Agenda for Change: NHS Pay Restraint

Dan Poulter Excerpts

Monday 30th January 2017 Westminster Hall

[Catherine McKinnell]

I very much agree. That is a factor right across the NHS and the social care sector, and it is an issue we see arising increasingly as staff come under increasing pressure, with the increased pressure to make efficiency savings, which ultimately compromises the health and safety of staff who find themselves in such situations.

Just last week the National Audit Office published its report into NHS ambulance services, which concluded, among other things, that:

“Increased funding for urgent and emergency activity has not matched rising demand, and future settlements are likely to be tougher”.

Crucially, in the context of this debate, it also concluded that:

“Ambulance trusts face resourcing challenges that are limiting their ability to meet rising demand. Most trusts are struggling to recruit the staff they need and then retain them. The reasons people cite for leaving are varied and include pay and reward, and the stressful nature of the job.”

That very much ties in with the concerns the hon. Gentleman raised.

[Dr Daniel Poulter (Central Suffolk and North Ipswich) (Con)]

I congratulate the hon. Lady on her speech; I agree with a number of the points she has made. On ambulance trusts and the point about very senior managers, we need good managers and senior managers in the NHS. However, ambulance trusts are a particular example—my trust, East of England, is an example—of where managers have sometimes received huge pay rises at the expense of frontline staff, who have received pay rises of nought or 1%. That is unacceptable. Does she agree that that further lowers the morale of frontline staff in a difficult period of pay restraint?

[Catherine McKinnell]

The hon. Gentleman makes an important point, which is why it is important that staff under Agenda for Change have the opportunity to have their voices heard today. When the Government look at how the NHS’s limited resources are distributed among the workforce, they need to approach the matter very much in the round.

I have no doubt that the Minister, when he responds to the debate, will be tempted to repeat the Prime Minister’s mantra that the Government are putting an additional £10 billion into the NHS by the end of this Parliament. However, as we all know, that figure has been comprehensively debunked by the hon. Member for Totnes (Dr Wollaston) and her fellow members of the Health Committee, and more recently by the chief executive of NHS England, Simon Stevens, when he appeared before that Committee. Indeed, Ministers confirmed only last week that NHS England will face a 0.6% real-terms fall in per capita funding in 2018.

How would an end to pay restraint for Agenda for Change staff help address the enormous difficulties the NHS faces? As the Royal College of Nursing has highlighted, chronic staff shortages have led to an “over-reliance” on “expensive agency staffing” to the extent that spending on agency nurses equates to about one tenth of the NHS’s total nursing pay bill. Indeed, the Royal College goes on to state that

“the over-reliance on agency staffing is a reflection of a nursing shortage and a direct consequence”

of the limit on pay for nurses working in the NHS.

We therefore have the nonsensical situation whereby nurses are leaving the NHS because of increasing workloads, stress and feeling undervalued following years of pay restraint, so the NHS has to turn to expensive agency nurses to fill the gaps left behind. Those concerns are mirrored by the Royal College of Midwives, which, following a freedom of information request, uncovered that NHS trusts in England spent almost £72.7 million on agency, overtime and bank midwives in 2015—enough to pay for 2,063 full-time experienced midwives or 3,318 full-time, newly qualified midwives.

The Minister might also refer to an increase in the number of nursing and other NHS staff since 2010. Again, that addresses neither the fact that there is currently a shortage of about 24,000 nurses in England and Wales, nor the shortage of nearly 3,500 midwives across the UK. Nor indeed does it address Health Education England’s worrying confirmation that last year some 8.8% of nurses left the NHS—the highest number since 2011. All that surely shows that the NHS is facing a perfect storm, not least in the light of the Minister’s ludicrous decision to axe bursaries for new nursing, midwifery and allied health students—I should perhaps say “Ministers’ decision”, rather than directing that comment at the Minister of State—the Government’s continued disgraceful failure to confirm the long-term future of 33,000 nurses from other EU countries working in the NHS, and the fact that one third of nurses are due to retire in the next 10 years. I look forward to hearing him explain how continued pay restraint for Agenda for Change staff will help resolve the staffing crisis.

