2 July 2018

The NHS needs a real agenda for change – and a Royal Commission


Today’s report from neurologist Paul Goldsmith on NHS pay is important for a number of reasons. The first is that it reveals the highly bureaucratic nature of pay administration, secondly it shows its geographical inflexibility, and thirdly, it supports powerfully the recent calls for a Royal Commission.

As a members of the Nurses and Allied Professions Pay Review Body in the late 1990s, I came to realise just how many different jobs there were in the NHS. Perhaps naively, I assumed that contracting out services would reduce some of this complexity.

Goldsmith’s report indicates that, if anything, the complexity has increased, albeit in a different way through the evaluation system and bonus schemes. What was badged as greater freedom for NHS trusts has actually resulted in even more centralisation. What many don’t realise is that the NHS pay structure is essentially a Soviet one, with an overmighty ministry at the top and all the paraphernalia of Whitehall civil servants, regional and local management, constant consultations and diffused responsibility.

This system failed in the USSR and it is a mystery that anyone thinks it is appropriate for a modern health service. Incidentally, the Beveridge Report did not propose this kind of organisation – it was the Labour Party and its socialist 1945 government that foisted it on the nation.

The comparisons in the report show the often-repeated claims that the NHS is the best health service in the world are false. We are actually in the middle rank for advanced countries, not only for staff numbers and salaries, but also for a number of other standards.

The geographical inequalities Goldsmith refers to were obvious in my day on the Pay Review Body – and little seems to have changed. Local pay bargaining has been virtually non-existent, probably due to a combination of budgetary pressures and continued union pressure. This was quite often the excuse given when I was on the Pay Review Body and it sometimes seemed that management did not want to tackle the issue.

He also refers to the pay scheme neglecting basic aspects of performance management. It certainly appears that local manpower planning systems that would improve productivity are not up to scratch. Having served as a director of a company employing thousands of both full and part-time staff, I can attest to the crucial importance of effective manpower planning.

Visiting hospitals during my period at the Pay Review Body I was surprised by the inadequacy of these systems in many places. Equally disappointingly, when an IT enthusiast did introduce a simple PC-based system to help his local hospital, there was no mechanism in place to export this simple mechanism to other trusts – a perfect illustration of the overly bureaucratic, centralised NHS system.

One wonders if this will ever change if the Soviet-style ministry system continues. What’s more, as Goldsmith’s report notes: “One of the most peculiar things about the NHS’s pay structure – which is very peculiar indeed – is that its origins lie not in Whitehall, but in Brussels”.

The public probably do not realise that this highly controlled system can result in the top NHS doctor receiving £739,000 a year, while quite a few of their colleagues are on over £400,000. Thanks to the endless propaganda and PR that accompanies pay reviews, they are probably equally unaware that by international standards the UK tends to pay its doctors above average and its nurses below average.

As Goldsmith points out,  “propaganda around recruitment and salaries also gives the impression that a career in the NHS is unattractive”. He rightly notes that so-called “pay freezes” or base pay increases of just 1% do not reflect the reality of annual salary increments for many staff.

Meanwhile, the pay incentives that exist do not appear to focus fully on the needs of trusts. Indeed, the NHS pay and conditions service handbook refers to pay flexibility that is available for “three-star NHS organisations”. As Goldsmith notes, the problem with this is that “trusts have not been ranked by a starred system since 2005”.

To make matters worse, annual appraisal systems were not up to date in most Trusts, which makes one wonder how the system can function at all. A retired senior governor with extensive private sector experience told me appraisals were no more than a box-ticking exercise. As for the bonus system, the same governor says he did not realise how complicated the system was and doubted that the leadership at his hospital could have applied it effectively.

Paul Goldsmith rightly exposes and castigates the present “Agenda for Change” programme and suggests what he calls for a “Real Agenda for Change”, which recognises the value of NHS staff and can “enact mechanisms that facilitate grassroots change”.

Like many of us, he believes the only way to achieve the necessary change is a non-partisan, rigorous Royal Commission. This must deal with the serious problems of the pay system, or we will end up wasting both lives and money. If we want a health service that is among the world’s best, we should also seriously consider moving away from the Soviet-style centralised system to one that can respond to local needs, such as the Swiss model.

Jeremy Hunt should read this report and demand explanations from his senior civil servants and health service managers. He should also urgently have a meeting with Paul Goldsmith.

Keith Miles is a former member of the Nurses and Allied Professions Pay Review Board