It is almost five years since the Agenda for Change pay system was introduced to unify pay across the third largest workforce in the world. Richard Staines asks the system’s architects about its successes, failures and future challenges.
When the Agenda for Change white paper was published back in 1999, pay in the NHS was in a chaotic state.
The old Whitley Council system, which applied to non-medical and non-dental staff – based on an old civil service pay framework originally drawn up in 1916 – was outdated and unfair.
Pay was often decided by job title and depended on which organisation and in which area a nurse happened to work. Staff nurses could earn as little as £12,000 per year in some places – the average annual salary is now £20,000.
In a bid to address the situation, unions began negotiations with a government that had risen to power in 1997 on the back of promises to improve public services. The landmark AfC white paper called for a unified pay system, with equal pay for work of equal value.
The new system was ambitious in its aims and complex in its mechanics.
It would require every non-medical job in the NHS to be re-evaluated and pay to be adjusted accordingly for hundreds of thousands of nurses and other health workers.
The NHS Plan, published in 2000, pledged to improve pay and conditions while negotiations on the new pay system continued between unions and the government.
‘It is a fair deal for NHS staff and a good deal for Britain’s NHS’
Final proposals for the Agenda for Change pay system were published in 2003 and 12 trusts in England and four sites in Scotland tested the new system. After a review by the NHS staff council, the RCN endorsed the system in 2004, followed by Unison, Amicus/CPHVA (now called Unite/CPHVA) and the other major health unions.
Announcing the deal, then health secretary Alan Milburn said: ‘Agenda for Change is the most radical modernisation of the NHS pay system since its foundation in 1948. It is a fair deal for NHS staff and a good deal for Britain’s NHS.’
National implementation of AfC began in December 2004. An initial three-year pay deal, worth 3.3% every year, which accompanied the new system lent weight to its promise to ensure fairer pay and a more productive workforce with improved morale.
Agenda for Change differed from its predecessor in that pay was no longer based on job title, but on work done – with the majority of NHS posts evaluated against national job profiles. For less mainstream jobs, pay was determined by matching a job against a series of competencies outlined in the job evaluation handbook accompanying the system.
The aim was to establish fairness by ensuring every nurse or staff member doing the same work received the same basic pay, wherever they worked in the country – with recruitment and retention premia added in places such as London in recognition of a higher cost of living.
The Knowledge and Skills Framework training and development system which accompanied the new pay scales, aimed to identify learning needs as staff progressed along pay scales.
Nursing Times has spoken to some of the original negotiators of the AfC pay deal – from both the unions and the government – about whether they believe it has been a success and has really improved the working lives of staff.
Andrew Foster, NHS director of workforce between 2001 and 2006, oversaw AfC’s transition from a policy proposal to a fully-fledged pay system.
Mr Foster, now chief executive of Wrightington, Wigan and Leigh NHS Foundation Trust, is proud of introducing the scheme, which he described as a monumental logistical challenge.
In particular he highlighted the role of the three-year pay deal that accompanied AfC as helping to drive a series of real-terms pay increases for NHS staff during a period of low inflation. He said: ‘AfC put more money into pay.’
Mike Jackson, Unison’s senior national officer for health who helped implement AfC, agreed. ‘In the years since AfC there has been an improvement in earnings for the overwhelming majority of staff,’ he said. ‘Many of the staff had previously been stuck on the top of their pay scale. Now there is more progression and greater flexibility in the way staff work.’
Additionally, NHS trusts in the UK are now more shielded from unforeseen costs generated by unequal pay claims – a real threat under the old Whitley system because of differing rates across the country.
‘We have defeated the equal pay challenge to the NHS, which did look far more threatening back in 1997,’ said Mr Foster. ‘Secondly we have harmonised all the terms and conditions – people forget what a mess the old system was, with things like wet wool handling allowances.’
‘We have a very much more flexible system for creating and altering jobs. Under the old system it was so difficult to create a new job, we have more flexibility,’ he added.
Mr Jackson, who oversaw much of the implementation phase for Unison, said: ‘The big achievement was to unify all NHS staff with the exception of dentists and doctors under a single pay and grading structure, that was equality proof.’
‘The Hartley decision has shown that AfC is equality proof’
The recent failure of a court case against Agenda for Change has buoyed confidence in AfC as an equal pay system.
Brought by the solicitor Stefan Cross, the case – Hartley versus Northumbria Healthcare NHS Foundation – argued that AfC was sexist as many – mainly male – technical workers had been placed on higher bands than many female staff, such as nurses.
