Regional Pay (NHS)

Jeremy Hunt Excerpts

Wednesday 7th November 2012 Commons Chamber

[Andy Burnham]

These are the same staff whom we were celebrating during the Olympic games, just a few months ago, for everything that they contribute to the NHS and to the care of others, but Ministers sit there and do absolutely nothing. It is disgraceful that any staff in the NHS should be treated in such a way.

This is no academic threat. These are the panic moves of an NHS that is experiencing increasing distress, in which control has been lost because it is facing the biggest financial challenge in its history. After the election, the £20 billion Nicholson challenge should have been the only show in town, but the previous Secretary of State was allowed to proceed with his vanity reorganisation of the NHS. Instead of focusing on saving money, the NHS has been busy wasting it: £1.6 billion, and rising. A full £1 billion has been spent on redundancies—1,300 people have received six-figure payouts, and l73 have received more than £200,000—while 6,000 nurses are losing their jobs. That is scandalous.

As unforgiveable is the Conservative party’s repeated inaccurate boast on NHS funding. I checked on the Conservative party website today, and in the “Where we stand” section it says this:

“We have increased the NHS budget in real terms in each of the last two years.”

[The Secretary of State for Health (Mr Jeremy Hunt)]

indicated assent.

[Andy Burnham]

The Secretary of State nods, because he has made similar statements. I want to know whether he stands by those words as a truthful and accurate statement.

[Mr Hunt]

Absolutely.

[Andy Burnham]

He says he does, so let me refer him to table 1.8 of the Treasury’s “Public Expenditure Statistical Analyses 2012”. On NHS spending it shows the following: for 2010-11, a 0.6% real-terms cut; for 2011-12, a 0.1% cut. Those are the facts. How on earth can the Secretary of State say today that he stands by—[Interruption.] The figures are there in black and white. There have been two years of real-terms cuts in the NHS. If anyone does not believe my analysis, a Department of Health press release from July 2012 confirms what I have said:

“PESA figures released today show that in real terms NHS spending has reduced.”

So I ask the Secretary of State this: will he today remove that untrue statement from the Conservative party website? It is giving a false impression of what is happening in the NHS. Perhaps it is designed to give the impression that the drastic moves on pay are a local matter not of Ministers’ making. This is the real picture, however: the Government have forced the NHS to fund a £1.6 billion reorganisation it did not want—even though they promised that would not happen—from a falling budget which they still claim is increasing.

All trusts have been put in a difficult position by this Government, but that is no excuse for some taking the easy way out by taking it out on staff. If they are allowed to do that, they will damage something that serves the wider good.

The “Agenda for Change” system introduced by the last Government represented a significant step forward, and I want to set out the compelling economic, social and health policy arguments in its favour. First, it brings stability to the service. Unlike other areas of economic activity, health care depends upon certainty and predictability. As an essential emergency service, it needs to be there for people day in, day out. Volatility helps no one. All communities need a full complement of clinical grades and professions. Local or regional pay is not conducive to stable services. If one area starts seeking to poach staff from another, no one wins, as we will get instability and, over time, an inflationary pressure that is hard to control at local level.

That brings me to the second reason in favour of national pay. All the evidence suggests that a national approach to pay and conditions helps to reduce costs and risks to the NHS. Market-based systems tend to cost more, not less.

There is also the hassle and distraction factor of every individual NHS employer or regional group going through the annual process of pay negotiation and setting. Trusts rushing to break away from the national pay system forget that. They are also forgetting the risks of the pre-“Agenda for Change” days, when individual trusts would bear the full legal exposure of failure to implement equal pay legislation. It would seem that there are a few short memories in the NHS. People are forgetting that the advent of a national pay system has insulated the NHS from those risks, which have impacted on other parts of the public sector, such as by bringing more turbulence in recruitment and retention.

I do not think the 32 trusts involved in the breakaway have fully thought through the consequences of their position. For instance, national pay is reflected in the calculation of the tariff under the payment by results system, so are these trusts expecting to be paid at national tariff rates by commissioners while paying staff regional rates? I find it hard to see how that could be justified. So, in effect, they are not only pulling down the system of national pay that helps to give stability for everyone; they will also end up pulling down the national tariff system.

The third health policy reason for national pay is the most compelling. National pay helps with the recruitment of staff in the areas where they are most needed. If we follow through the logic of the argument of proponents of a broken down system of regional or local pay, it will end in a proposal to pay people less in areas where unemployment is highest and wages are lowest. The problem with that argument is that those areas are also the most deprived parts of our country where the health challenges are greatest. It is often much harder to work on the NHS front line in areas of higher health need and deprivation. We need to work hard to attract the most motivated staff to those areas, and I simply do not see how that will happen if the offer to work in the areas where the pressure is greatest includes being paid 15% less.

