Regional Pay (NHS)

Dan Rogerson Excerpts

Wednesday 7th November 2012 Commons Chamber

[Dan Rogerson (North Cornwall) (LD)]

It is a pleasure to follow the hon. Member for Plymouth, Moor View (Alison Seabeck). She was, at times, at pains to say that we were all largely speaking with one voice across the far south-west of the United Kingdom on this issue. The right hon. Member for Leigh (Andy Burnham) introduced this debate and framed the discussion as though, when the Government took office two years ago, Nye Bevan had just left the Dispatch Box, the NHS was as he set it up, and we had a national health service based on a monolithic central structure. Of course that is nonsense. What we had—as my hon. Friend the Member for Southport (John Pugh) pointed out—was a very different NHS, one of foundation trusts. In my town, over my back garden wall is an NHS treatment centre operated by Ramsay Health Care, employing people who do a great job in providing services but who are not NHS employees. At the time, they were given a contract which basically said, “Here’s a chunk of money. Off you go. If you perform some procedures, that’s good, but if you don’t, it doesn’t matter, you still get the cash.” Fortunately the set-up is now different.

[Andy Burnham]

We could have a debate about foundation trusts, their powers and their freedoms, and there is an argument that some of them have improved in recent times, especially the big city trusts, but that is for another day. Will the hon. Gentleman at least do me the courtesy of acknowledging that during our time in government not one NHS trust broke away from “Agenda for Change”, and only one sought to add an increment?

[Dan Rogerson]

Absolutely, and of course the process of trusts becoming foundation trusts was just under way—it has gathered pace over the last two years—and they were bedding down. It is likely—especially given the challenges of efficiency savings that his party would still have imposed if they had won the 2010 election—that the same set of circumstances would have prevailed. In fact the managers in those trusts who are taking those decisions are the same people who would have been in post had Labour won. It is nonsense to say that because the coalition is in power, those people woke up one day and made those decisions. Those things would have happened anyway. To be fair to the right hon. Gentleman, perhaps we should say that we cannot know what would have happened because we are not in that world. We are in the world in which his party lost the last general election. However, the NHS that he left behind is the one that is allowing this to happen, and it is the one that we have to deal with.

We have private providers next door to the NHS treatment centre I mentioned. Bodmin hospital is full of great staff. It was built under a PFI contract and is now staffed by Peninsula Community Health, a community interest company on the social enterprise model. It had to move those nurses into the private sector—or the social enterprise sector, depending on how one views that form of body—on the basis of the provider/commissioner split in the primary care trusts that was set up by the right hon. Gentleman’s Government.

We also have the issue of funding, which is the background to much of this debate. It is no accident that trusts in Cornwall are looking at this. I disagree with them, and I agree with the hon. Member for Plymouth, Moor View about the process they are engaged in, but one of the reasons they are doing it is that the “distance from target” for NHS funding was massive for trusts in the area under the last Government. I have to say that I am not satisfied that our coalition Government have tackled that problem either. The problem also existed under the previous Conservative Government—health funding in our region has been lower than it should have been for decades. Trusts such as the Royal Cornwall Hospitals Trust are having to deal with the problem of funding for those historic reasons. It is not something that has suddenly been invented.

[Sarah Newton]

I am sure that the hon. Gentleman is proud, as I am, to be part of the coalition Government who have put lots more money into the NHS in Cornwall, so that the distance from the England average has really shrunk. Like him, I will not be happy until we hit the target, but it is now just 2% less. Under Labour, it was a maximum of 7%.

[Dan Rogerson]

I agree with the hon. Lady up to a point, in that there has been a narrowing in the “distance from target” figure. Of course, it is much easier to get closer to target when there is more cash around and more money is being put into the NHS—in the good times. That is when the distance from target should have been tackled. We are obviously very much not in the good times in terms of the economic circumstances, for reasons that all parties would agree with.

If the trusts continue down this path, and create efficiencies by doing so—as well as making life much more difficult for their valued employees—we run the risk of what I call the boa constrictor approach. Snakes that kill by constriction wait until their victim breathes out and then tighten up, so they cannot breathe in again. My worry is that if trusts in Cornwall make these changes first, before other areas, they will make it easier for the distance from target funding to continue. The view will be, “Well, they don’t need the cash now, because they’ve dealt with the problem.” But the burden will have been borne by NHS employees, and that cannot be right.

