The NHS pay freeze has failed to prevent acute hospitals from running up an estimated £300m year-to-date overspend on wage bills, an HSJ investigation has revealed.
HSJ’s figures also show that although the number of pay increments withheld from staff has doubled in 2011-12 compared with 2010-11, the vast majority of employees are automatically being handed incremental rises worth on average 2.8 per cent a year.
An HSJ analysis of the board papers of 96 trusts show they have already racked up a combined £176.3m year-to-date overspend on their 2011-12 paybills, based mainly on January figures. This suggests there is a £300m-plus overspend if extrapolated across all 165 acute and specialist trusts in England.
NHS chief executive Sir David Nicholson said last October that 40 per cent of the £20bn efficiency savings target would come from “national action” such as the pay freeze, which affects all NHS staff earning over £21,000 until April 2013.
Many trusts claim activity levels are preventing them from cutting their workforces as planned, as well as forcing them to rely on agency staff.
University Hospital Southampton Foundation Trust’s year-to-date outgoings on pay are 10 per cent higher than it budgeted for – a £7.1m overspend. A spokeswoman said: “The trust’s commissioners had anticipated reducing demand significantly but this has not occurred to the planned extent.”
Barking, Havering and Redbridge University Hospitals Trust’s paybill is 8 per cent, or £14.6m, overspent. It said it faced continued problems recruiting permanent staff.
Under the Agenda for Change pay framework, trusts are able to use appraisals to judge whether staff should be given a pay increment on top of the frozen “cost of living” allowance set nationally.
A separate HSJ inquiry drew Freedom of Information responses from 98 trusts with a combined £14.2bn year to date pay budget. This showed that so far this year just 18 have held back increments from 1,219 staff in total. See the files attached right.
The biggest proportion (42 per cent) of withheld pay increments were due to performance issues identified through appraisals, but a third were due to poor attendance and a fifth were for other reasons, including not attending mandatory training.
University Hospitals of Morecambe Bay Foundation Trust has held back the most increments – 427 this year, resulting in a £236,000 saving.
However, at 81 trusts not a single increment has been withheld for the past two years.
The figures have emerged as public sector pay is being heavily scrutinised by the government. Chancellor George Osborne was expected to announce in yesterday’s Budget that local pay rates would be rolled out to public sector staff. The NHS Pay Review Body is due to report to the government in July on the desirability of introducing local pay rates to the service.
Last year, NHS Employers unsuccessfully tried to negotiate a national deal with unions whereby increments would be frozen in return for no compulsory redundancies.
HSJ understands national staff representatives have been presented with a fresh series of proposals aimed at reducing paybills, but discussions have been put on hold pending ballots over pensions.
The possibility of unrest over pensions in coming months is also understood to be contributing to the government’s delayed decision on whether trusts will have to fund doctors’ clinical excellence awards in 2012.
HSJ understands the DH’s advisory body on the awards has written to health minister Simon Burns asking if he was “in a better position to give us a more precise date” for the long-awaited announcement.
NHS Employers director Dean Royles confirmed “an increasing number” of trusts were experiencing paybill pressures and said there were growing concerns that current pay arrangements “are not affordable”.
The £250 pay rise for those earning less than £21,000 recommended last week by the NHS Pay Review Body and incremental increases would “exacerbate the position”, he said, adding: “It’s a big ask for employers who want to avoid compulsory redundancies but who sometimes see slow progress and resistance [on changes to pay].”
Unite’s Barrie Brown said unions had little problem with employers deciding not to pay underperforming staff. However, he added that unions would resist attempts to move beyond Agenda for Change – for example Central Manchester University Hospitals Foundation Trust’s failed effort to link pay to sickness absence.
- Agenda for Change
- BARKING, HAVERING AND REDBRIDGE HOSP NHS TRUST
- CENTRAL MANCHESTER UNIVERSITY HOSPITALS NHS FOUNDATION TRUST
- Department of Health and Social Care (DHSC)
- George Osborne
- NHS Employers
- Simon Burns
- UNIVERSITY HOSPITAL SOUTHAMPTON NHS FOUNDATION TRUST
- UNIVERSITY HOSPITALS OF MORECAMBE BAY NHS TRUST