The brakes have been firmly applied to the pay of senior managers in trusts. Mark Crail reports
If trusts heed health secretary Frank Dobson on nothing else, then it is clear that his word on managers' pay has become law.
A survey of more than 2,500 senior managers' pay and benefits published this week shows that 98 of the 133 participating trusts gave managers awards for 1998-99 which mirrored those of other staff - 3.8 per cent in two stages.
Among the 35 trusts which broke ranks, 26 gave managers unstaged rises of less than 3 per cent, seven paid 3.1 to 4 per cent, and only two offered more than 4 per cent.
John Langran, senior human resources adviser with NHSP, which published the survey, says: 'It is clear that remuneration committees have taken on board Frank Dobson's comments about managers' pay rises.'
The survey shows that the 'average' chief executive now earns£78,423, with second-level board director salaries running at£58,190, second-level non-board salaries at£47,952, and third-level managers' salaries at£34,100.
But those headline figures conceal considerable variation in the salaries paid to managers at trusts of different sizes, types and geographical locations. There are also wide differences in salaries among members of the same board.
There is a clear correlation between the size of a trust and the size of its chief executive's pay packet (see figure 1 overleaf).
Other board level directors' salaries follow a similar pattern.
But Mr Langran points out that the figures may show some 'flattening' at the top end of the scale.
For the first time this year, the survey includes a£150m-plus turnover category, with the highest reported salary -£125,000 - paid to the chief executive of one of these very large trusts.
Though such salaries are considerably smaller than those paid to the directors of private sector companies with similar annual turnover, Mr Langran believes comparisons are 'very difficult'.
'Much as I respect chief executives in trusts, I don't think the full scope of their responsibilities is the same as those of the chief executive of a PLC,' he says.
'But when you look at surveys based on job evaluations - which take account of these differences - you tend to find pay lagging by about 20 per cent in the NHS.
'You find these differences at the top end and the bottom end of the scale, but perhaps not in the middle. The average middle manager is not as badly paid as they probably think they are.'
Differences in geographical location show higher average salaries paid to managers in London and the South East - although many London trusts are excluded from the survey published this week.
But the range runs from£71,649 in Northern Ireland, with the lowest- paying English region, the North West, averaging£74,764, to£88,720 in South Thames. Outside London, Northern and Yorkshire region tops the table with an average£83,033.
'What this really shows is that the differences are not as great as you think they might be,' says Mr Langran. 'Trusts in the South East pay slightly better, as you might expect, but essentially it is a national labour market.'
Devolution may change that. 'Scotland has always had a more centralised approach, and it may become more interventionist,' he says.
The survey shows that chief executives and board-level directors continue to be paid more in acute trusts than in community and mental health trusts (see figure 2).
'There is a size issue here. Acute trusts tend to be larger than community trusts in terms of revenue spend,' says Mr Langran.
'But there is an element of prejudice which says a big acute trust is structurally more complex than a community trust. I am sure people in community trusts would spin another story about physical size and geographical dispersion.'
He points out that with the emergence of primary care trusts which commission from acute trusts, 'the boot might go on the other foot'.
'Community trusts are going to change shape. Some will disappear and others will become much more powerful.'
Among members of the same board, finance directors are still among the best paid (see figure 3).
Mr Langran says the letter sent by the health secretary last year warning trusts that they should not award managers more than other groups of staff 'caused considerable problems for some remuneration committees'.
He points out: 'Performance-related pay relates to what people achieved in the previous year, so there were difficulties for trusts, not least in managing people's expectations, when this came out.'
The survey shows that a trend away from cumulative bonuses appears to have gone into reverse. Among chief executives, 66.7 per cent now get a lump sum bonus, 29.4 per cent a cumulative bonus and 3.9 per cent both.
But the move away from long-term rolling contracts continues: 70.3 per cent of chief executives and 84.1 per cent of board directors are on permanent contracts.
He attributes the change in part to bad publicity surrounding big pay- offs for senior managers. 'There was a perception that there were chief executives sitting around with£200,000 pay-offs in their back pocket,' he says.
But he believes the influence of trust chairs from the private sector has also been significant. 'They came in and said, 'what are these rolling contracts?'' he says.
'It is ironic because they were only introduced in the first place because people thought everyone in the private sector had them.'
NHS Salary Club Survey of Chief and Senior Executives: eighth edition.£265.
NHS Salary Club Middle Management Survey.£125. NHSP, King Square House, King Square, Bristol BS2 8EE.