In the end, care is a people business and this race-to-the-bottom approach simply does not deliver the quality people are looking for. We have seen that approach in social care: a crude race to the bottom and a cut-price, minimum-wage business. That simply does not work.

It is true that pressures vary from place to place and the job is not the same everywhere, but the principle that a health visitor, a physiotherapist or a midwife should be paid broadly the same for doing a similar job is a good one. It is fair to staff, and we should stick with it.

That brings me on to the fourth reason: the social and economic case. All the evidence points to regional pay in public services causing damage to the regional economies of England. Rather than stimulate the south-west economy, it has been estimated that regional pay would take £140 million out of it.

It is not just the public sector making that argument. Some 60 academics wrote to The Times to say that, and businesses in the north-east have written to the Chancellor raising their concerns. They said:

“Now is the time for the country to unite and focus on growth, not risk a divisive and harmful policy such as this.”

They are right. An NHS with national pay is a one-nation policy. What is happening in the NHS risks cementing the regional divides and creating an unequal Britain.

Taken together, those four reasons stack up a compelling case for keeping a system of national pay in the NHS. Losing it will be bad for the NHS, bad for the economy and bad for society.

I know that the force of that argument is not only felt on the Opposition Benches. Debates such as this one usually divide Members along tribal lines, but there are Members in all parties who represent areas where the jargon of “market-facing pay” means one thing: crude pay cuts for the staff who work so hard to serve their constituents day in, day out. What I find encouraging is that Members on both sides of the House whose constituencies would be affected by these changes have had the courage to speak out against them.

It is not just Liberal Democrat Members who are doing so. I am encouraged by the fact that a number of Conservative Members have expressed serious concerns. The hon. Members for Brigg and Goole (Andrew Percy), for Stafford (Jeremy Lefroy), for Carlisle (John Stevenson) and for Hexham (Guy Opperman) have all spoken out, and I can do no better than repeat the words of the hon. and learned Member for Torridge and West Devon (Mr Cox):

“I am extremely cautious about any change that might further depress incomes in our area or that might act as a disincentive to those in the medical profession to work here.”

The Government Front-Bench team would do well to listen to those concerns, as I suspect they are widely held across this House.

The Government’s amendment does absolutely nothing for the 88,000 NHS staff in the south-west who are worried about the future. It does nothing for the businesses worried about regional divides. It ducks the issue, and lets local and regional pay creep in through the back door. If the Secretary of State has any belief in a national health service, he must step in tonight, stop the breakaway and uphold the principle of national pay in the NHS. I commend the motion to the House.

[The Secretary of State for Health (Mr Jeremy Hunt)]

I beg to move an amendment, to leave out from “House” to the end of the Question and add:

“notes that the Agenda for Change pay system, introduced by the previous administration in 2004, already includes regional flexibilities, including high cost area supplements and recruitment and retention premiums; further notes that the previous administration also introduced local pay variation in the courts services; recognises that the previous administration established foundation trusts and in so doing removed the power of the Secretary of State to issue directions to trusts over matters of pay; accepts that the rt. Hon Member for Leigh had the opportunity to change this through legislation when he was Secretary of State but chose not to; looks forward to the publication of the NHS Pay Review Body report on the case for further reform to the pay system; supports the view expressed by the Chief Secretary to the Treasury at the GMB union conference that there will be no change unless there is strong evidence and a rational case for proceeding; and calls on the Government to continue to support employers and trade unions to work together for the benefit of patients and staff.”

What we have just heard is a shocking attempt to talk down the NHS and to misrepresent my views and those of the Government. As a former Secretary of State, the right hon. Member for Leigh (Andy Burnham) should know better.

I am glad, however, that the right hon. Gentleman has called this debate today, as it gives me a good opportunity to sing the praises of NHS staff up and down the country for the brilliant work they are doing. It is work that, contrary to the tone of the right hon. Gentleman’s comments, is delivering an NHS that is performing better than ever despite extremely challenging financial circumstances: an NHS where infection rates are at their lowest levels since the introduction of mandatory surveillance; an NHS where, despite what the right hon. Gentleman and his colleagues would have people believe, the number of patients waiting over 18 weeks is at the lowest ever level; an NHS where, for the first time since “call connect” was introduced, all ambulance trusts are meeting their category A8 performance measure; an NHS with more clinical staff than ever before, including 3,500 more doctors and 900 more midwives; and an NHS where performance measures on accident and emergency, cancer care, dentistry and waiting times are all being met.