[Dr Poulter]

The hon. Lady makes a good point about bursaries. Most nurses enter the profession in their late 20s—at about 28 or 29. We are talking about a recruitment challenge in nursing and the fact that the number of applicants for nursing courses dropped by 25% this year. Surely that demographic group needs the bursary as an enticement into nursing.

[Catherine McKinnell]

The hon. Gentleman makes another valid point. I hope that the Minister is listening, because although we are focusing specifically today on pay restraint for Agenda for Change staff, there is a much wider issue for the Government to take on board. A variety of factors is affecting recruitment and retention of NHS staff. The axing of bursaries is just one significant factor that the Government should seriously examine, and reverse.

What has the pay restraint for Agenda for Change staff meant to individual nurses, midwives, paramedics, cleaners and other healthcare professionals since 2011? Depending on the measure of inflation used, it has resulted in a drop in real-terms earnings of up to 14%. To put that in context, the trade union Unison has calculated that it is equivalent to annual pay cuts of £2,288 for a cleaner, £4,846 for a nurse, £6,134 for a midwife and £8,364 for a clinical psychologist. Indeed, ahead of the 2017-18 NHS pay review process, Unison surveyed its members working in the NHS and received the following responses, which are a matter of deep concern: nearly two thirds felt worse off than they did 12 months ago; 49% had asked for financial support from family or a friend; 13% had used a debt advice service; 11% had pawned possessions; 11% had used a payday loan company; 15% had moved to a less expensive home or remortgaged their house; and just under one fifth took on paid work in addition to their main NHS job, 64% of whom did so because their NHS salary was not enough to meet their basic living costs. More than 80% said they had considered leaving the NHS in the past year.

--- Later in debate ---

[Andy Burnham]

That is how it begins to appear. The Government are pushing people beyond their limits. There was the attempt to introduce regional pay, and there was the attempt to cut what is called the unsocial hours payment—there has been a whole series of initiatives that try to strip away support for the profession. It begins to feel like an attack on the profession. That is certainly how junior doctors felt, and I think GPs feel the same. The nursing profession is making clear today that it feels the same too.

As I said, this is a false economy. As well as damaging the good will and the extra hours that people were willing to offer before, it has also, as my hon. Friend the Member for Foyle indicated, pushed people into the arms of private staffing agencies. That, in the end, is another false economy for the national health service. Over recent years, we have seen the bill for private staffing agencies in the NHS increase year on year, to the point where it is now in the region of several billion pounds every year. Many trusts are in the grip of the private staffing agencies. That, of course, is also a factor in the cuts to nurse training that we have seen in recent years.

[Dr Poulter]

The right hon. Gentleman is making some very fair points. I hope he recognises that one of the first things I did in ministerial office was to reverse what was happening on regional pay and stick to the national pay contracts. He makes an important point about temporary staffing. If we look at the approach with the junior doctors’ contract, many junior doctors will now see a huge reduction in in-house locum pay for the work they are doing; it is sometimes a reduction of £10 an hour. That will feed locum agencies and drive up the temporary staffing bill. We need to see nurses and other Agenda for Change staff paid properly, to stop them needing to do agency work. That is one of the main drivers of the agency business.

[Andy Burnham]

I am glad to hear the intervention of the former Minister, whom I worked well with in the previous Parliament. I want to take this opportunity to say that he did listen on regional pay. We made an argument about that issue, backed up by the RCN and others, and, to be fair, it did not go any further than the experiment in the south-west. I give credit to him for that. I also give credit to him for consistently showing a real regard for the pressures faced on the frontline.

The hon. Gentleman makes an important point that the Minister would do well to reflect on. There is a huge false economy here. It makes sense to have fairness in terms of headline pay for staff, to maintain good will, but on top of that, it makes sense to provide them with incentives to give any additional shifts or time to the in-house bank, rather than private staffing agencies. The Government have lost sight of that in recent times.

