Agenda for Change: NHS Pay Restraint

Debate between Justin Madders and Lilian Greenwood

Monday 30th January 2017 Westminster Hall

[Justin Madders]

I agree entirely. We all know—it is well documented—the financial pressures that the health service is under. It defies belief or explanation that those in senior positions can still fly in the face of that. I can only sympathise profusely with how nurses must feel when they see those headlines.

[Lilian Greenwood (Nottingham South) (Lab)]

Important as nurses are as the backbone of our health service, many other NHS staff are affected by the Agenda for Change pay freeze. Does my hon. Friend share my particular concern for the many staff who work in support services? Given the financial pressure that trusts are under, they have been forced to privatise parts of the service, and support services staff have moved off Agenda for Change terms and conditions altogether, which is what has happened at my local trust. The private sector tries to recruit new members of staff for less than Agenda for Change, because it is implementing the funding cuts that it faces.

[Justin Madders]

My hon. Friend has encapsulated the challenge we always face when a service is privatised. Most often the only way in which the savings promised by the private company can be delivered is by changes to staff terms and conditions. I also agree that the pay freeze affects not only nurses, but the whole of the Agenda for Change workforce. Today we are focusing in particular on some of the effects on nurses, because there are clear reasons why that position is unsustainable.

To return to some of the contributions we have heard today, my right hon. Friend the Member for Leigh described clearly the impact on a ward of having agency staff, and how that creates uncertainty and is not the most efficient way of working. There is also the manifest unfairness of having someone on the same ward, who is only there for that particular shift, earning significantly more than permanent members of staff. How demoralising must that be for those involved? He was right to say in conclusion that we cannot afford to lose the good will of the nursing profession further.

In common with many hon. Members who have spoken today, I pay tribute to everyone who works in the NHS and the health and social care sector, not only to doctors and nurses, but to other allied health professionals such as porters, healthcare assistants, cleaners, receptionists, care workers, paramedics and countless others. It is important to remember that behind every story about the crisis that our NHS has faced this winter are patients waiting too long for treatment, and hard-working public servants doing everything that they can to prevent a very difficult situation from getting worse.

The NHS is the biggest employer in the country—and one of the biggest in the world—and it depends on the tireless efforts of its staff to keep going and meet the challenges of rising demand and insufficient funding. Let us be clear: we cannot indefinitely keep asking them to do more for less. I would argue, as other hon. Members have, that only the good will of NHS workers has stopped the current crisis from turning into a catastrophe. I recently heard the staff who work in our NHS described as “shock absorbers”. That seemed to be a pretty good description of how they are taking and absorbing the relentless pressure and stress of being on the frontline of an underfunded health service. They can take that for only so long before something snaps, which is why it is so important that we fully explore these issues today.

The incredible determination, professionalism and compassion that we see from staff comes against the backdrop of six years of pay restraint. Salary increases for NHS staff have either been frozen or capped at a level far below the rate of inflation. According to Unison, between 2010 and 2016 that represented a cut of more than £4.3 billion from NHS staff salaries, or a loss of between 12% and 19% in actual value since 2010. The Royal College of Nursing believes that since 2011 there has been a real-terms drop in earnings of 14% for its members. With Treasury forecasts indicating that the cost of living will go up by more than 3% every year between 2018 and 2020, it is not difficult to see how the current policy on pay restraint is unsustainable.

The policy is already beginning to have a huge personal impact on some of those affected. Registration fees have gone up by more than a third in two years, and we know well that wages have not kept pace with the cost of living. As we have heard, particularly from my hon. Friend the Member for Newcastle upon Tyne North, staff surveys from the RCN and Unison found that nearly two thirds of staff feel worse off financially than they did a year ago. Forty-nine per cent. had asked for financial support from a family or friend, 13% had used a debt advice service and 11% had used a payday loan company. About a third of nurses are struggling to pay their gas and electricity bills, 53% are working extra hours just to pay their everyday bills and 11% had pawned possessions. The Cavell Nurses’ Trust also found that 20% of nurses had skipped a meal in the last year due to money worries. Those are not abstract figures; they represent real people.

There was a lobby of Parliament today, and I am sure that some hon. Members in the Chamber went to hear at first hand from nurses how they are struggling. I met a nurse from the west midlands who works three days a week because of her caring responsibilities. She told me that she is living below the poverty line. Are we not ashamed that someone caring for our most vulnerable has to live like that? Are we really comfortable with a situation in which the people we are asking to care for our loved ones are having to pawn their possessions in order to make ends meet? In one of the richest countries in the world, can any of us accept the sight of nurses going to food banks?

