New figures published by Unison have revealed that NHS trusts are spending millions on outsourcing staff to new arms-length private companies.
Using a Freedom of Information request, the union discovered that NHS trusts are spending “huge amounts” of money on consultants. These companies are advising trusts on setting up wholly owned subsidiaries (WOSs), to which staff are then outsourced.
Unison says that these companies appeal to the NHS because they can reduce their VAT payments and cut the pay and pensions for newly recruited staff, with the health care workers being transferred usually amongst the lowest paid within the NHS, such as porters and cleaners.
Of the 31 trusts approached, 22 complied with the Freedom of Information request and the amount spent by just 15 of them is already in excess of £3.2m.
The union claims that the money spent on transferring staff to date could have paid the annual salary of around 200 extra hospital cleaners.
Sara Gorton, Unison’s head of health, said: “The amount of public money being frittered away on transferring NHS staff to private companies is a disgrace, especially at a time when there’s such a huge squeeze on resources.”
She warned that WOS are creating a two-tier workforce, with new staff likely to be far worse off in terms of pay and pensions.
“There is also no evidence that these new companies improve efficiency or productivity,” she added.
However, NHS Providers has argued that the union’s claims are misleading, with many WOS being established as a means to avoid outsourcing to the private sector.
Chris Hopson, chief executive of NHS Providers, said: “Unison’s claims are inaccurate and misleading. WOSs have been operating entirely without controversy in the NHS for many years. They are set up for many reasons which vary depending on local circumstance and need.”
He explained that WOSs are not being set up solely to avoid tax or cut staff pay, with the terms and conditions of existing staff being protected.
“New staff may join under different conditions – for example, earning an individual or team bonus – but this enables trusts to attract people with scarce and valuable skills who would otherwise stay in the private sector and be unwilling to work for the NHS,” he added.
Hopson did acknowledge that WOSs can bring some tax advantages, but argued: “Private health companies can benefit from VAT exemptions in areas like pharmacy and NHS trusts can’t – an unfair advantage trusts have highlighted for years.
“Unison argues that trusts need to consider the potential consequences of setting up these companies. Trust leaders agree. They take appropriate professional advice to ensure that they are considering all the options, risks and benefits, and that the process is well managed.
“They are rightly required to ensure that the cost of any professional advice is proportionate, appropriate and value for money.”
Source: National Health Executive