EXCLUSIVE: NHS Employers backs pay freeze

HSJ has learned NHS Employers is to ask the Doctors’ and Dentists’ Review Body to extend the pay freeze for a further year, claiming it is “essential to protect services and minimise job losses”. It is understood NHS Employers will subsequently recommend pay is frozen for all groups of NHS staff.

Across the public sector, the government had indicated it would allow a below-inflation 1 per cent increase for staff. However, HSJ understands NHS Employers will say such an increase is not needed in the NHS when workers continue to receive automatic incremental pay rises under Agenda for Change rules.

Approximately 70 per cent of NHS trusts’ budgets is spent on pay. A 1 per cent increase is projected to add hundreds of millions of pounds to trusts’ overall bill, hampering the NHS’s attempts to hit its efficiency targets.

NHS Employers will tell the review body that pay will make up an increasing proportion of trusts’ cost improvement programmes, rising from 57 per cent of total savings in 2012-13 to 63 per cent in 2014-15.

The body will also say incremental “drift”, where staff progress automatically through pay bands on the Agenda for Change framework, adds around 2 per cent to each NHS trust’s pay bill annually.

The flat rate £250 increase for workers earning below £21,000, as part of the two-year pay freeze for other groups, has added a further 0.4 per cent.

In total, the two-year pay freeze from April 2011 to March 2013 was predicted to save £3.3bn.

Automatic rises for doctors, who are covered by a separate contract, can range from 3-8 per cent of pay a year, according to NHS Employers. For wider NHS staff, increments can result in increases of 1.8-3.7 per cent a year.

HSJ understands NHS Employers will use its submission to the review body to say: “The current national pay and conditions arrangements are increasingly not affordable for employers… who are faced with the task of meeting growing demand and sustaining the quality of patient care while achieving unprecedented efficiency savings of up to £20bn by March 2015.”

NHS Employers will add: “There is no evidence from employers that any increase in the national scales is necessary for the recruitment, retention or motivation of staff.

“Taken together, the financial challenges to the service and the general financial outlook for the UK suggest to employers that further restraint on pay costs will be needed for some time ahead.”

The issue will add to existing workforce tensions at a time when NHS Employers is trying to secure an agreement from health unions to dilute terms and conditions, including incremental pay rises, by modifying Agenda for Change.

Union leaders have threatened to walk away from the talks after a group of 20 trusts in the South West formed their own consortium to consider breaking from the national framework.

In 2010-11, NHS Employers tried to negotiate a national deal with unions to freeze increments in return for promising no compulsory redundancies but the offer was rejected.

The Department of Health and unions are expected to submit their own evidence to the review body before the end of the month.

The move is likely to add to growing anger among unions, with public sector pay in the spotlight at this week’s Labour conference in Manchester. Party leader Ed Miliband and shadow chancellor Ed Balls provoked union outrage by backing the current pay freeze.