Executive-level pay jumps by 4.5 per cent

A study of boardroom pay in the health service by pay analysts Incomes Data Services also found a widening wage gap between foundation and non-foundation bosses.

Around one in eight non-medical chiefs and seven out of 10 medical directors in England earned more than £150,000 last year, according to IDS, which studied accounts for the year to March 2010.

The basic salary of non-medical chief executives in the NHS increased by an average of 4.5 per cent, three times higher than the Department of Health’s pay guidance rise of 1.5 per cent.

Steve Tatton of IDS said: “The government wants to bear down on senior executive pay in the public sector, yet it also wants to see decisions made locally without interference from central authorities.

“The issue for NHS organisations is will they be free to pay their senior executives what they decide is necessary or will they have to follow externally imposed pay restraints?”

Median total earnings of chief executives in foundation trusts was £164,500 compared to £152,500 for those in non-foundation trusts, the report said.

Foundation trusts have considerably more independence over the level of remuneration awarded to their executives, whereas others such as primary care and ambulance trusts are governed by prescribed guidelines determined by the Department of Health, IDS said.

The study also found that turnover in non-foundation trust boardrooms increased from 17 per cent to 24 per cent in the year to March 2010 and from 14 per cent to 21 per cent for foundation trusts.

A DH spokesman said: “Leadership has been vital to the NHS’s strong performance in recent years and there is continuing need for high quality leaders and administrators across the NHS. Very senior managers play vital roles in the success of the NHS, and generally provide very good value for money.

“NHS senior managers whose pay falls within the national framework received no uplift to basic pay for the 2010-11 financial year, and pay levels will be frozen for a further two years from April 2011.”

NHS Confederation deputy chief executive David Stout said: “NHS organisations are large and complex in nature and require the right managerial skills to be led effectively. A large city hospital could have a budget of between £500m and £1bn and employ as many as 10,000 staff - comparable to many FTSE 250 companies.

“Because of the challenging nature of a chief executive’s role, NHS boards must consider a range of factors, including pay, to encourage the best candidates in to these positions.

“The NHS is looking to involve more clinical staff in top management positions. Given that a number of hospital doctors will be paid more than NHS chief executives, this factor must be taken into consideration when making a decision on pay.”