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Break the cycle of pay freezes and service crises

This last month has been all about culture change in the NHS. No surprise given it’s a year since Robert Francis presented his seminal report into the events at Mid Staffordshire Hospital. It was great to see the Nuffield Trust reporting good progress on NHS culture change.

‘We are not asking for radical change, just the same sort of changes we have already agreed with other staff groups’

But in the NHS the centrality of the finance challenge is never far away. This month is no exception.

Trusts will be examining their month 9 and 10 finance reports – which are always a good indicator of where we will end the year. In addition, the pay review bodies will report their recommendations, in the context of the 1 per cent public sector pay cap.

To give some perspective, a 1 per cent pay increase for the NHS is the equivalent of £500m; the equivalent of over 15,000 nurses. We are also four months into negotiations on terms and conditions of employment with the British Medical Association.

Two way street

In these conversations, we are not asking for radical change, just the same sort of changes we have already agreed with other staff groups – more local discretion on increments and clinical excellence awards, and no veto on weekend work. Just the same employment protection as other staff. Nurses, therapists, admin staff and support workers have already accepted changes and we need doctors to do the same. We can’t expect patience from employers and I know trusts are already looking at implementing local solutions. The finance clock is ticking.

‘It frustrates me when commentators say a pay freeze is easy. It’s not. It can affect morale and values’

I know it can seem like employers and government want it all – pay restraint and changes to terms and conditions as well as increased activity. Like other parts of the public sector, the NHS is looking to do more with less. But everyone around the table – employers and trade unions, including the BMA – often talk of a partnership approach.

To be real, a partnership needs to work in challenging times as well as good times. We need to show we have the maturity of relationship to agree on changes that reflect the prevailing circumstances and equip us better for the future. And it’s not a one way street.

A forced choice

I know we, as employers, cannot go on asking for pay freezes year in, year out. It frustrates me when commentators say a pay freeze is easy. It’s not. It can affect morale and values; it can widen pay gaps. It not easy to recommend and even harder to try and justify to staff who are working hard, all hours, to provide care and to make ends meet. But at the moment it feels like a forced choice – jobs or pay increases?

‘It is right to explore and test out assumptions, to see if they will help us contain costs, secure jobs and exit from pay restraint’

We can also learn from experience. Public sector pay has been like a pendulum. We erode and eat away at earnings until we get a recruitment and service crisis. So we throw money at it from the wrong side of the negotiating table (usually in ways that fail to value our staff, so we get no corresponding morale lift when we do award increases). The public then criticise overpaid public sector workers and the cycle starts all over again. We need to break out of it. We have to be creative and bold.

Let’s explore options for multi-year deals – could we get cross-government support? Or let’s explore how we could move towards the “living wage”. That’s not easy given the cost and potential impact, for not only would it affect those earning below the living wage, but would effect pay differentials. And what would it mean for contracting for services? Would it create a level playing field or exacerbate it? Could we use “pay award” money to smooth things? Will commissioners provide support?

It’s a wicked problem but surely it is right to explore and test out assumptions, to see if they will help us contain costs, secure jobs and allow a smooth exit from pay restraint. That has to be good for patients, staff and employers.

Dean Royles is chief executive at NHS Employers

Readers' comments (1)

  • Mike Jackson

    Introducing the 'living wage' of a minimum £7.65 outside London and £8.80 in London would have a little impact on Trust budgets. All london Trusts rates are already above these rates as are the fringe rates. For the rest of the country it would simply mean removing the first two pay points which would have no knock on impact on differentials. In many ways its a disgrace this hasn't happened already given that so much of the public and private sector have adopted the minimum wage. The NHS should be an exmplar employer particularly when the links between low pay and poor health are so well documented.

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