--- Later in debate ---

[Mr Dunne]

The hon. Lady must have access to figures that my Department and I do not have. My information is that we have yet to receive any formal numbers from UCAS; there may be some early indications, but they do not represent the actual numbers. We will just have to wait for them. There is no point in speculating any further.

A number of hon. Members mentioned the potential impact of Brexit on EU staff, who currently represent a significant number of the professionals working in the NHS. Some 43,000 non-UK-born nationals work in the NHS—about 15% of the workforce—and about half of them come from the EU. It is very important that none of those staff are unnecessarily concerned about their future. The Prime Minister has sought to make it clear on several occasions that she wants to protect the status of EU nationals who are already living here and that the only circumstances in which that would not be possible would be those in which the rights of British citizens living in EU member states were not protected in return. We wish to provide as much reassurance as we can, both to NHS workers and to their employers, that they have a constructive future here in the UK.

However, it is important that we move towards a self-sustaining workforce. Frankly, that is at the heart of the reason behind the change in funding for nursing places, which is to bring nurses in line with doctors and those doing other degrees in England, so that from this autumn onwards they receive funding through student loans rather than bursaries.

[Dr Poulter]

The Minister is right to highlight the increases in many staff numbers across the NHS. He will also be aware that because of the increased focus on quality of care, many trusts have had to acknowledge that they did not have enough staff in the first place. If there are enough staff working in the NHS at the moment, why is the locum bill about £3 billion a year?

[Mr Dunne]

I will come on to agencies shortly. I am not denying that there are vacancies within the NHS, but my point is that there has been and continues to be a significant investment in increasing the number of people working in the NHS, which was not the impression that other hon. Members gave.

--- Later in debate ---

[Mr Dunne]

Because I have been very clear that at the moment nobody will be paid less than the national living wage, and that is all I am going to say on that.

[Dr Poulter]

On the current position, can my hon. Friend clarify what the average annual increase in pay in real terms is for NHS staff who have been at the top of the Agenda for Change pay scale since 2010?

[Mr Dunne]

I will come to that point. If my hon. Friend will bear with me for a few minutes, I think I will be able to satisfy him on that.

--- Later in debate ---

[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%.

[Dr Poulter]

I specifically asked about those who are at the top of the Agenda for Change pay scale, which many Agenda for Change staff are. Can the Minister confirm what the figures are for that group, because I think that the figures he has given include those in receipt of incremental rises?

[Mr Dunne]

They do, and it is important for hon. Members to understand the impact of incremental pay rises. The truth is that some half a million Agenda for Change staff are eligible for incremental pay rises each year of more than 3% on average, on top of annual pay awards. I am not saying that NHS staff should have no concerns about the level of pay award they receive; what I am saying is that since the 2008 recession, NHS earnings and public sector earnings have generally compared well with those in the wider economy.

A number of hon. Members talked about regional pay and in particular the challenges of working in London. Of course, we are very sympathetic to individuals who face the pressures of working in London—in both inner and outer London—and that is why we have the increments available to recognise the extra costs of living there.

[Catherine McKinnell]

rose—

[Dr Poulter]

rose—

[Mr Dunne]

I will make a little progress, if I may.

NHS organisations spend about two thirds of their entire expenditure on pay. Ensuring that the NHS has the staff it needs relies, crucially, on controlling pay and on making every penny count for the benefit of patients.

I give way to my hon. Friend.

[Dr Poulter]

My hon. Friend the Minister may not have the answer to my specific question here today, but will he write to me after the debate to confirm the answer to my question about those members of staff who are at the top of the Agenda for Change pay scale? What, in real terms, has been their pay increase since 2010?

[Mr Dunne]

I will be happy to look at that; if my hon. Friend would write to me with his precise question, of course we will give him an answer.