Bramble Hub partner Burrum River Advisory, specialist in financial advice for the NHS, has sounded a warning that a new policy on NHS subsidiaries risks stifling innovation.
In late September, NHS England announced a pause on the establishment of new NHS subsidiaries, pending a national consultation and updated guidance. The move follows pressure from trade unions – particularly Unison – who expressed concern that the growth of wholly owned subsidiaries could undermine the “principle of a single NHS workforce”. The change in direction marks a significant shift from earlier encouragement for trusts to explore new subsidiary structures, especially for back-office and corporate services.
Subsidiaries, in different guises, have long been used by NHS Trusts as a flexible mechanism to deliver efficiencies, attract specialist expertise, and support innovation in estates, facilities, and pharmacy operations. Under the new policy, any new subsidiary formation or transfer of staff will require union backing, effectively pausing a number of active projects across the country.
The decision creates a paradox. While outsourcing to private companies remains permitted, NHS-owned subsidiaries – structures that keep control and accountability within the public sector – are now off the table. Rhiannon Williams, of Burrum River Advisory noted that “… it seems counterintuitive for NHS subsidiaries – which keep services within public ownership – to face more constraints than outsourcing arrangements with private firms.” The change could discourage the kind of innovative service models that have successfully improved efficiency and outcomes in several Trusts over recent years.
NHS England has stated that the pause aims to “listen carefully to staff and union concerns” while reviewing the guidance to ensure transparency and fairness in workforce management. However, many in the sector view this as a politically cautious response to union pressure, rather than a long-term strategic shift. “Some of the most innovative things that have been done in the NHS have involved different structures,” Rhiannon added. “This pause is likely to make some innovations much harder to implement.”
As the consultation progresses, Trusts and partners will be watching closely to understand how the new guidance might balance workforce reassurance with the NHS’s ongoing need for flexibility, innovation, and sustainability.
