NHS Finance

20.03.18

Providers assure organisations that WOS are not form of backdoor privatisation

Suggestions that wholly owned subsidiaries (WOS) are a means to backdoor privatisation are “inaccurate and misleading,” according to NHS Providers.

A new report by NHS Providers argues that they are actually a “key tool” for NHS trusts, and enable them to “respond effectively to a range of challenges.”

According to the report, trusts have been setting up WOS since 2010, and they have been operating without controversy.

Yet, more recently, they have been under fire for being used to avoid VAT or for backdoor privatisation.

The report argues that the creation of a WOS is actually an alternative to outsourcing services to the private sector and that 100% of its ownership remains with the NHS.

In response to the concerns about VAT avoidance, it says that NHS trusts have long argued that in key areas VAT rules put them at a disadvantage compared to private organisations doing similar activities.

It says that savings made through the use of a WOS can be reinvested into frontline care, which is “very different” to establishing a WOS primarily to make VAT savings.

There have also been concerns that WOS may be created in order to pay a lower wage to staff, but NHS Providers says that existing staff that are transferred retain their employment rights, and although new staff may be employed under different conditions, it often provides flexibility on pay and pensions, which is attractive to staff who may not otherwise be willing to work in the NHS.

In addition, it says that WOS have benefitted the NHS in areas such as estates management, outpatient pharmacy services and developing new ways of delivering care for patients, as well as improving services for patients, and value for money.

Saffron Cordery, deputy chief executive of NHS Providers, explained: “It is important that people understand why NHS trusts are turning to wholly owned subsidiaries, and to address some of the misleading and inaccurate arguments that have been made over the last few weeks.

“Wholly owned subsidiaries have been around in the NHS for a long time.They are set up for many reasons which vary depending on local circumstances and needs.

“But trust leaders are clear they have become a key tool to deliver the current strategic requirements expected of them.

“And as our report shows, they have a record of delivering practical benefits for trusts, staff and patients.”

Top image: Peter Byrne PA Wire

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