Unison has accused Monitor over NHS income from private patients

Unison has accused NHS regulator Monitor of failing in its legal duty to cap income from private patient work properly.

The UK's largest public sector union said Monitor had issued legally flawed financial reporting instructions to NHS foundation trusts.

As a result, the statutory limit on the amount of private patient income that trusts are allowed to receive may have been breached, a judge was told.

Monitor is arguing that it has a discretion on how to interpret the law, and the Unison interpretation would lead to "undesirable" results and affect the quality of service to patients. Unison says it is acting to defend the interests of NHS patients. It emphasises the cap on private patient income was brought in to alleviate fears that cash-paying private patients would get precedence over NHS patients.

Unison head of health Karen Jennings said outside court: "We want the regulator to act within the law. Our concern about the marketisation of the NHS is that there will be weak interpretations of how foundation trusts conduct themselves, leading to profits rather than patients being more important."

In court, Peter Oldham, appearing for Unison, accused Monitor of adopting too narrow an interpretation of what amounted to "income derived from private charges" (PCI) under section 44 of the National Health Service Act 2006. He asked Mr Justice Cranston, sitting at the High Court in London, to rule on "what is and what is not PCI". He accused Monitor of making "unprincipled and arbitrary distinctions" between "income that counts as PCI and income that does not".

Under the 2006 Act, trusts were authorised on the basis that their principal purpose was the provision of goods and services for the NHS, said Mr Oldham. Monitor was required to restrict a trust's total private income in any financial year and ensure it remained at or below a statutory base level. But the regulator's financial reporting instructions stated that private patient income referred only to charges made "directly to patients".

That wrongly excluded income derived from the provision of goods and services to private healthcare providers who raised their own private charges. Also excluded was income paid to trusts by charities funded from providing services to private patients, and investment income from the provision of private healthcare.

Mr Oldham said the law should be interpreted in a way that prevented trusts adopting "artificial structures for circumventing the cap". The terms "subsidiaries", "joint ventures" and "associates" were being used in such a restricted way under the current Monitor instructions that income derived from them was not being counted as private income.

Michael Fordham QC, appearing for Monitor, argued Unison's legal challenge should not be heard because the law was due to undergo revision and there might be new legislation some time in the future. Rejecting Mr Fordham's argument, the judge said the review and possible legislation were "so far in the future" that the challenge should go ahead and the court decide the issue before it.