Special Purpose Vehicles in the NHS: the latest guidance for trusts
Special Purpose Vehicles (SPVs) were a requirement of public finance incentives contracts (PFIs) and continue to facilitate service arrangements within the NHS sector since PFIs were disbanded in the early 2000s. There were 96 NHS trusts with active PFI contracts managed through SPVs per the National Infrastructure and Service Transformation Authority (NISTA)’s 2024 published data on PFI. There is no dataset on the number of SPVs used in the NHS sector, but NHS England recorded 65 subsidiary companies in its annual accounts to March 2019.
What are Special Purpose Vehicles (SPVs)?
SPVs are formed for a specific purpose, to manage non-clinical services such as to deliver estate, facilities, IT or pharmacy services, and are usually private limited companies. Within the NHS sector, they are commonly owned by a single trust, multiple trusts, or in conjunction with a private entity.
Control of the SPVs depends on the structure of the arrangement, share ownership and the rights given to each party.
Why are SPVs used in the NHS sector?
Initially promoted by NHS England (‘NHSE’) CEO Jim Mackey in February 2024, and again in March 2025, to reduce costs and overspending, SPVs are also a means to share services, something strongly encouraged across the public sector.
Benefits of delivering services through an SPV include:
Cost efficiency and financial flexibility
SPVs allow NHS trusts to deliver estates, facilities, and back‑office services more cheaply and with greater commercial flexibility — helping trusts address financial pressures and reduce underlying deficits.
Operational efficiency and service improvement
Subsidiaries enable a trust or more than one trust to restructure fragmented support functions, improve productivity, gain better bargaining power with suppliers on procurement, and adopt shared‑service that is difficult to achieve within traditional NHS structures.
Workforce flexibility and recruitment benefits
Separate legal entities give trusts more flexible employment options, helping attract and retain staff—particularly in estates and facilities roles and hire staff with retail pharmacy experience —where the NHS competes directly with the private sector.
How can SPVs address challenges in the NHS sector?
We have seen three key challenges that can be resolved with the use of an SPV if the arrangement is structured in the correct way.
Insufficient cash
Government capital funding is limited, and trusts face significant barriers when trying to access alternative sources of finance. Establishing an SPV can provide a route to private investment—for example, a joint venture between a trust and a private contractor to deliver new or upgraded medical facilities.
Impact on capital budgets
Where trusts lack the capital budget to purchase an asset outright, they typically rely on leasing arrangements. However, leases still score against capital budgets under current accounting rules. An SPV structure can allow a trust to procure assets or infrastructure in a way that mitigates this capital impact and help protect core clinical budgets from these additional costs.
Limited operational flexibility in managing estates
Many NHS trusts operate complex estates with ageing infrastructure, limited in‑house technical capacity, and procurement rules that can slow down modernisation. These constraints make it difficult to upgrade facilities, deliver energy‑efficiency improvements, or run commercial activity at pace. Establishing an SPV can provide a more flexible structure for managing estate developments, entering long‑term service partnerships, or delivering sustainability projects that would otherwise be difficult to deliver within the trust’s existing operational framework.
How does the NHSE pause on proposals impact the use of SPVs?
Forming an SPV often involves the transfer of staff from the trust to the subsidiary to ensure continuity of service. NHSE expects trusts to consult meaningfully with employees and fully assess the implications for terms and conditions. Concerns raised by unions—particularly regarding job security and the comparability of employment conditions—led NHSE to pause approval of new subsidiaries in September 2025 while national guidance is reviewed. Updated guidance is expected to allow only a limited set of circumstances where transferring NHS staff to a new subsidiary will be permitted, though the specifics remain unclear.
What should trusts do?
We work with trusts and private companies to fully appraise their proposal and consider alternative options, particularly considering the latest notice from NHSE. Having a clear understanding of each party’s objectives, priorities and proposed rights (eg what happens to the SPV on a matter of disagreement or termination?) is crucial in fully assessing accounting matters and understanding the impact on capital budgets.
How we can support your NHS SPV and subsidiary strategy
Our team of experts are uniquely placed to help you with their detailed knowledge of the structures, the accounting and tax consequences and interaction with government rules.
If you would like to discuss how we can support you with structuring your arrangement, please get in touch with Paul Merris, Nicola Whitmarsh or Scott Harwood.