Nowhere is the problem more acute than in our capital city. The Nursing Times reported that 40% of nurses who currently live in London say that the cost of housing means they will be forced to leave the capital in the next five years. Of course that challenge is not unique to the health service, but vacancy rates in the London area are among the highest in the country, with at least 10,000 nursing vacancies. How long will it be before we reach a tipping point from which there will be no recovery?

The impact is not just on nurses in their daily lives outside work, but on their working environment. NHS staff surveys paint a picture that cannot be ignored. The 2015 survey for England found that 48% of those surveyed stated that a lack of staff was impinging on their ability to do their job, and only 43% felt able to manage all the conflicting demands on their time. The warning signs are there for us all to see.

Analysis of NHS England data by the Health Service Journal found that 96% of NHS hospital trusts in England had fewer nurses covering day shifts in October than they had planned, and 85% did not have the desired numbers working at night. In 2013, the regulator Monitor, now part of NHS Improvement, warned about the potential impact of continuing pay restraint, stating in a report:

“Capping wages for longer to keep costs down would be self-defeating for the sector in the long term as it would make recruiting and retaining good quality professionals increasingly difficult.”

We had that very clear warning four years ago, but we have not heeded it.

The evidence that we have heard today and on previous occasions has proved that that prophecy was correct. The Public Accounts Committee reported that the number of nurses leaving their jobs increased from 6.8% in 2010-11 to 9.2% in 2014-15. Simon Stevens gave evidence to that Committee in 2014, stating that pay restraint would not be an “indefinitely repeatable strategy”, yet that is exactly what the Government propose to do.

Pay restraint, along with a cut to the number of nurse training places in 2010, led to a situation in which the amount of money that the NHS spent on agency staff soared by £800 million in a single year to £3.3 billion in 2014-15. Although considerable steps have been taken to bear down on the figure since then, the situation only developed because of poor and short-term decisions made by the Government, and it remains the case that we still spend far too much public money on agency staff because the NHS has been unable to recruit and retain enough of its own. If we had maintained the levels set by the last Labour Government, we would have had 8,000 more nurses trained during the last Parliament.

Recent figures have revealed that the agency staff cap has been breached almost 2.7 million times in its first nine months of operation. That is a clear example of the impact of the recruitment and retention crisis on all areas of the NHS and how the current workforce balance is completely out of kilter. The use of agency staff is meant to be a temporary measure in times of particular demand and stress for the workforce, not a permanent feature. The fact that these incidences have run into the millions in less than a year should be a huge concern to the Government and a clear warning that the stability and continuity that we all want to see in our workforce is a long way from being achieved. The Government urgently need to address the situation in which hospitals seem unable to provide safe levels of care without relying permanently on agency staff.

The dependency on agency staff has made the case for a pay increase as strong as it has ever been. That is the view not only of the Royal College of Nursing, but of those that look at the impact of skills shortages on the wider economy. In March 2016 the Migration Advisory Committee found that many nurses are moving to agency work or leaving the profession altogether. The fact that the Government have had to put nurses on the skills shortages list should have been the point at which they realised that their pay restraint policy had reached the end of the road. Instead, they have ploughed on regardless, treating the symptoms rather than the cause.

In that regard, the disastrous policy of having tuition fees for student nurses will almost certainly make the position worse, not better. The Royal College of Nursing warned at the time that the policy could act as a disincentive for students from some backgrounds—particularly mature students and those on lower incomes—and early indications are that applications to study are down by at least 20%. If that turns out to be an accurate reflection of the position, the pressure on existing staff can only increase.

[Justin Madders]

I am glad to hear that my hon. Friend is out on the doorstep on a Saturday morning, but sorry that the news she was given is so concerning. It is not, however, a surprise. This is something that just about everyone interested in the matter warned the Government of and, as she says, we will find out in the next month or so what the final figures are. If they are of the order that we are hearing about, the Government will have the opportunity seriously to reconsider the policy. Today, when I attended the lobby, I heard some student nurses saying that they are finding it difficult to get staff mentors, because senior staff are exhausted. They do not blame those staff for that; they understand the intolerable pressure, because they too see it for themselves.

