I suspect from recent comments on ways of handling the economic downturn that the pre-election phoney war is now beginning. Views against initiatives such as workforce reductions have started to emerge but perhaps based more on philosophical grounds rather than rigorous analysis.I suspect it will not be too long before pay and compensation packages are raised as one of the possible solutions not just for the NHS but the public sector as a whole, particularly following the (not new) suggestion of public sector pension reform.  


This month’s HBR raises some interesting points in its article The Coming Battle over Executive Pay, one of which is that 373 US public companies reduced their chief executive’s base salaries during 2008-09 and 68 companies in the Fortune 1000 index reduced executives’ base salaries in the past year. Perhaps one of the principal lessons from what’s been going on across the Atlantic is that boards need to pay closer attention to remuneration issues not only because of company failures but also as a result of shareholder pressure. As these issues travel across to the UK, as they have started to, the UK public sector should prepare for pressure from FT governors, trades unions and staff, local public service and NHS pressure groups, the public and local politicians.


Looking ahead over the coming months another variable linked to the above developing scenario is the concern of Foundation Trust leaders, reported in HSJ, that ministers will try to appoint a government-friendly chair of Monitor when Bill Moyes steps down next January. Foundation Trusts are one of the biggest employers in most parts of the country and consequentially will be at the forefront of managing the impact of the economic downturn. We should remember that the creation of independent FTs is one of the key differences from the last economic downturn and presents them with a unique, collective opportunity both locally and nationally.


Locally, the opportunity is there for FTs to coordinate their approach within regional workforce markets to staff and trade unions over new pay arrangements, for example on handling pay increases. Such initiatives would reflect what’s been happening in parts of the UK private sector where pay freezes and pay cuts have been negotiated in return for maintaining employment during the downturn period. Nationally, it’s a time of opportunity for FTs to prepare a coordinated and coherent negotiating stance on pay and a whole range of common interests for discussion as next year’s general election approaches.


Philosophical responses to calls for greater efficiency are important but will not be enough. Oddly enough they are not incompatible but no matter how well loved the NHS is in the eyes of the public a more-hard edged approach to demonstrating value for money will be necessary as the downturn bites. Leadership is often about timing and If there is to be a real test for the Foundation Trust movement in terms of its relationship with regulators and government then I would suggest we are approaching it fast.