Regional Pay (NHS)

John Pugh Excerpts

Wednesday 7th November 2012 Commons Chamber

[Chris Skidmore]

The debate is not so much about regional pay because, as my hon. Friend says, there are local considerations to be taken into account; it is about what is the right pay. The right pay is not about lowering pay in poor areas, but about having the right pay in all areas. The right pay is the market rate for an individual, a professional with an individual mix of skills, expertise and experience. One of the problems with the national pay structure is that if trusts want to pay someone more, perhaps an expert, they will be prevented from doing so, which I think is wrong.

[John Pugh (Southport) (LD)]

The hon. Gentleman objected to the use of the word “cartel”. In what sense is it inappropriate in this context?

[Chris Skidmore]

I believe that “cartel” is a rather offensive word to use in this context, because it has connotations that are inappropriate for health care professionals who are doing their best to ensure that the NHS survives in the long term. That is the crux of the debate. Let us look at staffing costs. The Labour Government made a significant investment in the NHS over 13 years. It would be churlish to deny that, but it would also be churlish to deny the fact that a huge proportion of those costs were soaked up in pay.

--- 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.

[Yasmin Qureshi]

The hon. Gentleman said that as somebody from the north of the country he accepts that there is already a north-south divide in pay. Does he agree that regional pay would make that even worse?

[John Pugh]

Absolutely.

I was enlarging on the fact that the Minister has to keep peace between sectors of the coalition, and I do not envy him that role. To be fair, many Members from the majority party are also finding this issue uncomfortably irrelevant.

So what can the Minister do, and what can we do? I have a suggestion. The south-west trust was set up by Labour as an independent providers foundation trust with, frankly, pathetic levels of public accountability. Trusts were set up to operate within a market competing with other NHS providers and private providers, and they do not in law have to consider themselves as part of the wider NHS—as part of national bargaining or “Agenda for Change”. Apparently the trusts in the consortium do not to want to so consider themselves and want to ignore national agreements. If they see themselves as independent free agents in competition with other free independent agents, then surely they cannot all form a cartel with a huge share of the health market and conspire collectively to keep wages, and so their costs, down. That is not a free market—it is market abuse. It is not even fair trading. It is the sort of thing that in the United States would lead to a class action as wage fixing.

That is why my colleagues and I are referring this issue to Monitor and the Office of Fair Trading for investigation. This misguided lot in the south-west cannot be allowed to be freebooters when it suits them and freeloaders on the NHS when asked to play by market rules. If the Government are a bit schizophrenic on this issue, the south-west consortium appears to be even more so.

[Mr Bradshaw]

The hon. Gentleman mentions referring this to Monitor and the OFT. Does he accept from me, as a former health Minister, that all it would take is a word from the Minister to say “Stop it”, and it would stop?

[John Pugh]

I do not think that that is the case, or that the right hon. Gentleman thinks so, but he ruined my punchline, which goes like this: if the South West consortium is even more schizophrenic than the Government on this, it must be made to come to its senses.

[Dr Sarah Wollaston (Totnes) (Con)]

I ask the hon. Gentleman please to withdraw his comment about this being a schizophrenic response. It is really unfortunate when people use the term “schizophrenic” to refer to very important decisions, because it minimises the impact of schizophrenia on sufferers. May I ask him to rephrase his comment?

[John Pugh]

I cannot take it off the record, but I do take the point that the hon. Lady has made.