Our Calderdale and Huddersfield Hospitals Trust decided at the Board meeting on 1st March 2018 to set up an Estates and Facilities Management Subsidiary Company, to be fully operational by the end of August. This is one of many across England. The NHS staff who would be TUPE’d over are not in favour of the proposal. Nor are Calderdale & Kirklees 999 Call for the NHS.
This is why we will be sending this letter to all the Trust Directors and Elected Governors on 26th March 2018. (Update: Calderdale and Huddersfield NHS Foundation Trust replied to our letter on May 18, 2018. You can download and read the reply at the end of this blog post – please scroll down.)
Please sign it if you agree with what it says. You can do this by putting your name (and town) in the comments box.
In Bath the Subsidiary Company has been put on hold after campaigning by Bath Protect Our NHS together with the Unions. Bristol’s Subsidiary Company has been stopped after campaigning by Bristol Protect Our NHS & the Unions.
Our hospitals’ proposed Subsidiary Company is basically a VAT avoidance scheme, taking advantage of the Value Added Tax Act 1994 which encourages privatisation of public services by providing a mechanism through which government departments, including NHS trusts, can qualify for VAT refunds on contracted out services.
The presentation to the 1st March 2018 Trust Board meeting is here.. It shows NO benefits from creating the Subsidiary Company, unless you count this as a benefit:
“The new organisation will become more commercial and will have targets to increase turnover/bring on board new contracts.”
Which we don’t. There’s a lot of evidence that privatisation of key estates and facilities services like cleaning has lowered standards and been associated with the rise of hospital diseases like norovirus.
Dear Calderdale and Huddersfield NHS Foundation Trust Directors and Elected Governors
Re: Wholly Owned Subsidiary – urgent outstanding questions
We are writing on behalf of Calderdale 999 Call for the NHS and others to set out some urgent questions in five areas – assets, financial assumptions, tax, staff, and governance – regarding the proposal agreed at the 1st March 2018 CHFT Board meeting, to set up a CHFT-owned Estates and Facilities Wholly Owned Subsidiary that is to be fully operational by the end of August 2018.
We hope that all Trust directors and Elected Governors have been given the opportunity to ask all the following questions of the Trust executive.
It is our view that – given the problems there have been elsewhere – the Trust risks being negligent in its stewardship of public money and assets if it does not ensure all these questions are satisfactorily answered before signing off any arrangement.
We believe that public need to be given these answers themselves, before a decision is made. To this end we support calls to – at the very least – pause the scheme so that proper public information and consultation can take place.
Implications of the scheme for assets (including buildings)
- What property will be transferred under lease (as specified on slide 6 of Wholly Owned Subsidiary presentation to the 1st March 2018 Board meeting), including, but not limited to, buildings and equipment, and what is their value?
- What proportion of liabilities relating to those assets will also be transferred?
- What are the projected VAT savings from transferring the Trust’s legal rights over its assets in some way to the Wholly Owned Subsidiary?
- If transferring assets, is the Trust going to select an organisational form for the Wholly Owned Subsidiary that is, by law, subject to an asset lock? If not, why not?
- We note that slide 10 includes a restriction that the Trust has placed on the Wholly Owned Subsidiary selling any services transferred to it from the Trust, to a third party outside the NHS. Does that “guarantee” cover the whole gamut of assets that will be transferred to the Wholly Owned Subsidiary?
- Have any of the assets being disposed of/transferred, been on the asset register and identified as relevant to the provision of Commissioner Requested Services at any point? If so, has consent been sought and obtained from both the Clinical Commissioning Groups and from NHS Improvement for the disposal/transfer of assets to a third party (ie the company)? If not, why not?
Robustness of other financial assumptions
- If assets are transferred, will the Wholly Owned Subsidiary have to pay the 3.5% capital charge to government on those assets, as, for example, Gloucestershire Hospitals NHS FT currently does?
- Does the Trust know for definite whether the Wholly Owned Subsidiary will be able to borrow money for capital investment without being prevented by Treasury limits on government expenditure/ capital expenditure (bearing in mind that NHS borrowing / investment from the private sector currently still hits up against these limits)? If it does know, what is the answer?
- Does the Trust/Company expect to receive any loan financing from NHSI contingent on this arrangement?
- What assessment has the Trust made of the impact of the Wholly Owned Subsidiary on its financial risk rating and net surplus?
- Does the Trust expect to raise private patient income from any of these arrangements?
- How does the Wholly Owned Subsidiary sit with the current CHFT PFI facilities and estates management arrangements?
Robustness of projected tax savings
- Has the Trust a) requested and b) received confirmation that VAT saving arrangements are permissible and robust? If not, can the Trust confirm when it expects an answer, and if it expects to agree the deal before the answer?
- Is the Trust aware that the largest public in-sourcing to date, UnitingCare in Cambridgeshire, collapsed and the National Audit Office and NHSE investigations both noted that one of the major reasons for the collapse was a significant misunderstanding of its VAT position which increased annual costs, post-contract signing, by £5m/year? Does the Trust consider there is any risk of a similar situation here?
- What’s the breakdown in projected tax savings between VAT and other forms of taxes (including local taxes?)
- Are these projected savings, net of increases in tax liabilities that may be incurred by the Wholly Owned Subsidiary arrangements e.g. corporation tax, capital gains and stamp duty?
Staff terms and conditions
- Has the Trust conducted an Equalities Impact Assessment, given that this is recognised in court as the best way to ensure its General Duty under the 2010 Equalities Act is met, and particularly given the substantial equal pay claims that have arisen as a result of other Wholly Owned Subsidiary where increased pay flexibility/shift to so-called market rates appears to have given rise to gender and other inequalities in pay?
- Will transferring staff be given written guarantees specifically that they will remain covered by Agenda for Change pay, terms and conditions, as it develops through national bargaining over time, over the lifetime of their employment, and how can these guarantees be meaningful given the weakness of TUPE legislation?
- And the same regarding continued access to the NHS Pension Scheme? If not, why not?
Governance and accountability
- Why has the full business case not been made available (in electronic or hard copy form) to the public? Have governors, unions and staff had access to it? And where is the options appraisal?
- Does the Trust consider that Calderdale and Kirklees Joint Health Scrutiny Committee supports the Wholly Owned Subsidiary? If so, what evidence do they have for assuming this support? Has the Trust even approached the CKJHSC about setting up the Wholly Owned Subsidiary?
- Why has there not been any public consultation with the local community on these proposals. What formal scrutiny -if any – has taken place in the Calderdale and Kirklees Joint health Scrutiny Committee? (To the best of our knowledge, none.) On what statutory basis have you concluded that such consultation is not required? Please give urgent consideration to this issue and provide a detailed response. A failure in proper process often provides a basis for legal challenge.
- What powers is the Trust formally reserving in respect of the Wholly Owned Subsidiary, beyond the statutory and regulatory requirements?
We look forward to hearing from you,
Jenny Shepherd (Chair) ck999
Chrissie Ann Parker
Sheila Elson (Huddersfield)
Freda Davis (Sowerby Bridge)
Pam Fellows (Huddersfield)
Peter Davis (Sowerby Bridge)
Stella Clarkson (Halifax)
Rowena Fehilly (Hebden Bridge)
Rev Helen Lasham (Hebden Bridge)
Please add your name in the comments box if you’d like to sign this letter which we will send to CHFT on 26th March 2018
You can download the Hospitals Trust’s reply here (pdf) FINAL Letter of response to 999 Call for the NHS