Commissioning

VAT rebate for voluntary sector NHS providers – Monitor

More support should be available for charities bidding to provide NHS services, Monitor has recommended as part of its Fair Playing Field review.

The recommendations will help the public, private and voluntary sectors to operate more flexibly, and support CCGs to make the most of their new powers.

Guidance could help commissioners determine appropriate levels of reserves and working capital that can be required from providers. Among its 30 recommendations, Monitor has suggested extending access to the NHS Pension Scheme, and says charities should be entitled to the same VAT rebate as their public sector rivals. Under the current tax rules, NHS providers can recover VAT on some non-business supplies that voluntary sector organisations cannot. This is estimated to save perhaps up to 5% of a charity’s cost.

Dr David Bennett, chief executive of Monitor, said: “As the health sector regulator, our fundamental duty is to protect and promote the interests of patients. Our concern in carrying out the Review has been simply to identify any barriers that might be preventing the best providers from meeting patients’ needs.

“Our recommendations have been made with the aim of helping all providers and commissioners work together to improve patient care.

“We found that providers in all sectors – public, private and charitable – experience a range of advantages and disadvantages from the NHS playing field. A key conclusion of our Review is that the extent to which patients get access to the best possible provider is often determined by how commissioners go about their job. As the role of commissioners changes, Monitor will support them to do the best job they can for the people who use the NHS.”

Social Enterprise UK chief executive Peter Holbrook said: “Monitor’s review takes a serious look at whether healthcare markets are fair and working in the interests of patients.”

But he warned: “The proposed changes to the VAT regime may not be as beneficial to social enterprises as they first appear. They will only likely impact upon providers where there’s no competition – perhaps good news for some charities operating in areas of market failure, but most of our members operate in competitive markets.”

Chief executive of the NHS Partners Network, David Worskett, said: “In this well-considered, well-balanced report, Monitor has rightly identified the importance of commissioners of NHS-funded services ensuring the way is open to innovation and new providers.”

Worskett highlighted a “worrying lack of priority” for using a fair playing field to widen patient choice, and stated the independent sector’s mix of clinical services – which only allows them to offer a limited range of procedures – can itself create competitive disadvantages.

Chris Hopson, chief executive of the Foundation Trust Network, welcomed the report, which could give greater long term financial certainty to commissioners, and help providers to plan more effectively.

He added: “We hope Monitor and the Commissioning Board note the clear statement that tariffs should reflect the costs of providing care: the use of the 30% marginal tariff rate in emergency admissions is a very obvious example of where this principle needs to be quickly adopted.”

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