NHS Providers has accused critics of trusts creating wholly owned subsidiary companies as being “inaccurate and misleading” in their arguments. The body, which represents NHS trusts, believes these companies help attract key staff, deliver VAT savings and increase oversight of previously low priority back office services. It has published a briefing note today saying trust leaders “are clear that wholly owned subsidiaries are a key tool” to deliver current strategic requirements.
Nonsense. The reasons why dozens of Trusts moved to set up wholly owned subsidiary companies over the last 18 months is clear enough. The change brings the immediate cash saving of less taxation and that in its turn allows accounting changes which also improve the look of the finances. In the longer term it allows trusts to break out of what many regard as the straightjacket of agenda for change.
This has strategic implications in further fragmenting the NHS and in recreating the two-tier workforce, both damaging to the wider interests of patients and the public. This is ignored.
The crisis in estates management and some other “back office” services is simply one aspect of the years of inadequate funding and trusts, 60% plus of which are in deficit, have used all kinds of accounting tricks, capital to revenue transfers and cut all kinds of services to try for balance. Millions of pounds of savings from reduced tax is an offer too good to refuse.
To improve the NHS estate and its management requires investment. Capital investment, but also investment in the staff that deliver the services necessary. As the Naylor report illustrates it also requires a collective approach, bringing back some of the strategic planning skills lost by the Lansley reorganisation. Every trust setting up its own little empire and alienating its staff by moving them out of the NHS, is a move in entirely the wrong direction.
If as is claimed these changes were actually all about improving services “to deliver current strategic requirements” the approach would have been very different. Staff should have been consulted over what was required and sensible conversations could have been undertaken about what could and could not be achieved. Instead staff were excluded; and the tax saving option was the only one developed. This was never about service improvement.
In reality trusts worked on their plans in secret, refused to engage and consult with staff, defied FoI requests for even the most basic information and put out public information that was dishonest. In private senior staff admitted that pressure had been applied and that the tax benefits were the big prize but that had to be played down. Business cases which were eventually obtained (after decisions had been made) showed that 90% of savings came because of tax treatment changes. The cases showed that without tax savings the change was not justified. The cases showed that no options other than wholly owned companies were even tentatively considered. What exactly would improve in terms of the services was not described at all.
The businesses cases are so generic some paragraphs are word for word the same. They are backed not by analysis of the requirements of strategic needs for a better service but by extensive tax advice.
Service changes, better use of staff, recruitment and retention issues can be, and have all been, addressed in trusts without this artificial and damaging approach. Claims that flexibility in staffing arrangements and easier recruitment require a move out of agenda for change have been debunked many times. If service quality is an issue then the main causes of poor back office services are well known almost always simply lack of investment and poor management.
All sorts of claims have been made about improvements, especially by the organisations that make an income from promoting this change. Actual evidence of this is absent from the business cases. But to be fair if you put any group of staff into a spotlight and tell them they are important and the focus of some major project then it is no surprise when morale improves and satisfaction goes up – but you do not need to create a two tier workforce to improve morale.
It is sad that NHS Providers, which sometimes tells truth to power, has defended the indefensible.