Agenda for Change: NHS Pay Restraint

Justin Madders Excerpts

Monday 30th January 2017 Westminster Hall

[Justin Madders (Ellesmere Port and Neston) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Evans. I congratulate my hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) on the eloquent and knowledgeable way that she introduced this debate on behalf of not only the Petitions Committee but the more than 100,000 people around the country who signed this petition.

When she introduced the debate, my hon. Friend said that it is not enough for us simply to state our support for NHS staff—it has to be shown. The excellent attendance that we have had today, despite the important international business taking place in the main Chamber, has shown the huge support for our NHS staff and it is high time that the Government matched that support with action. In an intervention, the hon. Member for Kettering (Mr Hollobone) put the proposition that it is incredibly hard for the Government to justify ignoring the recommendations of an independent pay review body when we as Members of Parliament have our own pay agreed and implemented by an independent body. Can the Minister not see how repeatedly ignoring independent pay reviews strikes at the very heart of the bond of trust that exists in an employment relationship? Can he not see how it makes us look like we are uncaring and wrong? It is self-defeating and the approach needs to change.

My hon. Friend rightly highlighted the particular problems in ambulance trusts and the issues with the recruitment and retention of paramedics. She described the expenditure on agency staff as “nonsensical”. Certainly, no business would consider this a sustainable model. The personal testimonies that she gave from her constituents were compelling. None of us could fail to appreciate how difficult the situation is for some of our nurses. One said that she grieves for her profession, and that highlights just how dire the current situation is.

We also heard from the hon. Member for Foyle (Mark Durkan) about his perspective in Northern Ireland. He told us how the use of terminology appears to lead to people in different jobs being paid lower rates of pay for effectively the same job. That is certainly not how Agenda for Change should work in practice, and the pay freeze only exacerbates the sense of injustice that individuals feel. He summed up the situation perfectly when he said that the long-term pay freeze is in fact a pay cut. He said their sense of vocation “is being exploited”. He was right about that, but is it not incredibly sad that a Member of this place can say that without fear of contradiction? Just how low have we sunk?

We also heard from my right hon. Friend the Member for Leigh (Andy Burnham), who has great experience in the health service. He rightly said that nursing is “more than a job” and it is clear that he appreciates that, but he is right that when nurses feel that those above them do not appreciate what they are doing, it becomes a false economy and drives people into the arms of staffing agencies.

[Andy Burnham]

My hon. Friend has just mentioned people feeling a sense of fairness, particularly in the pay of those above them. Does he share my concern that in this current climate, while nurses’ pay is being cut, we are seeing large pay increases self-awarded to members of clinical commissioning groups and senior management? Does that not completely demoralise the whole local profession?

[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.

[Dr Huq]

At the weekend, on the doorstep, I met my constituent Dr Linda Burke, who is pro vice-chancellor for health and education at Greenwich University. She is really worried, because her university’s figures look like they are down by between 20% and 30%—UCAS will have final figures for late applications. She says that that is serious because it will directly reduce the number of nurses for the NHS. We should be thinking about our future workforce. Does my hon. Friend have anything to say about that?

[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.

--- Later in debate ---

[Mr Dunne]

I will make some progress.

We recognise that the NHS faces a number of very challenging pressures: not just the ageing population, but the expectations of the public, who rightly demand quality personalised care at home or in hospital every day, not just from Monday to Friday. Those pressures will not be resolved just through pay, but by engaging with staff as they adapt and respond to new ways of working, including by introducing change that comes with scientific development and by supporting them through appropriate training and development.

We know that inflation is increasing. We continue to rely on the independent pay review bodies, which for decades have applied their expertise and objectivity in making recommendations to Government, and we have huge respect for their important work. The hon. Member for Newcastle upon Tyne North and the hon. Member for Torfaen (Nick Thomas-Symonds) referred to the NHS Pay Review Body’s 2014-15 recommendations. Last year the Government accepted its recommendations for 2016-17. We have provided our evidence to the current round—as have others, including trade unions—and we expect its recommendations in the coming weeks.

[Justin Madders]

Will the Minister give way?

[Mr Dunne]

I will first answer, if I may, some of the comments made about the NHS Pay Review Body’s recommendations and how they sit alongside other elements of the NHS.

The allegation was made that there have been significant pay rises across NHS boardrooms, which are demoralising for those who have suffered pay restraint. However, I say to the hon. Members who raised that point that in 2016 the median rise across all board positions in NHS trusts was 0%. There are individual examples, when very senior managers are introduced to trusts that are going through a management change or are in difficulty, where higher pay rates may have to be introduced than for the previous incumbent, but generally speaking the opposite is happening: in many cases, those coming into new positions are coming in on slightly lower salaries.

--- Later in debate ---

[Justin Madders]

The Minister talks about respecting the independent NHS Pay Review Body’s recommendations. Without having seen them, can he say whether the Government are likely to respect those recommendations?

[Mr Dunne]

The hon. Gentleman will not be surprised to hear that I cannot give him any reassurances on that. We will have to see what the recommendations are and then take a view. However, we are not very far away from that point now.

The hon. Member for Foyle (Mark Durkan) referred to the national living wage. I got the impression from him that some NHS staff members in Northern Ireland are earning only the national living wage; I can reassure him that no NHS staff in England are earning only at that level.

--- Later in debate ---

[Mr Dunne]

No, I am afraid I am going to make some progress.

Hon. Members need to recognise that there is clearly a balance between pay and jobs in the NHS and across many public services. I note that the Opposition spokesman was full of recommendations about what not to do but had none, as far as I could calculate, about what should be done in relation to the delicate balance between pay and jobs. If pay were increased beyond the proposal from the NHS Pay Review Body, or beyond what the Government intend to pay, clearly there could be an impact on the number of jobs that can be afforded in the NHS within the financial envelope that we have.

[Justin Madders]

We are very clear that we believe that the recommendations of the independent NHS Pay Review Body should be accepted. Much of what I said was about how we should recognise that, given the pressures on nurses’ pay, that will not necessarily cost the Exchequer anything in the long run.

[Mr Dunne]

I am not sure that that provides much clarification, but I thank the hon. Gentleman for having a go.

Employers in the NHS know that they need to deliver greater efficiencies and improved productivity to help protect frontline jobs. Making the workforce more expensive, through higher pay rises, will not help.

It is therefore disappointing that trade unions have alleged that staff have suffered a pay cut of about 14% in real terms—an allegation that has been repeated by a number of hon. Members in the debate. The truth is that the Government have ensured that no NHS employee —indeed, no employee—should be paid below the national living wage. As I have said, no NHS employee employed under the Agenda for Change pay system is paid below that.

The truth is that average earnings of NHS staff as a whole remained well above the national average salary for 2015, which was £27,500, and have increased by more than annual pay awards. For most NHS staff groups, half of employees employed in 2010 and still in employment in 2015 benefited from double-figure increases in earnings, equating to between 2.2% and 2.9% annually, depending on staff group. The average annual consumer prices index figure over the same period was 2.4%.