The hurricane of protest over NHS pay can be calmed by honest debate

23 September 2010 | By Alastair McLellan

How much, in this age of austerity, should NHS staff or contractors be paid? Using the number of comments on HSJ’s website as a guide, no subject is of greater interest or importance.

The perceived or actual inequities of who is paid what - obscured during the years of plenty - are now leaping to the fore as the money gets tighter.

Agenda for Change is the proudest achievement of the NHS unions - they will defend its integrity tooth and nail

This week, HSJ’s readers have flocked to our site to express their views about GP pay and Panorama’s analysis of public sector staff paid more than £100,000. Anger - whether over value for money or inappropriate comparisons - was the abiding emotion.

But these debates are as gentle as spring breezes compared with the Hurricane Katrina of controversy brewing up over the freezing of agenda for change increments by foundation trusts, which could affect up to half a million NHS staff.

Agenda for change increments are different from uncertain cost of living rises (already frozen, of course). Increments are taken for granted by many staff, who make medium and long term financial decisions based on projected rises. The negotiation of Agenda for Change is the proudest achievement of the NHS unions - they will defend its integrity tooth and nail.

Given the stresses already built into the NHS by proposed reforms and financial pressures, is this a nettle that needs grasping?

Jim Easton, who leads the Department of Health’s QIPP efficiency drive, is already on the record as saying the NHS faces a choice between freezing increments and losing tens of thousands of jobs - but he is far from alone in that view.

Put simply, the leadership of the NHS believes achieving the much discussed £15bn saving target is impossible without reducing growth in the pay bill. Service change will deliver long term efficiencies but only constraining pay will make a difference quickly. Speed is important, they claim, because “falling behind” only increases the scale of savings needed in later years.

To have a significant effect the increment freeze needs to last at least two - and probably four - years. A one year freeze will neither deliver the necessary savings or allow trusts to plan ahead accurately.

Of course, Agenda for Change increments are a contractual obligation for existing staff, which is why most trusts are looking to begin with new recruits. However, in the near future they are likely to brave legal challenges to change the rights of current staff members.

But legal challenges will be just one barrier to delivering savings. Trusts will be understandably nervous of acting alone, particularly in the major cities, where staff can flee to other NHS employers. Then there is the problem of what happens if - as seems a real possibility - the government decides not to require NHS trusts to follow the lead of foundations. Reducing the total size of the pay bill at the required rate will be key.

It is understandable that organisations such as Norfolk and Norwich University Hospitals Foundation Trust are looking to review conditions when staff change jobs, but this could prove to be a drag on service reform.

What is needed most of all is an honest debate with staff about the financial challenges ahead and the range of possible solutions. For example, it might be possible for job and pay levels to be maintained in some areas if staff are prepared to work flexibly and, crucially, not expect a premium for doing so.

Unemployment during the recession did not reach expected levels, partly because companies tried hard to retain staff, who accepted changes to terms and conditions in return. The comparisons between the public and private sector approaches to workforce management are often shallow and inappropriate, but in this case there may be lessons to be learnt.

Readers' comments (9)

Joe Bloggs | 23-Sep-2010 1:41 pm
Nicely thought through AM. And the prediction is? I note the savings target has reduced from £20bn to £15bn. Does anyone really know what it is? The search for a silver bullet continues but the reality is more complex. Pay deals needs to be renegotiated. Not only are increments, and evenly distributed inflation a problem leading to inequalities, but the levels of pay for many are excessive for what they do. And not limited to managers. A pay review should not be limited to AfC.

TUs revelled in what they thought was a good deal. Indeed it was at one level; demonstrating that DH could spend our money quicker than Northern Rock could, but it also resulted in the rich getting richer widening the gap between high and low paid. If I were on low pay and a member of a TU I wouldn't be best pleased.

