Hammond, in early September but he is still awaiting a reply. Grogan told the House of Commons that the entire plan was “a VAT scam.” Andrea Leadsom, Leader of the House of Commons, conceded that the move was “concerning.”

The Department of Health is aware of the accusations amid concerns from senior Cabinet figures that the Tories are losing support to Jeremy Corbyn’s Labour on the issue of public services.

“This is not the way to improve our NHS services,” Davies told Felix. “We’ve seen this kind of thing before – it’s the bean-counters spotting a way to save money. But the Trust also clearly sees it as an opportunity to crush terms and conditions for the lowest paid employees.”

Davies said the intentions are “set out in black and white in the Trust’s proposed measures” and amounted to privatisation by stealth. “GMB simply cannot – and will not – accept that for our members or for any future employees. This is a race to the bottom and forcing more public sector workers to go to food banks is not the way to improve NHS services.”

The Airedale Trust wrote to its services staff – including cleaners, parking and patient transfer staff, porters and procurement workers – last week confirming its decision to set up a private firm to run its facilities, estates and purchasing at its hospital in Keighley.

More on The Way

At least two other NHS foundation trusts in Gloucestershire and Tyne and Wear have also set up firms with the intention of taking thousands of workers off the NHS’s books.

Staff members whose employment is transferred to the new firms will no longer be NHS employees, even if their current working conditions have been guaranteed.

New staff employed by the subsidiary firms may be employed on terms and conditions lower than NHS standards, and will no longer be guaranteed NHS pensions.

Philip Hunt, Labour’s health spokesperson in the House of Lords, said the new firms were a “back door” to privatisation and were being watched carefully by other foundation trusts looking for ways to cut their wage bills.

“Trusts will be free to screw down wages and pensions and when the contract has to be renewed there is no guarantee that it won’t go to another private company who can take more extreme measures,” Hunt said.

Gloucestershire Hospitals NHS foundation trust says it is giving “very serious consideration” to setting up a wholly-owned subsidiary that will produce “VAT benefits”.  Deborah Lee, the chief executive, wrote to a Unison union official in recent weeks saying that creating such a firm in November could reduce costs through “VAT flexibilities”.

And Northumberland, Tyne and Wear NHS foundation trust has set up NTW Solutions Ltd, a wholly-owned subsidiary, to transfer assets including 600 employees and leaseholds. A business case for the new company said it would have new pension arrangements for new staff joining the company as well as new terms and conditions.

 

by Bob Graham

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