The NHS is suffering from “back-door privatisation”. Here’s how

NHS workers in three hospitals are set to strike this month, protesting against the use of “SubCos” by their NHS employer, Frimley Health NHS Foundations Trust (FHFT).

Described by trade union UNISON as “back-door privatisation of the NHS and a blatant tax-avoidance scheme”, SubCos have caused controversy in recent years after being used by more and more trusts.


Despite this, relatively little is known about SubCos and how they affect NHS staff. So we’ve decided to write a brief explainer to help you out.

What are SubCos?

SubCos are subsidiary companies that are used by NHS trusts for various contracts. Separate from the NHS but run by trusts, they are effectively private companies subject to little government control.

As of 2019, there are 65 SubCos which take on a number of NHS contracts such as cleaning, catering, procurement of supplies, diagnostic services and more.

Why are they used?

NHS trusts use SubCos to take on the services they cannot afford – forced on them largely due to government cuts. In doing so they save money. It is also argued that the subsidiaries help decision making, by separating management from the overall trust.

But it is believed that the main motivation for setting up a SubCo is a VAT tax loophole. If a trust purchases goods and services from SubCos, they do not have to pay VAT, because SubCos are private entities.

Why are they controversial?

These bodies have attracted controversy for the same reasons that they are used. Critics such as UNISON have railed against SubCos for avoiding paying taxes, and have called for their abolition.

Employees working for SubCos can also be treated differently to NHS staff, despite doing exactly the same work. In the three hospitals mentioned above, up to 1,000 NHS cleaners, caterers, porters, security and estates staff could be put under private, SubCo contracts, if the agreement goes ahead.

For example, SubCos reduce pension contributions compared to NHS Trusts. While the NHS pays 20% of an employee’s salary, Subcos pay on average just 5%.

And, as they are set up without consultation, staff feel alienated from the process and have no say in their change of employer.

Speaking about the planned strike action, UNISON assistant general secretary Christina McAnea said: “Patients rely on good quality cleaning, catering and portering staff who play a vital role in providing excellent care. 

“But these hard-working hospital employees are some of the lowest paid in the health service, feel targeted by their employer and don’t deserve to have their NHS employment status ripped away.”

It’s clear that SubCos are entirely at odds with the public service ethos of the NHS. Share this article so people understand the back-door privatisation that’s happening in our health service.

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