Compared with the situation at the last election, we have an NHS treating almost a million more people in accident and emergency, carrying out over half a million more out-patient appointments, and conducting over one and a half million more diagnostic tests. None of that would have been possible if we had introduced the cuts proposed by the right hon. Gentleman at the last election. Instead, despite the huge pressure created by Labour’s deficit, we are actually increasing spending on the NHS by £12.5 billion.

Let me start by saying thank you to the many NHS staff who have made that possible—to more than a million people who work night and day, often in incredibly challenging circumstances. We owe them a debt, which is why the scaremongering we have heard this afternoon from the right hon. Gentleman is inaccurate at best, and downright irresponsible at worst.

[Derek Twigg (Halton) (Lab)]

One way in which the Secretary of State can express his thanks is by ruling out regional pay. Will he tell us now whether he will do so, because it is a major concern for my constituents, who have written to me in their dozens over the past two or three weeks?

[Mr Hunt]

I am coming on to say exactly what the Government’s approach to regional pay is, so I will address the hon. Gentleman’s comments.

[Mr Anderson]

rose—

[Mr Hunt]

May I just answer the question put by the hon. Member for Halton (Derek Twigg)? Let me make it clear: we are not proposing to abolish “Agenda for Change”; we are not proposing an end to national collective bargaining; we are not proposing the abolition of national pay scales; and current pay scales will not be cut. What we are doing is supporting the changes brought in by the previous Labour Government to ensure there is sensible flexibility in pay across the whole country.

[Mr Anderson]

The Secretary of State mentioned people working night and day. Does he agree with the agreement in “Agenda for Change” that people should get additional pay for working night shifts, both because such shifts are antisocial and as compensation for not only the impact on family life but the fact that people who work night shifts tend to die earlier?

[Mr Hunt]

I support the principles behind “Agenda for Change”, which were introduced in 2004 by the Labour Government of which the right hon. Member for Leigh was a member. I also support a number of other flexibilities introduced by the Government—the right hon. Gentleman supported the legislation—in respect of foundation trusts.

[Mr Bradshaw]

The south-west cartel is not about flexibilities introduced to allow hospitals to attract staff and pay them more, as they in fact did; it is about a regional pay system. The Secretary of State has to decide: is he for or against the south-west cartel? Does he say yes or no?

[Mr Hunt]

Perhaps the right hon. Gentleman will explain why he voted for the Health and Social Care (Community Health and Standards) Act 2003, which gave foundation trusts the freedom to introduce their own terms and conditions. Until he explains that, which we are simply supporting, I am afraid that his position is extremely tenuous.

[Hugh Bayley (York Central) (Lab)]

The NHS budget is actually going down. It is certainly much more constrained than it was under the previous Government, so if the Secretary of State accelerates the regionalisation of pay, it will presumably fall in low-pay areas such as mine in Yorkshire and rise in the leafy suburbs of Surrey, which he represents. Will the health budget then be transferred from poorer areas in the north of England to the high-pay places in the south?

[Mr Hunt]

Let me remind the hon. Gentleman that he supported the 2003 Act, which gave foundation trusts the power to set their own terms and conditions. Let me also remind him that this Government have increased the NHS budget in real terms—something that the right hon. Member for Leigh said was “irresponsible”. Let me say clearly that we are not changing the allocation of resources to different parts of the country, but we are allowing the flexibilities that the Labour Government introduced for local NHS managers to make sure that they get the benefit. If the hon. Member for York Central (Hugh Bayley) listened to what I said about a million more people being treated in accident and emergency, one and a half million more diagnostic tests being carried out, and about half a million more out-patient appointments being dealt with, he would understand that all our constituents are benefiting from that. That is because we have the flexibilities that that Government introduced.

[Andy Burnham]

The Secretary of State said again that in 2010-11 and 2011-12 the NHS budget increased in real terms. Is he saying that Her Majesty’s Treasury has got its figures wrong?

[Mr Hunt]

No. Let me just remind the right hon. Gentleman that the budget increase in the NHS that this Government committed to and that this Government announced was something that he said would be “irresponsible”. We have ignored that, and I have been completely clear that the NHS budget went up.

We support recruitment and retention pay—an amount that can be as much as 30% of a person’s salary, and which the Opposition, if they were consistent in their opposition to regional pay, would presumably wish to abolish. We support the London weighting, which is, again, a form of regional pay that we would be planning to abolish if we listened to the Opposition’s arguments today.

