HC Deb 03 December 1992 vol 215 cc323-4W
Mr. Blunkett

To ask the Secretary of State for Health if she will make a statement on the future of the contracting out of NHS services, in connection with recent European rulings on the transfer of undertakings.

Mr. Sackville

In the national health service market testing has been mandatory for catering, laundry and linen and domestic services since 1983 and a significant amount of work has been put out to commercial contractors. NHS managers have undertaken market testing in some 20 other support services and the NHS is preparing for an enhanced programme of testing as set out in the "Competing for Quality" White Paper.

Contractors and would-be tenderers may have seen confusing reports concerning an amendment to the Transfer of Undertakings (Protection of Employment) Regulations (1981) proposed in the employment legislation now before Parliament.

These regulations provide for the transfer of employees' contracts where an undertaking has transferred to a new employer. It is not true, as reports have suggested, that the amendment which is being made applies the regulations to the public sector for the first time. Nor is it correct to suggest this cuts across the Government's policy to open central and local government services to competition. The Government have always accepted that the regulations cover both the public and private sectors.

However, in every case the crucial consideration in deciding whether the regulations require that existing terms and conditions of employment should be preserved, is whether or not an undertaking is actually being transferred. This test has always applied and will continue to apply.

In the NHS there is a wide spectrum of work and contracting scenarios. Health authorities, trusts and would-be contractors need to consider in each case, whether there is likely to be a transfer of undertaking involved and if in any doubt to take legal advice.

The Bill makes no difference to the likely outcome of such consideration. The only relevant changes that are being made in the Bill are that it will no longer be necessary to show that the undertaking is in the nature of a commercial venture and that it is made clear that property does not have to be transferred for there to be a transfer of an undertaking.

These changes are required to bring the wording into line with the EC acquired rights directive and to clarify its interpretation.

The changes in the Bill do not imply that past cases should have been decided differently because other criteria may have been relevant to those decisions, nor can it be assumed that future cases will be decided differently.

Market testing in the NHS has led to both improvements in quality of service and financial savings thus releasing resources for direct patient care. The NHS is committed to pressing ahead with the challenging programme of market testing for the future.