Regional Pay (NHS)

Ian Mearns Excerpts

Wednesday 7th November 2012 Commons Chamber

[Kerry McCarthy]

There is some confusion. When I wrote to the Health Secretary to get some clarity—

[Ian Mearns (Gateshead) (Lab)]

On a point of order, Mr Speaker. I could not help but notice that the clock did not stop during that intervention. I see that a minute has been added on, but I think it should have been more than that.

[Mr Speaker]

Allowance will be made. I am grateful to the hon. Gentleman for his service. Perhaps we can now proceed with the debate in an orderly way.

--- Later in debate ---

[John Pugh (Southport) (LD)]

The submission made by 25 of my colleagues to the regional pay consortium—copies are still available, if people want them—has an excellent conclusion:

“Richard Disney, an expert on regional pay at Nottingham University, has said, ‘everyone thinks it’”—

regional pay—

“‘makes sense until they try to work it out.’ The Government is no different.”

Let us be brutal: this debate is not just about regional pay, but about a set of hospitals that are desperate to save money in any way they can by cutting their wage bill and that are stupid enough to think that how they treat their staff and human capital simply does not matter. This debate is not even just about getting the Government to intervene; it is also about exposing differences between the coalition parties and about the coalition trying, to an extent, to paper over the cracks, which is what the amendment endeavours to do.

We all know that the Secretary of State does not want to intervene and that he will wait, quite legitimately, for the pay reviews to report. He cannot do that much anyway, because the guys on the Opposition Benches created independent foundation trusts—they were conned into agreeing to them in 2003, I think—which has resulted in the current situation.

To be fair, some people believe that regional pay will revive economies in the regions, that pumping extra money into areas with high housing costs will not drive up house prices still further, that it will not reduce demand in the regions and that it is a great way of ensuring that everyone gets good quality public services. They are the sort of people who believe that it will allow us to create not only more private sector jobs, but more public sector jobs. That view was expressed by the hon. Member for Norwich North (Miss Smith) when we last debated this issue.

[Ian Mearns]

Would the hon. Gentleman care to speculate on how the quality of front-line care for our patients will improve by threatening tens of thousands of hospital workers and NHS front-line staff with a further reduction in their living standards?

[John Pugh]

Some proponents of regional pay argue that teachers would work harder, nurses would be more caring and skills shortages would disappear, and that we would not squander useless time on endless boundary, demarcation and wage disputes. Bizarrely, however, those same people usually believe that this principle and its effects are applicable only to lower paid jobs, not to the top jobs. In other words, the proposal applies only to the plebs.

A prejudiced northerner such as me might be tempted to call those people, “southerners,” but the truth is that they are only a tiny subset of southerners who are upwardly mobile, found in think-tanks, male and disproportionately London-based. Their arguments will change, but no evidence to the contrary will satisfy them, because they have a Tea party-like faith and simple creed that public services should and can be run as simple markets, that people respond only to financial incentives and, most preposterously of all, that nothing worthwhile is lost by turning our great public services into markets full of acquisitive agents. That is not so much market ideology as a form of market idolatry: an unreasoning faith in the omnipotence of idealised markets of the kind that we find only in economics textbooks. Regional pay—and market-facing pay—is part of that faith, and the principle of equal pay for equal work is not part of it. In all honesty, we have to say that we have such people in our midst, some of whom are in positions of power and influence, but equally we have many colleagues around us who have a better grip on reality and the complexities of life and who question such crackpot ideas as regional pay and where they might take us.

I pity the Minister, who is probably aware—I looked this up—that house prices, wages and the cost of living in his Suffolk constituency are very similar to those in many parts of the south-west. He certainly will not welcome telling hordes of his constituents that they are a tad overpaid.

--- Later in debate ---

[Mr Wright]

The hon. Gentleman makes a pertinent point. I am about to come to the financial condition of my trust, which I imagine is true of other trusts.