But savings of this order, whilst greater than anything the NHS has ever achieved before, are just about the next few years. What happens after that? Sustainable change comes from planning medium term. We already know the demand for services is going to rise exponentially. So really we need to be looking at all the Rs including renegotiation, reconfiguration, rationalisation, reorganisation, redundancy, redeployment and hopefully a little responsibility thrown in. And when we've done that we'll need to look at reconciliation because whatever route this government chooses is going to be painful and given current performance (lacking in any coherence) it will lead to resentment all the way through to industrial dispute. I cant find anyone who believes the DH/SHA top teams know how to manage change. All but a few of them have ever experienced the real world and those that have are mediocre at best. We need new leadership.
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Anonymous | 23-Sep-2010 4:04 pm
Here we go again, we will get back to the 70s where NHS professionals had lost parity with others. It took us decades to return to a reasonable level. Potentially fewer nurses will be trained in an attempt to achieve savings, and we will end up with a double whammy of a national shortage. Fortunately I am nearing the end of my 40 year career in the NHS and cannot wait to leave.
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Anonymous | 24-Sep-2010 8:44 am
We in health are being protected from the ravages facing other vital public services such as social care. Given most social care staff are on the minimum wage, the debate raging over six figure salaries and even pay negotiations seems in stark contrast from the decisions being faced in other sectors. Far from losing parity with other professions, we may still find ourselves in a strong position relative to all other public sector staff. All is far from lost.
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Anonymous | 24-Sep-2010 9:18 am
"NHS faces a choice between freezing increments and losing tens of thousands of jobs."

That might be fair if the choice was either/or. I would be open minded about being rewarding less in return for job guarantees.

But its both - good chance of losing your job and failing that we'll steal the salary and pension you thought you had anyway.
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Star Geezer | 26-Sep-2010 9:53 pm
This is a scare story, jobs vs pay, well the staff accepted a 2 year pay freeze, how many the private sector did that, incremental freezes leaves it open to equal pay claims and as only 60% of staff have increments its very unfair as surprise surprise...its the high band 8&9s who are getting phenominal incremental pay rises, frankly I would.nt be bothered if they capped pay at 100K. They are the people to be recieving lower pay bandings and need culling in order to rebalance theservice as well as its finances.
Many Trusts have already negotiated frontline staffing cuts increasing caseloads and work.
These cuts are not necessary on the scale, speed & urgency proclaimed unless you are a carpet bagger and stealing the crown jewels of the nation ,Thatcher sold off the family silver.
The staff are waking up to the misinformation and half truths being told them and without a doubt serious unrest is heading our way, and thats before they cross the stupid over pensions.
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Anonymous | 27-Sep-2010 8:36 am
freezing increments for staff working in PCTs who have already been told their organisation will cease to exist in 2013 adds insult to injury. If we want them to support the transition to GP commissioners over the next couple of years, this is not the way to go about it.
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Anonymous | 28-Sep-2010 1:46 pm
Some good points. Being new to the NHS 2 years ago and in a relatively senior role I have to admit to being surprised at the automatic 2.5k per year plus inflation hikes each year. It certainly wasn't anything I had in the private sector, where my experience ranged from one year getting a pay rise of £10k, another getting a bonus of £17k and the next 4 years getting no increase, but keeping my job through some really tough times.

In the current climate I would accept a 2 year freeze or alternatively Afc increments halved and the number of steps doubled (therefore taking twice as long to get from the bottom to the top) if it meant security. I think most of my colleagues in PCTs would accept something similar if they could see prospects of continued employment in 2013 and beyond. This is a big if though.

At the moment it seems like there are planned pay freezes, job losses and at the same time both political parties saying NHS funding will increase in real terms.

Well done Alastair for kicking this off. We need to have a sensible debate about all of these issues and some of the even thornier ones like pensions and other benefits. Unless we do you will surely see the type of creeping outsourcing and privatisation of services where these benefits don't exist in any case.

There also need to be moves by the government away from the GP = Good, NHS Management = Bad Mantra.

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KEVIN PRITCHARD | 28-Sep-2010 1:47 pm
I note the opening sentence refers to contractors and then no reference after that.

Spare a thought for the hundreds of Interims who have been laid off with little chance of being taken on again.

Amongst the few offers of work are rates which represent 66% cuts on previous. Add to that periods of 'resting' lasting months at a time and you you can see that some NHS private sector partners are suffering more - many Interims would welcome a pay cut of 20%, never mind a pay freeze.

But that's business.

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Anonymous | 28-Sep-2010 3:59 pm
If the end game results in the reintroduction of local pay bargaining then this is going to creat far more problems than it solves. The last conservative Gov introduced it, it was shambolic and used up a lot of resources to manage it. The London cartel meant there was no local pay bargaining and it was an insult to staff intelligence to say it was.
Many trusts have large numbers at the top of their increment point 40%, so the 0ther 60% will be held back and made to contribute to the global finacial meltdown by working for less pay along side colleagues who have higher salaries... thats got to be a Lawyers dream equal pay claim.If the Trusts want to get a grip on finances, put a ceiling on the executives, freeze all band 8bs and higher. Don't go near low paid bands they've already accepted a 2 year pay freeze and some of them lose out under the benefits changes in April 11.
There is stupid line, FTs need to think carefully before they cross it.
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