The national regulator has today told NHS trusts to “pause” any ongoing plans to set up subsidiary companies and wait for new guidance to be issued.

NHS Improvement has issued a short statement on its website asking providers to pause plans to create new subsidiaries or change existing ones.

It said it will be issuing national guidance following a consultation on a new regulatory approach to subsidiary companies, which is due to launch next month.

Earlier this year, HSJ revealed thousands of non-clinical NHS staff were due to be transferred into subsidiaries at trusts across the country. This drew heavy criticism from unions and Labour politicians, which have accused trusts of seeking to exploit a VAT loophole.

In July, the Department of Health and Social Care issued guidance which said regulators would ensure that subsidiaries were not being established “for the sole purpose tax avoidance”.

Two strikes have already been planned at hospitals planning subsidiary companies this month, while some trusts have recently shelved their plans.

Unite staff at both York University Teaching Hospital FT and East Kent Hospitals University FT have both voted for industrial action this month.

University Hospitals of Leicester Trust and Wrightington, Wigan and Leigh Foundation Trust both backed down on plans to create subsidiary companies earlier this year.

Colenzo Jarrett-Thorpe, Unite national officer for health, said the union is trying to get staff, alongside other unions, to campaign against the creation of wholly owned subsidiary companies, because they are “not the solution to the under investment in the NHS over the past eight years”.