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NHS Employers Support More Flexibility on Pay but Caution on Full Local Pay Bargaining

Greater flexibility to vary pay in different parts of the country could lead to more efficient use of the "unaffordable" NHS pay bill, according to the NHS Employers organisation.

 

But there is limited appetite for full local pay bargaining, which could significantly increase administration costs and risk pay inflation as employers compete for staff.

The NHS Employers organisation has published its submission on market facing pay to the NHS Pay Review Body.

The submission points out that the NHS has a wide-ranging sophisticated workforce that operates at international, national, regional and local levels.

The NHS Employers organisation stresses that savings made from a more efficient system should be retained locally and reinvested in patient care.

Dean Royles, director of the NHS Employers organisation, said:

"Employers are very concerned that pay arrangements are not affordable in their current form and that this financial pressure could harm future patient services. Over half of all NHS spending is on pay, so reducing cost and ensuring greater productivity is a priority if the NHS is to achieve its target of £20 billion in efficiency savings.

"But getting rewards wrong could have a significant impact on the quality of patient care and safety. This is a complex area and we need to avoid crude solutions."

The submission points to research showing that large private sector organisations, with sites across the country, tend to have national pay frameworks to avoid the time and costs of multiple full local bargaining. Income Data Services (IDS) found that nationally-determined zonal approaches are common in retail while banks tend to use regional pay bands(1).

The submission concludes that the current pay system's "high cost area supplements" (HCAS) - of which 'London weighting' is an example - could be extended and amended to differentiate pay awards to different areas, should there be evidence to justify this.

The submission suggests to the Government that the following issues need consideration:

  • A continued role for a national framework. Though some local NHS organisations can and may want to agree local arrangements. A central approach continues to be followed by large private sector national organisations.
  • There would be need for a transparent methodology to rank each geographical area based on a range of economic and labour measures.
  • There is a need for better information and data sources for future pay rounds.
  • It is essential that any further pay differentiation should be balanced to NHS funding allocations.
  • Any changes should avoid adding too much complexity to the national framework.
  • Equal pay requirements limit the scope for much pay differentiation for staff within the same Agenda for Change pay band at employer level.
  • Defining boundaries will be difficult. There are NHS organisations of all sizes, many of which are multi-site spread over large geographical boundaries. Regional and PCT boundaries are likely to end. NHS organisations near boundaries may find themselves at a competitive disadvantage for healthcare professional staff.

The full NHS Employers submission is available here.

(1) IDS, Location-based pay differentiation A research report for UNISON, September 2011.

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