[Yasmin Qureshi (Bolton South East) (Lab)]

rose—

[Mr Hunt]

The hon. Lady might want to think about her own constituents before she jumps on that bandwagon. We also support high-cost area supplements. Why should trusts not be able to offer higher packages to lower-paid staff living in expensive areas beyond the capital so that they can live nearer to where they work? If we listened to the Opposition and their trade union sponsors, that, too, would be banned. This Government support the right of local trusts to determine how best to reward their own staff, so they can recruit, retain and motivate the people whom patients rely on every single day. That includes the right of each employer to choose their own terms and conditions or to use national terms and conditions, should they wish.

[Yasmin Qureshi]

I was not in this House when the earlier legislation and policies were being put through, but the question for today is: will someone working in London be paid the same as someone doing the same work in Bolton? Will the Secretary of State reassure us that the fundamental change to that arrangement will not take place?

[Mr Hunt]

May I gently remind the hon. Lady that she stood for election on a manifesto that did not include abolishing the 2003 Act or the Health Act 2006, which gave foundation trusts the freedom to set their own pay and conditions? [Interruption.] I ask Labour Members to let me answer the question. May I also remind her that the previous Government, whom she supported, introduced “Agenda for Change”, which does not pay the same amount throughout the country for the same work? It actually includes a lot of flexibility for regional pay.

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

So far, the Secretary of State is describing what he sees as the benefits of flexibility. I put it to him that if a number of regions adopt the south-west’s approach, he will eventually be confronted by the fact, as the Secretary of State, that the poorest parts of this country will not be able to attract the doctors they need. What will he do then?

[Mr Hunt]

All we are doing is supporting what the hon. Gentleman’s Government did, which was to introduce flexibilities for the people who run foundation trusts to set pay and conditions in order to get the best health care in their areas, including in his constituency, in that of the right hon. Member for Leigh and in mine. The previous Labour Government did not just support that; they legislated to require it. They introduced foundation trusts—

[Andy Burnham]

rose—

[Mr Hunt]

I am going to make some progress now. The previous Labour Government introduced foundation trusts in 2003, giving them the power to set their own terms and conditions, just like NHS trusts. Indeed that Government went further, removing the remaining powers of the Secretary of State to intervene. Then, in 2004, the right hon. Gentleman’s Government included regional pay as a firm principle of “Agenda for Change”. Then they legislated to confirm these principles in the Health Act 2006. Who was the Health Minister then? It was the right hon. Gentleman.

The right hon. Gentleman recently referred to this flexibility as a “loophole”. It is not a loophole; it was one of the central planks of that Government’s policy. Let us consider the following:

“The challenge now must be to genuinely free the very best NHS hospitals from direct Whitehall control.

We plan to do this…by removing the Secretary of State's powers of direction over NHS Foundation Trusts…

Exercising these freedoms will give NHS Foundation Trusts precisely the sort of autonomy that is commonplace for hospitals elsewhere in Europe.”

Those are not my words, but those of his colleague and former Health Secretary, Alan Milburn, when he introduced foundation trusts.

The question that the right hon. Gentleman has to answer—he has completely failed to do so—is why, as Health Minister, he legislated for these powers if he disagreed with them. If he disagrees with them, why did he not overturn them when he had a chance to do so as Health Secretary? Either he has changed his mind or the unions which bankroll his party have changed it for him. Whichever is the case, it is a pretty sorry state of affairs for a party that claims to aspire to power.

[Andy Burnham]

The Secretary of State has misrepresented the former Government’s position twice, and on NHS spending. Let me just ask him about regional pay. He said he is building on what we did. When we left office not a single NHS trust in this country had opted out of the national “Agenda for Change” system—that is a fact—because we defended the principle of national pay. He has just said to my right hon. Friend the Member for Exeter (Mr Bradshaw) that he will not condemn the cartel in the south-west, and that he wants trusts to choose whether to opt in to national pay or regional pay. Should he not tell Liberal Democrat Members and the people sitting behind him that he supports local and regional pay in the NHS?

[Mr Hunt]

That is a funny way of defending the principle of national pay: legislating to give foundation trusts the ability, for the first time ever, to set their own terms and conditions. I do not know how the right hon. Gentleman defines it, but that does not seem to me to be in any way logical.

[Sarah Newton (Truro and Falmouth) (Con)]

I represent an area with a very high cost of living. Does my right hon. Friend agree that trusts trying to balance their books should not do so at the expense of modestly paid care assistants and nurses?

