Karin Smyth: Do away with tax benefits for wholly owned companies

With workforce and money still the key challenges facing the NHS, anything seen to help address these issues receives a broad welcome. Finding new avenues that ostensibly maximise value for taxpayers’ money, improve efficiency and reduce waste are the watchword, alongside training, inspiring and retaining a well balanced workforce.

It is through this prism that we should view the sudden outbreak of around 30 trusts using wholly owned companies – and judge their merits. The off-the-peg justification will be familiar to anyone with a cursory interest in NHS efficiency savings, namely improvements in “back office” services, especially in estates and facilities management.

There is, of course, another benefit – the fact that these changes also bring huge tax benefits to the trust. It stretches credulity that 30 trusts all decided to improve these services at more or less the same time for any other reason. It smacks of collusion.

The list of “benefits” claimed by trusts correlate to a loss of benefits for the workforce, as staff in these companies are not employed on NHS terms and conditions. Worse, these changes drive a further fragmentation of the NHS, and blithely ignore the supposed strategic drive towards partnership and cooperation across systems.

Cooperation v/s competition

Where collaboration should be growing, we instead see each trust is going its own way. If there is cooperation, how can there be competition on different terms and conditions for staff, especially the lower paid staff in a city of high employment?

After being approached by Unsion, I urged North Bristol Trust Board not to risk fracturing our own, sometimes fragile, health economy. They listened, and rejected the wholly owned company approach. Other trusts are not listening, which is cause for real alarm.

NHS Improvement – whose permission appears to have been given for these changes – should not be encouraging the recreation of a two tier workforce, especially at a time of such overwhelming concern about the availability of a skilled and available health and social care workforce

Opposition has been patchy, despite proposals often being met with a robust response locally from trade unions. Ministers and even the usually reliable NHS Providers are defending this development, claiming that it brings greater funding into the trusts; that staff actually welcome the “flexibilities” around terms and conditions; and that better services will result.

They perpetuate the myth, and repeat the lie, that this is about service efficiencies, when the truth is clear as day – it’s the tax efficiencies that trusts are looking for.

And this truth is also highlighted by the trust’s conduct. If these changes were driven by service improvement and the appetite of staff, boards would have identified the need for improvement in these services and spoken to their staff about it. Yet, in almost every case, the changes have been progressed in secret, with no staff engagement or consultation and with no documents being made public.

Worse still, we are now in an uncontrollable hiving off of NHS assets to these new companies, with no discernible safeguards to prevent these assets, or indeed the whole company, being sold off to anyone else. These companies are one step away from moving outside the NHS to any provider. No assurances have been forthcoming as to how this could be stopped.

A decent first step to remedying this shambles would be an immediate closure of the loophole that allows the tax benefits. The government, as well as sorting out the money, needs to give greater clarity on its position, and answer the raft of questions around governance, future sale and staffing.

Meanwhile, NHS Improvement – whose permission appears to have been given for these changes – should not be encouraging the recreation of a two tier workforce, especially at a time of such overwhelming concern about the availability of a skilled and available health and social care workforce. With Brexit looming, this is ever more important.