Regional Pay (NHS)

Stephen Dorrell Excerpts

Wednesday 7th November 2012 Commons Chamber

[Andy Burnham]

I am here to talk about the NHS in England. I will come on to the Conservative Government’s record on funding the NHS in England, so I would not be so smug if I were the hon. Gentleman.

The drive to turn collaboration into competition depends on breaking national standards—breaking the “N” in NHS. The former Health Secretary’s request to the pay review body to consider the case for “market-facing pay” needs to be seen alongside his Health and Social Care Act 2012. Breaking national pay in the NHS is an essential step towards creating the free market in health that many in the Conservative party have long wanted, and which the Liberals now seem willing to let them have.

[Mr Stephen Dorrell (Charnwood) (Con)]

Will the right hon. Gentleman confirm that the direction towards market-facing pay should also be seen in the context of the statement in the Budget presented by the previous Government in 2003 committing them to increase regional and local flexibility in public service pay systems? Did he support that when he was Secretary of State?

[Andy Burnham]

The Labour Government did introduce some flexibility, but let me tell the right hon. Gentleman my record: I spoke up, at every opportunity, for the principle of national pay underpinning a national health service. We hear nothing similar from Government Front Benchers. We built a progressive system of pay for the NHS in “Agenda for Change”, which brought fairness and stability to the system. By the time we left office, not one trust had opted out of that national system of pay, and only one, Southend, paid an increment on top.

[Mr Dorrell]

Will the right hon. Gentleman give way?

[Andy Burnham]

No, I will make some progress.

Breaking national pay is what the Government want to do, and that springs from an entirely different philosophy from the one that forged the NHS in the first place. The Government are rejecting the “one NHS” approach, whereby hospitals collaborate and the unpredictable pressures of any health service are balanced across the system. Instead, they have a vision of hospitals as stand-alone small businesses, on their own in the marketplace, with no bail-outs and free to earn up to 49% of their income from the treatment of private patients, but—as we are seeing in south-east London—finding little mercy in a private-sector-style administration process if the sums do not add up. That is a very different vision of the NHS, and it is not one to which the British people have ever given their consent in a general election.

--- Later in debate ---

[Chris Skidmore]

What I find so frustrating about this debate is that the right hon. Gentleman has thrown his principles out of the window. He once defended flexibility for foundation trusts, but he now no longer trusts professionals in the way he really should.

[Mr Dorrell]

My hon. Friend asked the shadow spokesman a question as though it was academic, but actually it is not academic. When the right hon. Gentleman was responsible for these things, we know what he thought because it is there on the record. The policy was

“to increase regional and local flexibility in public service pay systems.”

That is what he thought was necessary when he had responsibility.

[Chris Skidmore]

I thank my right hon. Friend for his intervention, which is much appreciated.

The key point is that staffing costs will have to be managed for the future. We cannot get away from that fact. If I am honest in making that point, I am sorry, but we all, regardless of political parties, have to understand the financial pressures the NHS will come under in the decades to come. Staffing costs make up between 70% and 75% of NHS spend. The Nicholson challenge is absolutely vital, and it is not just over four years, as the right hon. Member for Leigh well knows; it will be for ever. We will have to commit to making those efficiency savings so that they can be reinvested in the service if we are to keep the NHS free at the point of delivery. I want an NHS that is free at the point of delivery for my children, yet to be born, and I want it to be there at the end of the century. In order to do that, we need to be responsible about where savings will be made. We are pushing savings at the moment on the outside staffing costs of 20%. The pay freeze has managed to save around £2.5 billion for the Nicholson challenge, as we have heard Mike Farrar from the NHS Confederation explain.

There is a problem, in that the NHS pay freeze will come to an end next year and will have to be renegotiated. Rather than cutting staff numbers, the NHS Confederation is pushing for us to be responsible about what is put into the NHS. That is what we have to consider. We cannot get away from this challenge. It is irresponsible to fly in the face of reorganisation. We need to make savings so that they can be reinvested for the future. That is why it is responsible for the trust and the south-west consortium to take the issue seriously, and it will be up to the individual trusts to decide at the end of the year.

I cannot see any reason why local trusts and health care professionals, who know what is best for their local areas, should not be able to take advantage of the regulations for local flexibilities set out in “Agenda for Change” to ensure that the NHS has the best possible productivity. Let us not forget that the NHS is not free; it is paid for by taxpayers, who deserve the best possible value for money. If the south-west consortium can deliver that, it should be applauded.