NHS leaders are calling for the third year of the pay settlement to be renegotiated to avoid mass redundancies.

The calls come as HSJ’s exclusive survey of 35 finance directors reveals the posts most vulnerable to cuts.

Participants were interviewed in mid June - almost a month after NHS chief executive David Nicholson warned the service it would need to make efficiency savings of around £6bn a year from 2011 onwards.

Only two of the 35 directors said they had recruitment freezes now, but five said they were planning to either freeze recruitment or limit recruitment spending over the next year. Overall, respondents expected staff numbers in seven categories to fare slightly worse than “stay the same”.

The most vulnerable staffing groups were administrators, support staff such as porters and junior managers in acute trusts, with finance directors expecting “moderate decreases” on average.

“I can’t see that any part of society can be safeguarded”

A third or more of finance directors said they expected moderate or worse reductions in senior managers, junior managers and administrators. These, plus support staff and clinicians other than doctors and nurses, were also the most likely targets for future recruitment freezes. The safest posts were clinical. The most vulnerable clinical posts were in mental health trusts.

Managers fear if pay is not renegotiated, “painful measures”, including compulsory redundancies, will need to be imposed sooner than expected.

The current pay deal, set last year, would give staff covered by Agenda for Change a 2.25 per cent pay rise in 2010-11.

Cumbria Partnership Mental Health foundation trust chief executive Stephen Dalton said unless the deal was re-examined, providers may have no choice but to reduce headcount.

This would be especially likely if there were a limited financial settlement next year due to a review of the payment by results tariff or if commissioning for quality and innovation (CQUIN) payments were held back.

He said: “If we carry on with the same pay deal the danger is we’ll have to bring forward the timetable for employment efficiency savings and that will inevitably mean redundancies.”

Possible job cuts

Percentage of finance directors saying these staff are most likely to be reduced this year.

  • Junior managers 37
  • Administrators 37
  • Senior managers 34
  • Other support staff 31
  • Other clinicians 26
  • Nurses 26
  • Doctors 20

Percentage of finance directors saying these staff are most likely to increase this year

  • Other support staff 0
  • Junior managers 6
  • Administrators 9
  • Senior managers 9
  • Doctors 11
  • Nurses 14
  • Other clinicians 17

Audit Commission chief executive Steve Bundred has warned the public sector must not be immune to pay freezes and spending cuts. Mr Dalton said a pay freeze after 2011 was “the only way forward” because of the likely timing of a delayed “public sector recession”.

A senior NHS workforce leader said NHS Employers needed to start renegotiating the third year of the deal: “Even if the deal stands, it sets out a clear marker [for the following year]. Now is the time to do it.”

Unions, which have rejected reopening the deal or pay freezes after 2011, had made a “tactical error” by arguing that the first year needed to be re-evaluated in light of then spiralling inflation, the manager said.

If the pay review body, due to report in autumn, identifies new evidence of a change in recruitment and retention and wider economic and labour market conditions, it can request a remit from the secretary of state to review the increases set out in the agreement for 2010-11.

A foundation trust chief executive agreed the public sector had to contribute towards the “painful periods” ahead: “The trade unions’ view that the public sector should be protected has no foundation at all because the public sector is funded by taxation. I can’t see that any part of society can be safeguarded.”

His trust was planning for a 4-5 per cent downturn between 2011 and 2016.

NHS Employers director of pay, pensions and employment relations Gill Bellord said it remained committed to the three year pay settlement.

HSJ’s first survey of NHS finance directors is based on structured interviews with 35 finance directors and deputy finance directors from across the NHS. Efforts were made to make the participants representative; 46 per cent of the panel were from primary care trusts, 37 per cent from acute trusts and 17 per cent from mental health trusts. The interviews were conducted between 17 and 26 June this year - a week after the NHS Confederation conference.

See Pay freeze warmer prospect than redundancies.