The Department of Health is to examine introducing a national freeze in annual pay increments affecting more than a million NHS staff.
Director general of NHS finance, performance and operations David Flory spoke to Nursing Times’ sister magazine HSJ in the wake of last week’s spending review, which left the NHS with a real terms increase of 0.1 per cent a year.
Asked if the tight settlement now made a pay increment freeze more pressing, Mr Flory said: “The pay drift around increments is a significant cost pressure. In the end, within our resource limit, there is a trade-off between increases in pay and number of jobs.”
From April next year, NHS staff, in common with other public sector employees, will not receive a cost of living pay rise. However, Agenda for Change pay increments – worth an average 2.5 per cent a year - are not affected.
Approximately 70 per cent of staff on the AfC pay deal receive such increments at an estimated cost of almost £1bn a year across the NHS.
Last month Nursing Times and HSJ reported that foundation trusts were drawing up plans to freeze increments. Speaking this week, Mr Flory said the department would not stand in their way.
However, rather than going it alone, foundations are hoping the DH would implement a national freeze. Asked if the DH would consider such a move, Mr Flory said: “It’s clearly an issue we’re thinking about. As we move forward we will discuss that.”
Unison senior national officer for health Mike Jackson said the suggestion was “deplorable”.
He said: “At a time when we have a pay freeze, the increments are the one thing that mitigates [that]”. He pointed out that at an average 2.5 per cent increase a year, pay increments were currently not even keeping up with inflation, which is running at 3.1 per cent.
Mr Jackson added that although a number of foundation trusts had proposed increment freezes to their local staff representatives, none of them had been able to offer guarantees against redundancies in exchange.
By contrast, Royal College of Nursing head of employment relations Josie Irwin suggested her union might be more accommodating if the DH went ahead with the freeze. She told Nursing Times: “We would be naive if we weren’t anticipating serious discussions.”
“There are some very difficult questions that have to be faced in terms of balancing pay and jobs. We want to have those conversations because we believe trade unions are part of the solution and we want to find an approach that safe guards our members but is not at the dis-benefit of patients.”
She said the introduction of a national framework for freezing increments would be preferable to local increment freezes, which could lead to a return of unfair pay inequalities across the NHS.
Asked if the RCN might support an increment freeze if couched in terms of job protection Ms Irwin said: “I don’t even think it’s as strong as ‘may be’. But there is a discussion to have about a problem everyone faces.
“It may be we can find a way through that doesn’t have to mean additional pay restraint.”
She said that while discussions would inevitably go on around the balance between “pay and jobs”, arguments in favour of an increment freeze would need to be weighed against “very low” level to which NHS staff morale had now fallen.
Concerns about the NHS funding settlement came despite chancellor George Osborne claiming he had “protected” the NHS with a headline real terms increase of 0.1 per cent a year.
The claim is based on comparison with GDP inflation, currently running at 1.9 per cent and significantly lower than the consumer price index measure of 3.1 per cent.
However, the spending review also announced a cumulative £3.8bn transfer over four years from the NHS’s capital budget to fund adult social care. After that transfer – which will peak at £1.1bn in 2013-14 – the average real terms change falls to minus 0.1 per cent a year over the four year period (see graph).
Mr Flory said the transfer from the NHS budget had been necessary due to the 26 per cent real terms cut to local authority budgets.
He argued that, as the spending would be channelled through the “statutory structures of the NHS”, the NHS would be “at the table” working out the best way to spend the money and therefore reducing the knock-on effects on the NHS, such as delayed discharge.
A snapshot poll of 1,250 Nursing Times readers, carried out online last week, found 65 per cent thought people climbed the incremental pay scale without their skills being properly scrutinised.
The survey also showed a reduction since a similar poll in July on the number of nurses prepared to sacrifice a pay rise in exchange for their job being protected – down from 44 per cent to 36 per cent.
There was a slight increase in the number of nurses who said they would consider industrial action if annual increment progression was blocked – up from 38 per cent to 42 per cent.