[Mr Hunt]

I agree that I want local trusts to have the freedom to get the best health care for people in their areas, including my hon. Friend’s constituents. I agree that that means recruiting and retaining the very best staff and ensuring that they are highly motivated. My hon. Friend makes an important point: we must think about areas where the cost of living is lower, but we must also think about areas where it is higher. People in my constituency who work for the NHS have to commute from Portsmouth because they cannot afford to live near the hospitals and community health centres where they work. That is why an element of flexibility is a very important principle.

[Jack Dromey (Birmingham, Erdington) (Lab)]

rose—

[Geraint Davies (Swansea West) (Lab/Co-op)]

rose—

[Mr Hunt]

I want to make a little more progress, and then I will perhaps take one or two more interventions.

NHS employers have the ability to set their own terms and conditions, but the vast majority prefer to use national terms and conditions, and provided that those remain sustainable and fit for purpose, they are likely to continue to do so. I welcome the national negotiations between NHS employers and NHS trade unions, and I urge both sides to bring the negotiations to a swift and successful conclusion. Unfortunately, the time it is taking for agreement to be reached is encouraging some employers, such as those in the south-west consortium of NHS and foundation trusts, to examine alternative provision. Sadly, it appears that the people who bankroll the Opposition—particularly Unite—would rather put their members’ jobs at risk than work with employers to find an acceptable solution to help the NHS meet its financial challenge—[Interruption.] I am sorry they do not want to hear this—

[Mr Anderson]

On a point of order, Mr Speaker.

--- Later in debate ---

[Mr Speaker]

I am grateful to the hon. Gentleman, but that is a point of debate that he might wish to develop further if he is successful in catching my eye. We will leave it for now.

[Mr Hunt]

I ask the right hon. Member for Leigh, rather than irresponsibly scaremongering, to do something positive by doing everything in his power to encourage his trade union friends to work in the best interests of their members, of patients and of his constituents and mine to come to a speedy resolution. I suspect he has rather more influence with the unions than I do in that regard. Even with a protected NHS budget—something that he thought was “irresponsible”—the NHS must do significantly more within its limited means, and as its single largest expense the pay bill cannot be immune to change. It represents between 60% and 70% of total expenditure in most NHS organisations and costs more than £43 billion in the hospital and community services sector alone.

[Jack Dromey]

I was involved in the process that led to the groundbreaking agreement “Agenda for Change”. It was a national agreement that contained certain flexibilities but it explicitly rejected regional pay. Regional pay is now proposed in the south-west. Does the Secretary of State support that move or condemn it?

[Mr Hunt]

I support proper negotiations between NHS employers and unions to revise, reform and improve “Agenda for Change” so that it is fit for the very different financial circumstances in which the NHS now finds itself. The vast majority of NHS trusts and foundation trusts, including in the south-west, would rather negotiate on national pay scales, but that means the unions being realistic about what is sensible in this financial climate. That is why employers need to use the system more efficiently and effectively, extending the use of high-cost area supplements when they can be justified to tackle the recruitment and retention issues that affect a particular area or region.

Like the previous Government, we want to retain the flexibility that allows individual employers to use recruitment and retention premiums and, like the previous Government, we want any changes to be introduced incrementally in full partnership with NHS employers and trade unions.

[Mr Bradshaw]

Will the Secretary of State give way?

[Mr Hunt]

I have already given way to the right hon. Gentleman once.

The greatest risk to national terms and conditions is that they will become rigid, inflexible and no longer fit for purpose. If that happens, employers will be more likely to use the freedoms given to them by Labour to abandon “Agenda for Change”, which was where those freedoms came from, and introduce local terms and conditions.

The Opposition has a clear choice. They can wolf whistle to their trade union sponsors in a hollow attempt to distance themselves from legislation that they passed, or they can prioritise the interests of low-paid NHS employees by encouraging the unions to work for constructive, negotiated improvements to “Agenda for Change”. Sadly, this afternoon’s debate shows that they have made that choice—the motion is nothing more than a shameless attempt to frighten the hard-working staff of the NHS.

The debate is scandalous scaremongering from a party that did more to introduce regional pay during its time in office than any other Government in history and outrageous opportunism from a party that wanted to cut the NHS budget. Rather than singing to the tune of their trade union paymasters, the Opposition should be telling them to get around the table and negotiate seriously on “Agenda for Change”; rather than scaring NHS employees, the Opposition should be celebrating their achievements; and rather than talking down the NHS, the Opposition should, painful though it is, be celebrating the achievements of a Government who have delivered record NHS performance. I urge my colleagues to support the amendment.

[Several hon. Members]

rose—