Asked by: Neil Duncan-Jordan (Labour - Poole)
Question to the Department of Health and Social Care:
To ask the Secretary of State for Health and Social Care, whether he plans to make an assessment of the potential merits of NHS Trusts setting up wholly owned subsidiary companies to avoid paying VAT.
Answered by Karin Smyth - Minister of State (Department of Health and Social Care)
The current NHS England guidance dated February 2024, titled Guidance for assuring and supporting complex change – subsidiaries guidance for trusts forming or changing a subsidiary, confirms that the Department “reminded all NHS provider finance directors in September 2017 of their responsibilities around tax, advising that tax avoidance arrangements should not be entered into under any circumstances. We expect all NHS providers to follow this guidance when considering any new arrangements or different ways of working”
A perceived VAT advantage of setting up a wholly owned subsidiary cannot be the only reason for its creation. Subsidiary proposals should be driven by a robust commercial strategy that delivers clear financial, operational, and patient benefits.
No assessment is planned or deemed necessary.
Asked by: Neil Duncan-Jordan (Labour - Poole)
Question to the Department of Health and Social Care:
To ask the Secretary of State for Health and Social Care, whether he plans to issue new guidance to NHS Trusts advising them not to set up wholly owned subsidiary companies to avoid paying VAT.
Answered by Karin Smyth - Minister of State (Department of Health and Social Care)
The current NHS England guidance dated February 2024, titled Guidance for assuring and supporting complex change – subsidiaries guidance for trusts forming or changing a subsidiary, sets out the VAT position of wholly owned subsidiaries and confirms that “the commercial rationale is not dependent on the subsidiary enabling a VAT treatment that differs from the trust’s current arrangements”.
There are no plans for this guidance to be updated.
Asked by: Tom Hayes (Labour - Bournemouth East)
Question to the Department of Health and Social Care:
To ask the Secretary of State for Health and Social Care, what assessment he has made of the potential impact of proposals to create a subsidiary company by NHS trusts in Dorset on (a) jobs and (b) existing terms and conditions.
Answered by Karin Smyth - Minister of State (Department of Health and Social Care)
Contract award decisions in the National Health Service fall directly to individual NHS bodies, who are responsible for running their own procurement exercises. Ministers at the Department do not have general powers in legislation to direct trusts in relation to the exercise of any of their functions, including in relation to specific contractual decisions. The NHS has established governance processes, in line with Government procurement policy and best practice, to ensure that appropriate contractual decisions are made that represent value for money.
The three NHS Dorset foundation trusts have undertaken two months of engagement concerning proposals to establish a wholly owned subsidiary company to deliver estates and facilities management services. Relevant papers concerning the proposal were placed in the public domain in June 2025 for board meetings held in that month. Under the proposals, the trusts have advised NHS England that there will be no job reductions, and that transferred staff will keep their pay and terms and conditions exactly aligned with the NHS. This covers both current and new staff. NHS England will review the level of assurance around the trust boards’ self-certification as to their readiness to proceed to the next formal consultation stage, which will involve staff and unions.
The Transfer of Undertakings (Protection of Employment) Regulations allow for terms and conditions of service to be protected or frozen as they stand on the date of transfer to a new employer, like a wholly owned subsidiary. NHS trust wholly owned subsidiaries can apply for access to the NHS Pension Scheme for compulsorily transferring staff, and new starters.
The Government expects that any outsourced services are delivered by trusts in a way that improves quality, ensures greater stability and longer-term investment in the workforce, and delivers better value for money, as part of the broader commitments on procurement, as set out in the Make Work Pay programme, with further information available at the following link:
https://www.gov.uk/government/collections/make-work-pay
NHS staff continue to work incredibly hard on delivering the best possible care for patients, and wherever they work across the health service, we expect the highest standards and good terms and conditions.
Asked by: Tom Hayes (Labour - Bournemouth East)
Question to the Department of Health and Social Care:
To ask the Secretary of State for Health and Social Care, what discussions he has had with (a) Dorset County Hospital NHS Foundation Trust, (b) University Hospitals Dorset NHS Foundation Trust and (c) Dorset HealthCare University NHS Foundation Trust on their proposals to create a subsidiary company.
Answered by Karin Smyth - Minister of State (Department of Health and Social Care)
Contract award decisions in the National Health Service fall directly to individual NHS bodies, who are responsible for running their own procurement exercises. Ministers at the Department do not have general powers in legislation to direct trusts in relation to the exercise of any of their functions, including in relation to specific contractual decisions. The NHS has established governance processes, in line with Government procurement policy and best practice, to ensure that appropriate contractual decisions are made that represent value for money.
