• Around 1,000 Frimley Health FT staff would be moved to subsidiary
  • Trust expects to save £45m over five years
  • But application for company lodged with NHS Improvement 11 weeks ago

A foundation trust is pursuing plans to set up a wholly-owned subsidiary company following concerns unions are spreading “misinformation“ among staff.

In particular, one union – Unite – is currently conducting a strike ballot among its members affected by Frimley Health Foundation Trust’s proposals and held a demonstration outside the trust’s board meeting earlier this month.

Around 1,000 staff working across services such as housekeeping, estates management, equipment maintenance, catering, procurement and security are expected to transfer to the subsidiary if the plan goes ahead.

However, the trust is still waiting for approval for the subsidiary from NHS Improvement, 11 weeks after it submitted its application under new rules which require plans to be scrutinised to show they have other benefits other than just VAT savings.

In a question and answer briefing for the trust’s governors – who approved the proposal at the same meeting two weeks ago – the trust said it wanted to consult with staff as soon as possible. It said staff had been “quite positive” at initial briefings in May and June, but “since then the unions have been agitating with misinformation by raising the possibility of lower pay rates, reduced T&Cs, privatisation etc. This has resulted in staff becoming increasingly concerned.”

However, Unite regional officer Jesika Parmar said: “Unions aren’t scaremongering – we have been setting out the facts. Unite’s bitter experience is that when workers are transferred to a wholly-owned subsidiary, pay, conditions and jobs are cut. Going forward, the directors duty is to act in the best interests of the wholly-owned subsidiary and not the NHS or the patients it serves.”

Saving £45m over five years

The scheme would transfer all the trust’s land and buildings and much of its equipment to the subsidiary. In its business case, the trust said it would save around £45m over five years and it could not otherwise make these savings. Around £5m of this would come from VAT savings each year.

None of the savings would come from cutting jobs, salaries or pensions, it said, although new staff employed by the subsidiary company may be employed on different terms and conditions at “competitive market rates”. Staff who are moved to the new organisation under the Transfer of Undertakings (Protection of Employment) Regulations could keep their existing terms and conditions or choose to transfer to the new ones.

Other claimed benefits of the subsidiary outlined in the business case included: allowing clinicians to focus on quality, care and patients; new terms and conditions to support recruitment and retention of staff in the subsidiary; developing professional “end-to-end” supply chain teams and greater expertise; efficiency saving for the trust; and the potential to provide non-clinical services to other businesses.

However, Ms Parmar described the subsidiary as “tax avoiding” and said the proposals were flawed, adding: “We are concerned that the public has not been asked for their view on this proposal that could have an adverse impact on jobs, and, ultimately, patient services.”

NHSI’s sub co rules

NHSI tightened up rules on subsidiary companies in November last year, allowing it to stop FTs from creating them if they were viewed as high risk.

At the time, NHSI was expected to complete business case reviews within six weeks. However, the timeline now is for a panel review of applications to take place within three weeks, and, if the panel decides the transaction is “significant”, a second review to take place within six weeks of the trust providing any necessary information and the NHS England/Improvement committee finalising the resulting risk rating. 

Asked about the length of time the Frimley application was taking, an NHSI spokesman said: “It’s only right that any change like this is properly assessed and reviewed before being set up.”

NHSI would not say how many other applications had been considered since the new requirements came into force.