A total of £40 million needs to be cut from the trust’s budget in the three-year period from 2011-12 to 2013-14—so much for real-terms increases in NHS budgets, as put forward by the Secretary of State at the Dispatch Box. Given that pay costs represent over 68% of the trust’s total income, it seems inevitable, given the financial pressures that the Government are putting the trust under, that there will be a need to cut pay costs still further, whether through redundancies, recruitment freezes or changes to terms and conditions.

The change on sickness enhancement pay is the first of many, and I suggest to the Minister that we must see it as the thin end of the wedge. The proposal on sickness enhancement pay will go through, and then, as the hon. Member for St Austell and Newquay (Stephen Gilbert) said, there will be changes to or cancellations of increments for staff, cuts in overtime, and further pay freezes for lower and middle-paid staff, leading to less money in the local economy. The actions of North Tees and Hartlepool NHS Foundation Trust on sickness enhancement pay simply amount to regional pay through the back door.

As a result, we will see a steady deterioration in pay and other terms and conditions for NHS workers in my constituency relative to other areas and other trusts, even within the north-east. I do not want a race to the bottom with regard to health care in my area. I am concerned that recruitment and retention of staff in North Tees and Hartlepool NHS foundation trust will become an issue because pay will be higher elsewhere, even within the region. Staff may want to move elsewhere, or may not want to work in the trust in the first place, which will lead to a deterioration in quality health provision.

[Ian Mearns]

Will my hon. Friend give way?

[Mr Wright]

Before I give way to a fellow regional MP, let me point out that my constituency has huge health inequalities and low life expectancy, and we therefore need the best possible health provision and the best possible staff.

[Ian Mearns]

I have an additional concern. Eroding morale within the NHS and hospital trusts to such an extent that staff turnover increases, will lead to an inherent increase in costs due to the additional training required when new people replace those who have left, at a lower rate.

[Mr Wright]

My hon. Friend makes an important point. As the shadow Secretary of State will know from when he was in office, we have had debates, concerns and anxieties about the future of health and hospital services in Hartlepool and north of the Tees for many years. That has not helped staff morale, recruitment or retention. I think that this is the thin end of the wedge, and regional pay through the back door will make matters in my area even worse.

In his response, will the Minister comment on what is happening at North Tees and Hartlepool NHS Foundation Trust and explain why, if NHS spending is increasing in real terms, it has to find £40 million of savings? Why is regional pay being pushed in through the back door? Does he think that the ideas put forward by the trust are good, and what impact will that have on recruitment, retention, morale, and ultimately health care provision in the NHS in areas such as mine?

I will conclude with a broader point about the economic rationale—or rather, the lack of it—behind regional pay. If the national economy’s major problems are caused by a lack of demand, an erosion in the confidence of consumers, households and businesses, and structural imbalances in regional economies—in the north-east especially, relative to London and the south-east—I cannot emphasise enough that it seems economically ludicrous to contemplate policies that widen the regional imbalance, restrict demand still further, and result in further private sector austerity in regions such as mine. That is precisely what Lord Heseltine argued against in his review on growth published last week. We must ensure balance between the regional economies, so that the great potential of areas such as mine can be fulfilled. Regional pay in the NHS, or elsewhere, is not the way to do that.

The 5,500 people employed by the North Tees and Hartlepool NHS Foundation Trust live in my area and contribute to the sub-regional economy. They buy things such as cars; they might add a conservatory to their house. That will all stop as a result of regional pay, which will strip out money from the north-east economy to the tune of £0.5 billion a year, according to the TUC. That will result in reduced economic activity in the private sector, and increased private sector unemployment in an area that already has the highest unemployment and the lowest wages anywhere in the country. That is economic madness. We cannot say, “Public sector work over here, private sector enterprise over there”. Modern economies simply do not work like that.

If the Government wish to rebalance the economy geographically—as I think they should—regional pay and a race to the bottom is not the way to do it. The national health service needs a national pay agreement. I strongly support health care provision and health care workers in my area, and on that basis I support the motion.