3.12 NHS bodies have powers to enter contractual and other joint arrangements23, but of Primary Care Trusts (PCTs) and NHS trusts have fewer freedoms to participate in separate JV entities.
3.13 The powers of PCTs and NHS trusts to form companies can be broadly divided into two categories: income generation and Public Private Partnerships.
3.14 In relation to income generation, PCTs and NHS trusts have powers to form, participate, invest in companies for the purpose of making additional income available to the health service (or, in the case of NHS trusts, in order to better to perform their functions).24 It is important to note that the scope of this power is limited to companies. It would not extend to limited liability partnerships. There are other limitations attached to these powers and in relation to PCTs and NHS trusts Department of Health directions and guidance are available regarding the exercise of these powers.25
3.15 In relation to Public Private Partnerships, the Secretary of State may also form or participate in companies to provide facilities or services for NHS purposes.26 Again, this power is limited to companies and does not extend to the formation of limited liability partnerships. The power may be exercised by PCTs and NHS trusts in so far as it is delegated to them. At present, the only delegation that has been made has been to enable PCTs to form LIFT companies.27 No such delegation has been made to NHS trusts. As such NHS trusts may only establish companies using their income generation powers.
3.17 NHS foundation trusts, on the other hand, have broader powers to establish and to participate in "bodies corporate" (not just companies) for the purposes of or in connection with their functions which could include income generation activities28.
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23 See section 12 of, and paragraph 15 of Schedule 3 to the National Health Service Act 2006 (Primary Care Trusts), paragraphs 14 and 18 of Schedule 4 (NHS trusts) and sections 43 and 47 (NHS foundation trusts).
24 See section 21(5) of the National Health Service Act 2006 (PCTs), paragraph 20 of Part 2 of Schedule 4 to the National Health Service Act 2006 (NHS trusts) and sections 43(3) and 46 of the National Health Service Act 2006 (NHS foundation trusts).
25 National Health Service Income Generation - Best Practice (DH February 2006); and Department of Health Guidance: The Use of Companies in Income Generation by the NHS (1 April 2005).
26 See section 223 of the National Health Service Act 2006.
27 Regulations 3(2) and 8(3) of, and Part 2 of Schedule 1 to, the National Health Service (Functions of Strategic Health Authorities and Primary Care Trusts and Administration Arrangements) (England) Regulations 2004.
28 See section 46(4) and (5) of the National Health Service Act 2006.