UNITE celebrated a “significant victory” today after forcing an NHS trust in Leicester to abandon its proposal to set up a wholly owned subsidiary to avoid paying tax.

The union described the decision by University Hospitals of Leicester NHS Trust as “a victory in the long campaign against the creation of such subsidiaries which could lead to a Pandora’s box of Carillion-type meltdowns” and have “adverse knock-on effects on jobs and patient services.”

Unite national officer for health Colenzo Jarrett-Thorpe said: “This is very good news that the NHS trust in Leicester has backed down over its plan to set up a hived-off tax-avoiding subsidiary.”

It is understood that the trust dropped the plan when NHS Improvement said it was “unlikely” to be approved by new Health Secretary Matt Hancock.

The Department of Health and Social Care recently announced that it was consulting on this issue with a view to strengthening “central oversight” of wholly owned subsidiaries and so was asking all NHS trusts that plan to set one up to to report their intention to NHS Improvement.

Unite has waged an extensive campaign against wholly owned subsidiaries, warning that they could lead to job losses and the “salami-slicing” of service provision.

Mr Jarrett-Thorpe added: “We want Matt Hancock to enforce a moratorium on the further creation of other wholly owned subsidiary companies while this consultation is taking place and for those that are in the process of being created to be paused while the consultation takes place.”