The change to student fees will add an extra penalty on those training from this year onwards, due to the Government’s decision to freeze the student loan repayment threshold at £21,000. That means that all future nurses will face a real-terms pay cut. According to Unison, based on current salaries, the average nurse, midwife or allied health professional will lose more than £900 per year to meeting their debt repayments. In practical terms, for a nurse on band 5, that means a salary cut approaching 5%. It is abundantly clear that that will make staff retention harder, not easier; there is a clear link between pay and retention levels.

Nobody is suggesting for a minute that anyone who goes into nursing is motivated by money, but when someone who has just finished yet another draining shift, going above and beyond the call of duty time and again, finds that they do not have enough cash in the bank to feed themselves and their family, and when each year their wages buy them less and less, they could be forgiven for thinking, “Is it all worth it?” It is morally wrong for the Government to put our nurses in that position, and it makes no sense economically either.

[Lilian Greenwood]

That is precisely the point that one of my constituents, a nurse, made when she wrote to me. She said that she graduated last year and is earning only £21,900, one of the lowest starting salaries among her graduate friends. She says that only months into her dream profession, she feels

“worn down by the strains put on the NHS. I face continued pressures every day. Most 12-hour shifts I don’t get my unpaid break, and I leave late.”

That is on top of knowing that she is not being properly rewarded for the work that she does. Is that not precisely why our nurses are feeling so demoralised?

[Justin Madders]

Yes. It is sad to hear that someone who has only just started out in the profession is being ground down so much already and is feeling so unappreciated. It is a story and a message that we hear repeatedly from our constituents who work in the health service. The Government need to listen carefully to it.

The RCN’s submission to the pay review body not long ago said:

“Having faced a long period of pay restraint, it is inevitable that a large number of staff are now undertaking agency work as a way of restoring the real value of their earnings. Further restraint will only lead to even more damaging impact to the recruitment, retention and motivation of the most valuable asset the NHS has.”

Those comments were echoed by the House of Commons Health Committee in July 2016, which said that

“a long term pay squeeze has unintended consequences for recruitment and retention, which may drive higher costs.”

The independent Nuffield Trust made a similar statement after the 2015 summer Budget. It said that

“curbing public sector pay may make it even harder for the Government to realise some of its totemic pledges, such as seven-day working and reducing reliance on temporary staff.”

All those comments have come before the implications are clear for recruitment and retention of the thousands of staff who come from the EU. If they left tomorrow, it would make the current staffing gaps seem like a golden age.

I conclude with a couple more quotes. The first states that

“as the economy returns to growth, NHS pay will need to stay broadly in line with private sector wages in order to recruit and retain frontline staff.”

That quote is from a document that I am sure is known to us all, the NHS “Five Year Forward View”. Median weekly earnings for full-time employees in the private sector rose by 3.4% in 2016. I referred earlier to the anticipated increases in the cost of living over the next three years, which are bound to put more upward pressure on private sector wages.

The second quote is from a document entitled “The Conservative Party Manifesto 2015”, which I do not generally quote. Page 38 says:

“We will implement the NHS’s own plan to improve health care even further—the Five Year Forward View.”

As the Conservative party manifesto includes a clear commitment to delivering “Five Year Forward View”, and as it is clear that pay restraint needs to end to improve recruitment and retention rates, I must ask exactly what is preventing that from happening. I would be grateful if the Minister, when he responds, could tell us whether he considers the current policy of pay restraint to be consistent with the successful delivery of “Five Year Forward View”.

Labour agree with what has been said, be it by the cross-party Health Committee, the King’s Fund, the Nuffield Trust or the Health Foundation, about the need to end pay restraint. We agree with their crystal-clear message, and that of many hon. Members who have spoken in this debate, that further pay restraint for NHS staff would be self-defeating and unsustainable. We therefore endorse the wording of the petition.

I conclude with another quote from the Migration Advisory Committee, which said:

“The restraint on nurses’ pay instituted by the government was presented to us, and in the evidence to the pay review bodies, as an immutable fact. It is not. It is a choice”.

That is the nub of it: this is a political choice that does not need to continue. The Government have persisted with a damaging policy in pursuit of an objective that they have now abandoned, yet despite all the evidence that that policy is self-defeating and will cost more in the long run, the pay cap remains in place. It is a choice that they have made. It is the wrong choice, and it is time that they accept that they have got it wrong and change course before it is too late.