I think this process is wrong because, as hon. Members on both sides have pointed out, there is an existing process for NHS employers and employee representatives to engage in to examine terms and conditions and pay levels, and see where savings can be made.

[Alison Seabeck]

Does the hon. Gentleman agree that the document that became public contains clear reference to the fact that the consortium had already been working with those staff-side organisations effectively to find some changes? We need to build on that rather than pursue this policy.

[Dan Rogerson]

That is exactly the point that I was going to make. Given the history of the two sides of the House, it is interesting to note that the motion tabled by the Opposition does not refer to the role of the trade unions in these negotiations. However, the amendment calls on the Government

“to continue to support employers and trade unions to work together for the benefit of patients and staff.”

I very much agree with that. I do not think that the approach set out by this consortium—or cartel, as others have called it—goes along with that, and that is why the amendment would send a powerful signal to those employers to get back round the table with the representative organisations, the trade unions. I do not join in the trade union bashing—talking about Labour’s paymasters and so on. Having met trade union representatives here, as the hon. Member for Plymouth, Moor View and others have, I know that some give a certain amount of cash to the Labour party and that others do not. That does not matter. They are local representatives representing their staff and doing the job that they are there to do. I have always supported, and continue to support, officials having time to do that job, as it actually saves the public sector a great deal of money. There will be accord from some parts of the House on that issue, too.

This is about market-facing pay versus a top-down, imposed regional pay structure. The Deputy Prime Minister has said that we will not have that. I am delighted that he said that, and I support him. I think that all hon. Members on these Benches—including many of our coalition partners—would say that that is not the way to go. We are not going to have a regional structure that mandates a different level of pay in different parts of the country. However, there is a risk with the market-facing approach, of which the hon. Member for Kingswood (Chris Skidmore) seems unfortunately to be a fan, that that could happen via another route.

The argument has been made repeatedly that public sector pay somehow holds back private sector employment. That is absolute nonsense. The idea that the widget factory next door to the hospital is struggling to employ people, and that if we pay nurses less they might suddenly all decide to go and work in the widget factory, is absolute rubbish and I hope we can knock it on the head right here and now. However, if there are challenges facing the NHS, as there are in other public services, as a good employer it should get around the table and look at ways it can defend jobs and make sensible changes that have the support of the work force. Local government has done that in a lot of places. The challenges facing local government have been great, but in a number of areas that process has protected jobs, so it is possible. There is a national process under way to deal with that, as other hon. Members have said.

I am opposed to the process that is going on independently of national pay bargaining. The motion effectively states that the current system is encouraging that process and that the Secretary of State needs to step in and stop it. I would like a stronger message from the Secretary of State—do not get me wrong about this—and I hope that the Minister will listen to remarks from all parts of the House about the message that we would like the Department to be sending to the trusts. However, if I look at the motion and the amendment, it is the amendment that mentions the continued role of staff, employers and trade unions working together, and that is what I will be supporting tonight.

[Hugh Bayley (York Central) (Lab)]

It would be a good thing, when debating the future of the health service, to talk a little more about the work done by health service professionals. If a woman has breast cancer and consults the oncologist, and he is working out what the best chemotherapy would be, she would want him to be as well qualified and skilled whether he lived in Plymouth or in a part of the country where wage levels were higher. She would expect her doctor to be as well remunerated. Exactly the same would apply for a nurse planning a care and rehabilitation regime for an elderly stroke victim. A number of colleagues made the point that a nurse in Plymouth should get the same rate of pay as a nurse in the City of London. The reason why they should receive the same rate of pay is that we, as their patients, want the same level of care, the same level of service and the same likelihood of survival if we have an illness.

My remarks are based on my experience before I joined the House. We heard a number of Conservative Members trashing the trade unions. I spent seven years as a full-time trade union official for the National and Local Government Officers Association, now part of Unison, negotiating pay and conditions in the national pay bodies for nurses, midwives, ambulance officers, and administrative and clerical staff. I put the interests of the health service and patients very high on my agenda when I did that job. I spent a number of years as a health economist, working at the university of York, advising health authorities and trusts on how best to use their budgets. I spent time as a member of York health authority—they were called health authorities in those days—which would now be the equivalent of being a non-executive member of a trust board. Before the debate, I consulted senior NHS managers, finance directors, chief executives, a trust chair, and Professor Alan Maynard, a professor of health economics who was an adviser to the Health Committee, and my remarks reflect what they told me.

