NHS Trusts: Subsidiary Companies

Oral Answers to Questions — Health – in the House of Commons at 12:00 am on 14 November 2017.

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Photo of John Grogan John Grogan Labour, Keighley 12:00, 14 November 2017

How many subsidiary companies have been set up by NHS trusts.

Photo of Philip Dunne Philip Dunne The Minister of State, Department of Health

Local NHS organisations are responsible for deciding the most appropriate structures they need to deliver services to their patients within available resources. Commissioners and regulators are responsible for ensuring that NHS providers act in the best interests of patients and taxpayers. A theme of the 2015 review into performance variability across NHS hospitals, undertaken by the noble Lord Carter of Coles, sought to drive efficiency through sharing administrative functions across NHS bodies in an area. A number of trusts are creating the right structures to do so. NHS Improvement is aware of 39 subsidiaries consolidated within the accounts of foundation trusts as of 31 March 2017.

Photo of John Grogan John Grogan Labour, Keighley

Does the Minister share my concern that NHS trusts in Yorkshire are now lining up to follow the example of Airedale NHS Foundation Trust, which recently, behind closed doors and as part of a VAT scam, set up a subsidiary company to run many of its activities, which will not only cost the Treasury in lost tax receipts, but mean that new staff, such as hospital porters, will no longer be on NHS terms and conditions?

Photo of Philip Dunne Philip Dunne The Minister of State, Department of Health

I can reassure the hon. Gentleman that we have no interest in allowing NHS trusts to avoid their tax responsibilities. Guidance was sent to all trusts in September to ensure that any TUPE transfers of staff would remain subject to NHS pension rules and should not be done for tax avoidance purposes.

Photo of Andrew Bridgen Andrew Bridgen Conservative, North West Leicestershire

What role does the Minister see for the private and voluntary sectors in the provision of NHS services and delivery in the future?

Photo of Philip Dunne Philip Dunne The Minister of State, Department of Health

There has been a continuing involvement of private provision of health services since the very origins of the NHS, when GP partnerships came in, as private businesses, to provide their services. Of course, competitive tendering to NHS contracts was introduced by the last Labour Government, and the rate of private provision under that Government grew faster than it has under this Government. According to the last figures, 7.7% of services were provided by the independent sector.

Photo of Karin Smyth Karin Smyth Labour, Bristol South

Where a foundation trust or other NHS provider sets up a wholly owned subsidiary within the public sector, would the Minister expect to see all those papers in the public domain?

Photo of Philip Dunne Philip Dunne The Minister of State, Department of Health

As I said to John Grogan, the trust, which would consolidate subsidiaries in its accounts, would publish the accounts of subsidiaries as part of its consolidated accounts each year.

Photo of Justin Madders Justin Madders Shadow Minister (Health)

On Sunday, the Secretary of State said that

“good public services are the moral purpose of a strong capitalist economy”, yet trusts are so strapped for cash that they are creating private companies to get around VAT laws. Not only does this take money away from the Exchequer, meaning that other parts of the NHS are effectively subsidising these trusts, but it also removes vital protections for staff, who will find that they no longer work for our national health service. Be in no doubt: this is another step down the road of privatisation. Will the Minister set out, therefore, what protections are in place to prevent any of these companies from being sold off in the future to the highest bidder?

Photo of Philip Dunne Philip Dunne The Minister of State, Department of Health

I am afraid that the hon. Gentleman, for whom I have considerable respect, is trying, yet again, the tired old approach of weaponising the NHS by alleging privatisation—seeing privatisation fairies where there are not any. This is about responding to the review of Lord Carter—one of his hon. Friends in the other place, I remind him—into driving efficiency through the NHS, which I know he supports, and about finding the right structures to allow, for example, the back offices of different NHS bodies in an area to be combined. That requires a structure, and a number of foundation trusts are setting up subsidiaries to provide those services to each other.