The three NHS Dorset foundation trusts have undertaken two months of engagement concerning proposals to establish a wholly owned subsidiary company to deliver estates and facilities management services. Relevant papers concerning the proposal were placed in the public domain in June 2025 for board meetings held in that month. Under the proposals, the trusts have advised NHS England that there will be no job reductions, and that transferred staff will keep their pay and terms and conditions exactly aligned with the NHS. This covers both current and new staff. NHS England will review the level of assurance around the trust boards’ self-certification as to their readiness to proceed to the next formal consultation stage, which will involve staff and unions.
The Transfer of Undertakings (Protection of Employment) Regulations allow for terms and conditions of service to be protected or frozen as they stand on the date of transfer to a new employer, like a wholly owned subsidiary. NHS trust wholly owned subsidiaries can apply for access to the NHS Pension Scheme for compulsorily transferring staff, and new starters.
The Government expects that any outsourced services are delivered by trusts in a way that improves quality, ensures greater stability and longer-term investment in the workforce, and delivers better value for money, as part of the broader commitments on procurement, as set out in the Make Work Pay programme, with further information available at the following link:
https://www.gov.uk/government/collections/make-work-pay
NHS staff continue to work incredibly hard on delivering the best possible care for patients, and wherever they work across the health service, we expect the highest standards and good terms and conditions.
Asked by: Tom Hayes (Labour - Bournemouth East)
Question to the Department of Health and Social Care:
To ask the Secretary of State for Health and Social Care, whether he is taking steps to retain (a) job numbers and (b) existing terms and conditions when NHS trusts create subsidiary companies.
Answered by Karin Smyth - Minister of State (Department of Health and Social Care)
Contract award decisions in the National Health Service fall directly to individual NHS bodies, who are responsible for running their own procurement exercises. Ministers at the Department do not have general powers in legislation to direct trusts in relation to the exercise of any of their functions, including in relation to specific contractual decisions. The NHS has established governance processes, in line with Government procurement policy and best practice, to ensure that appropriate contractual decisions are made that represent value for money.
The three NHS Dorset foundation trusts have undertaken two months of engagement concerning proposals to establish a wholly owned subsidiary company to deliver estates and facilities management services. Relevant papers concerning the proposal were placed in the public domain in June 2025 for board meetings held in that month. Under the proposals, the trusts have advised NHS England that there will be no job reductions, and that transferred staff will keep their pay and terms and conditions exactly aligned with the NHS. This covers both current and new staff. NHS England will review the level of assurance around the trust boards’ self-certification as to their readiness to proceed to the next formal consultation stage, which will involve staff and unions.
The Transfer of Undertakings (Protection of Employment) Regulations allow for terms and conditions of service to be protected or frozen as they stand on the date of transfer to a new employer, like a wholly owned subsidiary. NHS trust wholly owned subsidiaries can apply for access to the NHS Pension Scheme for compulsorily transferring staff, and new starters.
The Government expects that any outsourced services are delivered by trusts in a way that improves quality, ensures greater stability and longer-term investment in the workforce, and delivers better value for money, as part of the broader commitments on procurement, as set out in the Make Work Pay programme, with further information available at the following link:
https://www.gov.uk/government/collections/make-work-pay
NHS staff continue to work incredibly hard on delivering the best possible care for patients, and wherever they work across the health service, we expect the highest standards and good terms and conditions.
Asked by: Tom Hayes (Labour - Bournemouth East)
Question to the Department of Health and Social Care:
To ask the Secretary of State for Health and Social Care, whether he has had discussions with UNISON in relation to proposals by NHS Trusts in Dorset to create a subsidiary company.
Answered by Karin Smyth - Minister of State (Department of Health and Social Care)
Contract award decisions in the National Health Service fall directly to individual NHS bodies, who are responsible for running their own procurement exercises. Ministers at the Department do not have general powers in legislation to direct trusts in relation to the exercise of any of their functions, including in relation to specific contractual decisions. The NHS has established governance processes, in line with Government procurement policy and best practice, to ensure that appropriate contractual decisions are made that represent value for money.
The three NHS Dorset foundation trusts have undertaken two months of engagement concerning proposals to establish a wholly owned subsidiary company to deliver estates and facilities management services. Relevant papers concerning the proposal were placed in the public domain in June 2025 for board meetings held in that month. Under the proposals, the trusts have advised NHS England that there will be no job reductions, and that transferred staff will keep their pay and terms and conditions exactly aligned with the NHS. This covers both current and new staff. NHS England will review the level of assurance around the trust boards’ self-certification as to their readiness to proceed to the next formal consultation stage, which will involve staff and unions.
The Transfer of Undertakings (Protection of Employment) Regulations allow for terms and conditions of service to be protected or frozen as they stand on the date of transfer to a new employer, like a wholly owned subsidiary. NHS trust wholly owned subsidiaries can apply for access to the NHS Pension Scheme for compulsorily transferring staff, and new starters.