I can tell hon. Members from real experience that negotiating pay and conditions is a slow, painful and labour-intensive task. There is an opportunity cost. If health service managers spend time determining pay on a regional or local basis, that removes them from focusing on something else—driving up productivity, improving care outcomes or developing new prevention services, perhaps. There is a cost if more effort is put into regional pay negotiations, because less is done on something else. Regional pay would divert hundreds of managers from thousands of hours of managing the health service into doing something that they currently do not need to do. The Labour Government permitted a measure of local flexibility, but we specifically did not go for the introduction of regional pay.

[Dan Rogerson]

The other approach that, unfortunately, the consortium seems to have taken is putting aside money and employing consultants to come up with a model for it. That has the potential to be even worse than the approach the hon. Gentleman describes.

[Hugh Bayley]

I am grateful to the hon. Gentleman for enhancing my argument. As has been pointed out, the limited flexibility that was introduced by the Labour Government has been used by only one hospital to date, Southend, and in that case it was to raise, not reduce, pay.

Abandoning a national pay framework for the NHS is likely to be inflationary for NHS pay. Let us start with doctors. We know from experience that doctors are tough negotiators—[Interruption.] I can see the Under-Secretary of State for Health, the hon. Member for Central Suffolk and North Ipswich (Dr Poulter) smiling. When GPs were negotiating with the previous Labour Government about the cost of the change in out-of-hours services, they—let us be blunt about it—did extremely well out of the agreement. Why did they do well? Because they have immeasurably high leverage. If they were to withhold their services, in whole or in part, from patients, the consequences would be dramatic.

If we had regional pay, the charge would be led by groups, such as doctors, in the highest-cost areas such as London, and they would be in a position to leverage large increases in pay. What would then happen? Doctors would inevitably be drawn away from areas of the country where they are paid 20% or 30% less. What would happen in an area such as mine, which would lose doctors to high-cost areas in London and the south-east of England? Of course, my area would have to raise pay to attract people back. There would be a general pressure, raising wage costs across the NHS, not just in the medical profession, but in other health professions too.

If the Department of Health loses control of pay in the NHS, which accounts for 70% or 75% of its budget, it would blow the Nicholson challenge straight out of the water. The Government have set the NHS the challenge of finding £20 billion of efficiency savings. If regional pay is introduced, they have no prospect whatever of achieving that because of the inflationary pressures of the change that they are making. Fragmentation and liberalisation of pay regimes only reduce pay where there is a surplus of labour—where the employer has the economic power and the leverage.

The health professions are highly regulated, however, and the professionals are extremely skilled workers who train for a long time, which makes it an inflexible labour market, and that gives health professionals immense bargaining power—a power that, as we know from experience, is used. If the Government really want a levelling down of pay in the NHS, they should train more doctors, nurses, physiotherapists and radiographers, so that there are 10% more than we need, which would have two advantages: first, the NHS could get rid of poor performers, and secondly, there would not be the same inflationary pressure on pay.

If we had regional pay variations, there would be an impact on quality of care in those regions that paid less, because the best clinicians would go to the best jobs paying higher salaries in high-cost areas. It would inevitably divert resources from poorer regions of the country to richer regions, which would fly in the face of the “No Stone Unturned” plan for growth produced for the Government by Lord Heseltine.

I want to respond briefly to the Secretary of State’s statement that under this Government spending on the NHS has increased in real terms. If he or other Members were to consult Her Majesty’s Treasury’s public expenditure statistical analyses of 2012, in table 1.8 they would find that expenditure on the NHS in 2009-10—the last year of the last Labour Government—at 2011-12 prices was £105.1 billion. In 2011-12—the first year of the coalition Government—it fell to £104.4 billion, and last year to £104.3 billion. That is a real-terms reduction in expenditure on the NHS. In comparison, under the Labour Government, we had on average a 6.2% increase each year. That shows why the NHS is in such a parlous financial position now.