Regional Pay (NHS)

Alex Cunningham Excerpts

Wednesday 7th November 2012 Commons Chamber

[Alex Cunningham (Stockton North) (Lab)]

It is impossible to underestimate the importance of this afternoon’s debate. It is of enormous national significance, but also, of course, of acute interest to my constituents. The idea of regional pay is very simple at its core—that an NHS worker in my Stockton North constituency should get significantly lower pay than an NHS worker in another part of the country for doing exactly the same job. The same applies to fire fighters such as my constituent Tony Dorling, whom I met a few minutes ago. He is worried about the cuts to his service and the impact of regional pay on his work, too.

With that in mind, I am surprised that this Government would see regional pay as a viable policy. In my view, that is the heart of the matter. Try as they may, I cannot believe that the Government could ever claim that it would be fair, and it seems that few people, if any, think it would be anything other than unfair, divisive and counter-productive.

How can we really expect a skilled NHS worker, hit by a pay cut, to continue to work in a busy hospital or clinic in a deprived area when a quieter health centre in a more affluent area offers a much better paid position 30 miles away? The reality of regional pay in the NHS is a brain drain away from the areas that need quality and dedicated staff most towards areas with better health outcomes, with the inevitable knock-on effect on health equalities.

Several colleagues have referred to the north-east and Teesside. Because of the impact it is having on my community and on our hard-working staff, it particularly distresses me that this Government have forced the North Tees and Hartlepool NHS Foundation Trust to slash another £40 million off its budget over the next two or three years. I am also distressed that that has led to a move to vary terms and conditions for its workers’ sick pay and even to a threat to sack them and re-employ them on different terms and conditions if the changes are rejected.

I am a former member of the board of the North Tees and Hartlepool trust. A couple of weeks ago, my hon. Friend the Member for Hartlepool (Mr Wright) and I met the chairman and the chief executive to find out exactly what was going on. Both gentlemen assured us that they did not support regional pay, but wanted to make a change in national terms and conditions, which they claimed had the support of staff—something very much disputed by the Royal College of Nursing. I saw why they chose that particular change, but I pleaded with them to think again and stick to nationally agreed terms and conditions to ensure that our needy area did not lose its staff to other areas. The people at North Tees and Hartlepool want a national agreement, and I would like to see health employers get back to the table with the trade unions to negotiate on that particular issue. We should totally avoid policies that widen health inequalities—coming from an area such as mine, I know about them—but this policy falls into that category.

Implementation is another issue. If we were to move towards a system of localised pay, negotiations would take place locally and those would take up a greater amount of the time of both managers and union representatives in different places all over the country. The NHS in its current form is not equipped to manage local pay negotiations and, frankly, lacks the skills to do that. This is just another disruptive set of changes that the NHS could do without, particularly during the implementation period of the Health and Social Care Act 2012. According to the RCN, the proposed policy, ostensibly designed to save money, will actually see the cost to the public purse increase.

I am proud to be a member of Unison, a campaigning union on behalf of employees and patients. Its head of health, Christina McAnea, sums up regional pay perfectly when she says:

“Regional pay would be a massively expensive, bureaucratic nightmare, designed to cause huge disruption and conflict.”

The British Medical Association is also opposed to any moves away from national terms and conditions, saying that such a move would have

“a significant negative impact on the NHS, staff and patients.”

The Government have yet to make a convincing case as to why a regional system of pay is preferable to the current national one. The current “Agenda for Change” works by setting a basic pay floor, which no health authority can go below with regard to pay. The BMA has said:

“A national approach to contract negotiations for NHS staff is both efficient and fair.”

Where a sufficient case can be made, the system allows for minor variations through high-cost area supplements and recruitment and retention premiums. Those provisions make sense for areas that are particularly high cost, such as inner London, but what the Government are proposing would explode the system of sensible divergence through levelling-up, and replace it with one that relentlessly levels down to the detriment of health workers in the areas with the highest need and demand.

The argument that cutting pay in the public sector will help to stimulate growth in the private sector is undermined by the group of 60 regional economic specialists who wrote to The Times to say that they could find

“no convincing evidence within these reports to support the Chancellor’s inference that such regionally or locally determined pay could boost the economic performance of regional economies. On the contrary, such a policy could reduce spending power, undermine many small and medium-sized businesses in areas of low pay, and aggravate geographical economic and social inequalities”—

even more inequalities. They go on to say:

“Moreover, for government, the medium and long-term economic and social costs could increase.”

If the NHS wants to continue to attract a work force of similar quality in different parts of the country, we need to continue with a national system for pay and reward within the current provisions of “Agenda for Change.” I would urge the NHS pay review body to reject outright any moves towards regional pay.

I am also concerned about the impact that moving towards a system of localised and regionalised pay would have on local economies. One of the things that has held us back in combating our stagnant and shrinking economy is low private sector pay. The Governor of the Bank of England has observed, in relation to growth, a clear link between a real fall in wages and consumer spending.

The TUC has argued that reducing public sector wages by 1% would hit local economies by at least £1.7 billion a year. I am not sure, even if regional pay were a good idea, that such a loss to the economy would be a price worth paying, and I am not convinced that the private sector in areas such as mine would welcome a local decline in disposable income.

Regional pay in the NHS would cost, rather than save money. It would widen health inequalities. It would disadvantage deprived areas, create a bureaucratic mess and damage the economy. I have tried, during my short speech, to express what is wrong with regional pay, but I cannot put the case any better than my fellow north-east MP, the hon. Member for Hexham (Guy Opperman), a Conservative, who said:

“I…believe that regional pay is divisive and manifestly unfair.”—[Official Report, 20 June 2012; Vol. 456, c. 960.]

The Government would do well to listen to him.