The Government expects that any outsourced services are delivered by trusts in a way that improves quality, ensures greater stability and longer-term investment in the workforce, and delivers better value for money, as part of the broader commitments on procurement, as set out in the Make Work Pay programme, with further information available at the following link:
https://www.gov.uk/government/collections/make-work-pay
NHS staff continue to work incredibly hard on delivering the best possible care for patients, and wherever they work across the health service, we expect the highest standards and good terms and conditions.
Asked by: Karin Smyth (Labour - Bristol South)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, with reference to his Department's policy paper VAT and the Public Sector: Reform to VAT Refund Rules, published on 27 August 2020, whether he plans to implement changes to the VAT regime for NHS (a) trusts and (b) foundation trusts considering establishing wholly owned subsidiary companies.
Answered by Victoria Atkins - Shadow Secretary of State for Environment, Food and Rural Affairs
The 2020 policy paper published by HM Treasury set out the case for a Full Refund Model for public bodies currently eligible for VAT refunds under Section 41 of the VAT Act, to simplify the VAT system for public bodies and enhance public sector productivity. Please find the published paper on the GOV.UK website here: https://www.gov.uk/government/publications/vat-and-the-public-sector-reform-to-vat-refund-rules.
We are continuing to consider the practicalities of any reform and no decisions have been made on whether to proceed. We will update on next steps in due course.
Asked by: Karin Smyth (Labour - Bristol South)
Question to the Department of Health and Social Care:
To ask the Secretary of State for Health and Social Care, how many wholly owned subsidiary companies are operating within NHS England.
Answered by Will Quince
Ministers do not have a role in approving Wholly Owned Subsidiary companies created by NHS Foundation Trusts, with this role undertaken through the statutory powers and duties of NHS England. Ministers only have a role in approving subsidiaries created by NHS Trusts for income-generation purposes.
The Department is not currently assessing any plans for new NHS Trust subsidiaries created for income-generation purposes. NHS England published guidance in November 2018 setting out the regulatory review process required before NHS trusts and foundation trusts can implement plans involving subsidiaries. Since the guidance was published, 48 proposals have been reported to NHS England for classification and potential review. A number of these are still ‘live’ cases where a proposal has been reported, but has not yet been reviewed and not all proposals will have been implemented.
No discussions have taken place with NHS England on preventing NHS trusts and foundation trusts from setting up wholly owned subsidiary companies. NHS England are working to publish updated guidance, reflecting lessons learned on trust subsidiary reviews. There are no plans to publish a list of wholly owned subsidiary companies operating within England.
Asked by: Karin Smyth (Labour - Bristol South)
Question to the Department of Health and Social Care:
To ask the Secretary of State for Health and Social Care, what steps his Department is taking to increase engagement with (a) staff and (b) trade unions on the establishment of wholly owned subsidiary companies by NHS trusts and foundation trusts.
Answered by Will Quince
NHS England published guidance in November 2018 setting out the regulatory review process required before NHS trusts and foundation trusts can implement plans involving subsidiaries. As part of this review, NHS England consider engagement with staff and trade unions. NHS England routinely involve regional workforce leads in the review process where a subsidiary proposal involves changes to the workforce.
NHS England work in conjunction with trusts and trade unions, setting out good practice workforce engagement and consultation guidance for trusts considering setting up or dissolving a subsidiary.
Asked by: Karin Smyth (Labour - Bristol South)
Question to the Department of Health and Social Care:
To ask the Secretary of State for Health and Social Care, how many plans for (a) new and (b) altered wholly owned subsidiary companies in the NHS are being assessed by his Department.
Answered by Will Quince
Ministers do not have a role in approving Wholly Owned Subsidiary companies created by NHS Foundation Trusts, with this role undertaken through the statutory powers and duties of NHS England. Ministers only have a role in approving subsidiaries created by NHS Trusts for income-generation purposes.
The Department is not currently assessing any plans for new NHS Trust subsidiaries created for income-generation purposes. NHS England published guidance in November 2018 setting out the regulatory review process required before NHS trusts and foundation trusts can implement plans involving subsidiaries. Since the guidance was published, 48 proposals have been reported to NHS England for classification and potential review. A number of these are still ‘live’ cases where a proposal has been reported, but has not yet been reviewed and not all proposals will have been implemented.
No discussions have taken place with NHS England on preventing NHS trusts and foundation trusts from setting up wholly owned subsidiary companies. NHS England are working to publish updated guidance, reflecting lessons learned on trust subsidiary reviews. There are no plans to publish a list of wholly owned subsidiary companies operating within England.