By Andy Ford, NHS Union rep
A rash of strikes across the NHS this summer has succeeded in pushing back against the Tory government’s latest backdoor privatisation – Wholly Owned Subsidiaries (WOS) also known as Sub-Companies (Subcos)
Wholly-owned subsidiaries are companies set up by NHS Trusts to run support services such as estates and maintenance, security and catering. The subsidiary company has just one owner, the NHS Trust, but for tax and legal purposes is a separate entity. This allows the Trust to take advantage of an obscure tax benefit granted to private companies working in the NHS, typically in a PFI (Private Finance Initiative). The loophole has allowed private companies undertaking work for the NHS to claim back the VAT on the goods and services they buy, in order to execute the NHS contract, but without charging VAT on the services they provide. This can amount to a benefit of between £10 and £20 million pounds per contract.
Originally set up as a more-or-less hidden subsidy to PFI contractors, in the last few years management consultants such as KPMG and Price Waterhouse Coopers have been hawking these schemes (for a fee of course) to NHS Trusts up and down the land as a way to bridge deficits – albeit by means of bit of tax avoidance. It amounts to the government avoiding tax payable to itself! It is an absurdity, but welcome to Tory spiv Britain.
Over 40 Trusts have been looking at such schemes, and a few have gone ahead over recent years, with workers TUPE-ing across to the new entity. Under TUPE rules existing NHS staff transfer to the WOS with their NHS terms intact, although there are no guarantees for the future. Even under TUPE, the ‘new employer’ can vary the terms of employment after only a year for supposedly valid “economic, technical, or other” (ETO) reasons. Most employers can manufacture an ETO reason if they really want to, but probably in these NHS Subcos it will be too much trouble.
Privatisations undermine NHS workers’ conditions
However, the real threat comes when new employees start – they will not come in on NHS terms and conditions, and it here where the actual savings come in. With no NHS pension, no NHS pay scales, and on non-NHS terms of employment, the Subcos can really drive down wages in the NHS. This is another saving for the cash-strapped Trusts, in addition to the tax scam.
But NHS workers have had enough. A heroic strike in Wigan, Wrightington and Leigh against a Subco intended to hive off nearly 900 catering, estates and maintenance and portering staff to the newly created “WWL Solutions Ltd” ended with the Trust agreeing not to proceed with the new company. This was after months of saying that there was simply no alternative.
Similar plans were defeated in Mid-Yorkshire (Wakefield), the Tyne Tees and Esk Valley Trust and in Leicester, after the mere threat of strike action. Unison have been playing a good role in the campaign, although in at least some of these Trusts socialist shop stewards have been to the fore in getting Unison to act. Unite have also been involved, especially when the proposed Subco affects Unite’s traditional areas in engineering and maintenance.
The latest is that NHS-Improvement, who, behind the scenes, are directing the NHS with no democratic accountability or mandate to do so, have issued ‘advice’ that tax avoidance schemes are not the way forward for the NHS. NHS Improvement have the power to remove NHS executives and impose new boards, so this quite a key development.
Despite this, two trusts, in Kent and in York, have said they are planning to proceed with their Subcos in the face of this instruction and against the wishes of their workforce. To their credit Unite have called strike action in both trusts – of 50 members in East Kent (Canterbury and Margate) and 80 members in York.
The Subco strikes over the summer show that the Tories’ anti-union laws are ineffective in the face of a united and organised workforce. Yes, it may be more difficult now to call the big set piece national strikes like we saw in 2011/12, but instead we see smaller but more cohesive strikes on basic employment issues. And the ballot majorities for strike action are noteworthy – 89% for strike action in Wigan, on a 73% turnout. So far, it is a tactic that is working.
October 9, 2018