The case, which began in November last year, failed. The judgement, passed in April this year, ruled there was no systematic discrimination in Agenda for Change. It also ruled that AfC did not perpetuate historic sexual discrimination against women.
‘The Hartley decision has shown that AfC is equality proof,’ said Mr Jackson. But he added that mistakes had been made by failing to test this at an early stage in the implementation process.
‘We did not realise we should have put equality monitoring and impact assessment in place at an early stage. We definitely should have put in place an equality impact assessment in early implementer sites,’ he said.
However, Josie Irwin, head of employment relations at the RCN, said that there were still some other areas of Agenda for Change that needed to be improved to prevent equal pay issues arising in the future.
She said: ‘We need to complete negotiations on “on call” arrangements. There may be equal pay issues. There are differences between groups of staff, with one set of arrangements for men and another for midwives who are predominantly women. That is an area that needs to be completed as soon as possible.’
The latest three-year pay deal, agreed last year, also shortened the pay scale for most band 5 nurses, to give them larger pay rises as they make their yearly progress along the pay band.
‘Management and unions found working in partnership was actually a good model’
However, Ms Irwin argues that higher bands must be shortened to allow women to progress more quickly along pay scales.
‘We want to start work on band six and seven. There are potential equal pay issues there because women who go off to have children make slower progress than men,’ said Ms Irwin.
A less obvious benefit of the AfC agreement was that it made government and unions work together for the good of frontline staff. Turning AfC from a series of bright ideas on a white paper into a working pay system required a large degree of teamwork between both parties and NHS organisations themselves.
Employers needed the expertise of unions to identify the problems in the old system and both needed the political will of the government to drive forward the reforms.
Mr Jackson said: ‘[Agenda for Change] was achieved through partnership working between employers and trade unions. Management and unions found working in partnership was actually a good model for resolving a range of issues.’
‘There was a step change in partnership working between management and staff side,’ added Mr Foster.
However, despite this new-found willingness to work together and make AfC a success, it was not all plain sailing – especially with the initial banding of staff.
‘All over the NHS there were mistakes made in implementing AfC’
As often reported in Nursing Times during the implementation process, there were problems with staff being placed on the wrong bands. Around 5% of NHS staff are estimated to have challenged their initial banding.
‘We were criticised at the time for trying to make it happen too fast. I think there is some truth about that,’ said Mr Foster.
‘We set targets that meant that there were things that were done to timetable rather than done right. ‘All over the NHS there were mistakes made in implementing AfC. That was because of the top-down performance management,’ he said.
‘On the other hand if we had not done that we might be implementing it still now. The implementation was not as smooth as we would have liked,’ he added.
These problems have now largely been rectified. Most NHS employees in England and Wales have now been fully transferred to AfC and received back-pay for the assimilation period – although progress has been slower in Scotland.
However, at one stage there were concerns that the whole national pay system could be scuppered by NHS organisations opting out under the government’s plans to give trusts greater local autonomy over decision-making.
Three year’s ago Southend University Hospital NHS Foundation Trust in Essex used its foundation status to opt out of Agenda for Change and agreed local terms and conditions for 95% of its staff. However, the expected flood of other trusts following this route has so far not materialised.
Maintaining the integrity of AfC remains a priority. Josie Irwin is concerned that organisations may attempt to revert to local job evaluation systems.
‘I think there is work to be done to ensure that employers who continue to apply AfC correctly and work through job evaluation and don’t do weird and wonderful things,’ she said.
During Patricia Hewitt’s tenure as health secretary, Agenda for Change came under attack from trusts trying to balance their books through attempts at re-banding. Some trusts claimed many nurses were on too high a band due to errors in job evaluation, with band 6 nurses particularly targeted during this period.
Mr Foster warned that this management culture still persisted in some places – not helped perhaps by recent reports from the King’s Fund and the Commons’ public accounts committee, which have criticised the cost-benefit of the system.
‘I hope the government holds its nerve’
‘Even now people see AfC as a nuisance and a cost. Really what they need to see it is not a nuisance and a cost but an enabler to do other things. People need to hover up and look down on the whole system and look at what it has achieved rather than being concerned about the price of it,’ he said.
While the agreement has so far survived such threats and criticism, a new danger is looming large on the horizon. The economic crisis and forecasts in huge public sector budget cuts seemingly pose the biggest threat to the future of Agenda for Change.
Mr Foster said: ‘The biggest single challenge is the economic crisis. When you read newspapers there are various commentators threatening public sector pensions, public sector increases, threatening the fact that there is a national NHS pay system.
‘I personally think all those things need to be defended,’ he added. ‘It is important there is a common NHS pay system. I hope the government holds its nerve.’