Published: 05/02/2004, Volume II4, No. 5891 Page 34 35

Agenda for Change holds only some of the solutions for fixing NHS staffing problems, as an analysis by Philip Cohen and Phil Kenmore explains

By common consent, Agenda for Change represents the biggest ever reform to the NHS pay system. It is also one of the biggest change management exercises ever undertaken by a UK employer.

Combined with the new consultant contract and the new general medical services contract, the extent of the changes is staggering.

Not surprisingly, these will have an effect on the pay market across the country - and not just in the public sector. The Hay Group set out to examine how the new pay rates for most NHS staff compare to current market conditions and whether they create the conditions required for the NHS to attract, retain and develop the staff it needs to deliver an ambitious modernisation agenda.

We took a sample of the published new role profiles and evaluated them using our methodology. This allowed a comparison of the Agenda For Change pay rates with the Hay Group database of over 500 private and public sector employers.We compared base salary rates to two geographically based data sets: national public and private sector markets excluding London and the South East, and inner London.

Figures 1 and 2 show the results alongside the minimum and maximum pay rates in the new pay bands (uplifted for 2003-04), as stated in the Department of Health pay circular of 24 July 2003.

The data revealed the following:

At the minimum pay rates, NHS staff will earn significantly below the market median for both the public and private sectors and in fact also below the lower quartiles. Outside London and the South East, pay bands 5 and 6 (entry level and experienced professionals) fare particularly badly.Within inner London (assuming all staff receive the full inner London allowance) the gap is marginally less.

At maximum rates, NHS pay for relatively senior posts will be comparable to public sector pay, with bands 8a-c faring fairly well outside London and the South East and band 8d being well above the median rate. In inner London the story is even better.

Also important are comparisons to the private sector where the NHS is increasingly competing at all job levels. Again, outside London and the South East, the lower pay bands do not fare well (although band 2 is again closer than others to the market median), but the higher bands of 8b-d do reasonably well. In inner London, the gaps for bands 1-4 are particularly significant.

Our data, especially for areas outside London and the South East, camouflages very substantial variations in local pay market practices.However, below grade 6 the NHS maximum will be roughly in line with the lowestpaying parts of local government and other public services.

At the minimum (entry) levels, the new pay rates are unlikely to help the NHS recruit and retain staff in most parts of the country.

However, at the more senior levels the new pay rates do, on the whole, compare favourably with the rest of the public sector - especially at the highest levels outside London and the South East.

In prosperous southern areas, things may well remain more difficult. So will Agenda for Change get the desired results?

The profiles we selected reveal the job evaluation methodology itself to be robust and to produce a generally defensible rank order.

This is good news for the NHS in terms of ensuring equal pay for work of equal value - but it will need to be applied rigorously at local level. The fact that the more senior, qualified professional groups fare well in the new pay bands should be helpful in gaining greater flexibility in roles and responsibilities as staff move up the skills escalator and take on roles previously associated with medical jobs.

Lower level jobs do less well.

Progress may be more dependent on convincing people that the knowledge and skills framework can lead to pay progression within a reasonable timescale.A lot may depend on the experiences of the early implementer sites before the second ballots by the unions.

Agenda for Change comes with a 10 per cent pay rise over three years and it is estimated that the average increase on top of this will be a further 5.9 per cent, albeit with winners and losers.

This is happening in the context of the new consultant contract bringing pay rises of 9-24 per cent, the new GMS contract bringing an estimated average pay rise for GPs of 11 per cent and a new pay framework for chief executives with a pay range of£65,000-150,000.

There is no doubt that Agenda for Change is a major step forward. But the pay rates are very unlikely to provide the full answer to the problems faced, and that implementation may still face some serious risks. In parts of the country, the minimum pay points may be little used. Our advice to trusts is to track the local pay market, make best use of the recruitment and retention premia, and not to underestimate the local work involved in implementation.

Philip Cohen is a director and Phil Kenmore is head of healthcare consulting, Hay Group www. haygroup. com