Hutton: Welcomed cost savings

Around 230 health service staff are to see their jobs transferred to the private sector as part of an outsourcing deal aimed at saving £220 million, the Department of Health has announced.

The move will come with the transfer of NHS Shared Financial Services (SFS) into a joint venture with private sector firm Xansa.

SFS currently manages back office functions such as accounting, budgets, VAT and supplier invoice settlement for 36 NHS organisations.

It is expected that more of the 663 NHS organisations will sign up for the centralised provision of services from two existing centres in Leeds and Bristol.

Promises of cost reductions of over 20 per cent on current in-house costs are being used to encourage trusts to switch their financial functions to the new partnership.

If successful the venture will save more than £220 million over the next 10 years, with the company expanding the range of services it offers into areas such as payroll and e-commerce.

It remains to be seen, however, whether take-up rates will rise as expected.

Unions

With a trend towards greater devolution in the NHS, ministers previously decided not to order trusts to make use of the new services.

The outsourcing of public sector jobs is set to provoke further anger from unions already unhappy with plans to axe thousands of jobs as part of the current efficiency drive.

But officials were keen to stress that no SFS staff were being made redundant as a result of the plan.

Staff who are currently working in the service centres will transfer to Xansa, but will retain NHS terms and conditions as required by employment regulations.

And Xansa said its new staff members would be able to benefit from its "full package of employment benefits including award winning share ownership schemes".

"Under the partnership, Xansa will invest people, resources and expertise to support the existing centres, in order to provide increased capacity, optimise services, and expand the service portfolio to include payroll and e-commerce for example," added a Department of Health statement.

New name

Reflecting the wider range of tasks to be undertaken by the joint venture, it will be renamed as NHS Shared Business Services Limited.

The new body will be a private sector company, with a board of directors made up of two Department of Health and two Xansa nominees, and an independent chairman.

It will run in shadow form during the transition period until April next year, when the joint venture partnership will become effective.

The market for financial services within the NHS is estimated to be in excess of £1 billion over the next decade.

The joint venture could earn up to half that sum, around £500 million over the same initial period, predicted Xansa.

Functions

Health minister John Hutton said the plan would "streamline back office functions, reduce bureaucracy and generate substantial savings for reinvestment in frontline services".

"The joint venture will generate significant cost savings - enough to pay the annual salaries of over 3,000 GPs or 12,000 nurses," he said.

"By entering into this partnership, we are utilising private sector experience to both improve and expand the range of corporate functions provided for the NHS."

Alistair Cox, chief executive of Xansa, said the deal would now "move forward at full speed".

"This partnership is a perfect example of how our leadership in providing finance and accounting services frees up significant cost savings for the Department of Health to deploy for example in providing more doctors and nurses," he added.

David Thorpe, SFS acting managing director, said he was "very pleased" with the new partnership.