Bill could lead to 'dilution' of pensions benefits
Monitor could push for the value of NHS pensions to be reduced under the terms of the Health Bill.
Documents released alongside the bill highlight inequities between the private and public sector that Monitor will need to consider as economic regulator.
The impact assessment says: “Independent providers of healthcare may have been deterred from entering the market for NHS services because they perceive that incumbent NHS providers are given certain advantages – for example an affordable pension scheme – which mean that they cannot compete on a fair playing field.”
It says Monitor, as independent economic regulator with a duty to promote competition “could help address these issues over time”.
The impact assessment also states that it is the NHS that benefits from “the majority” of the “quantifiable distortions” within the healthcare market, for example in terms of tax, capital funding and staff pensions.
It says these “distortions” result in private sector acute providers facing costs that are around 14 per cent higher than an average NHS provider.
HSJ has teamed up with the NHS legal experts Beachcroft to provide exclusive legal and technical analysis of the bill.
Beachcroft partner Rachel Heenan said the wording of the bill effectively marked out a government “placeholder” in the discussions around the market distortion created by the NHS pension scheme and by the current agreement that NHS staff transferred to other employers are given a comparable pension.
The involvement of Monitor could result in the “dilution [or] abolition of the Fair Deal requirement to provide a broadly comparable pension scheme to the NHS pension scheme for staff transferring out of the NHS,” she said.
However, it could also mean “a reduction in the value of NHS pension scheme benefits accrued in the future.”
Before Christmas, NHS chief executive Sir David Nicholson said in a letter to managers that commissioning consortia would have “NHS employing authority status”, meaning transferring NHS staff would retain access to the pension scheme.
However the bill seems to leave this open.
It states that a commissioning consortia “must pay its employees such remuneration as it may determine and employ them on such other terms and conditions as it may determine.” This includes pensions.
Ms Heenan said: “It’s not necessarily assumed that there will be access to the NHS pension scheme” for consortia staff.
Have your say
You must sign in to make a comment.
Related images
Make-up and duties of health and wellbeing boards revealed
Health secretary to get powers over commissioning board
Commissioning transition to cost £1.2bn
New freedoms set out for NHS foundation trusts
Health Bill maintains light touch on consortia
Small consortia will reduce savings, warns DH
The Health and Social Care Bill 2011
National board will hire consortia leads and guide pay
Public health directors in grip of health secretary
FT oversight to move to DH bank
Commissioning board given 'draconian' powers
Tribunal to have responsibility for settling disputes over protected services
Extent of health secretary's powers over NHS Commissioning Board 'surprising'
Bill paves way for consortia bail outs and risk sharing
Redundancy payouts to average £48,000
Your essential guide to the Health Bill
The commissioner's essential guide to the Health Bill
Share
Readers' comments (5)
Anonymous | 21-Jan-2011 9:15 am
I thought that providers were compensated for unavoidable variation in costs by the use of the Market Forces Factor (MFF). Many private providers have very high MFF.
Unsuitable or offensive?
Anonymous | 21-Jan-2011 9:49 am
The NHS does not pay the full cost of staff pensions. NHS employers typically contribute 14% of salary with employees contributing a further 6% giving a total 20%. To fund a final salary scheme like the NHS one would require the NHS contribution level to rise to near 30% with a total contribution around 36%.
The NHS is heavily subsidised when it competes against a private sector provider.
Unsuitable or offensive?
mike batt | 21-Jan-2011 10:45 am
TUPE will apply though to consortia and unless they make all staff redundant, they will haveto offer an equivalent scheme.
Unsuitable or offensive?
Anonymous | 21-Jan-2011 11:20 am
Mike,
They could get Closed Directive status. This means existing staff can keep their pension and the employer only has to pay the 14%. But all new staff must go on a new direct contribution pension as opposed to direct benefit pension. This is the model being used for the most recent social enterprises.
Unsuitable or offensive?
Anonymous | 25-Jan-2011 7:27 pm
Not unexpected. The Free School initiative by Gove has already destroyed the central bargaining between teachers unions and the local authorities, existing teachers are covered by pay agreements but new teachers won't be. Getting pensions watered down is just a matter of natural development given the objectives of this government.
Unsuitable or offensive?