Health Service Focus

Keeping the pay bill fair

Earlier this year the government refused a 1% pay rise for all nurses in England, as recommended by the independent Pay Review Body, instead limiting it to those not on progression pay already. This decision was made on the basis that NHS trusts were acting “responsibly and sensitively when setting senior pay”.

But a new report argues the opposite. Based on Freedom of Information responses from 126 NHS trusts, the Royal College of Nursing (RCN) has revealed that the mean annual executive team costs per trust, as shown annually in the statutory accounts, increased from £936,992 in 2011-12 to £994,545 in 2013-14 – a 6.1% increase.

During the same period, though, the mean annual earnings of qualified nurses, midwives and health visitors went up by just 1.6% from £30,439 to £30,938 – lower than the RPI rate of inflation, which increased by 5.8%.

That was the headline finding of the ‘All in it together? The Executive pay bill in England’s NHS’ report, which also highlighted that half of the responding trusts had awarded salary increases of at least £5,000 to one or more executive directors and a quarter had awarded increases in benefit-in-kind payments to at least one executive director.

The 14 largest trusts that replied, with more than 7,000 full-time staff, saw the biggest increases in average executive team costs; going up from £1.13m in 2011-12 to £1.3m in 2013-14, a 15.28% increase. However, the nine smallest trusts, those with up to 1,500 full time staff, also saw large increases, with a mean 13.19% increase in costs rising from £571,778 to £647,185.

Dr Peter Carter, chief executive and general secretary of the RCN, said: “It’s extremely worrying that the government believes that trusts are acting responsibly when it’s clear many are failing to show the leadership they should on senior management remuneration

“There are some trusts and managers who have led by example and acted sensitively and they are to be commended. The government has maintained an iron grip on the pay and benefits of frontline staff whilst the senior managers pay bill has seemingly gone unchecked. This is the worst kind of double standard and makes a mockery of their insistence that fairness has been at the heart of their decision making on public sector pay.”

In defence

However, the NHS Confederation was quick to defend executive pay. Making reference to the Income Data Services, which carries out independent research into NHS directors’ pay and rewards, the organisation stated that the latest evidence in the year ending March 2013 showed that 60% of NHS board directors received no salary increase.

Within the RCN report it was stated that there were numerous examples of executives being paid substantial bonuses on top of their salaries, with two chief executives receiving bonuses of at least £40,000 – more than a senior ward sister or district nurse will earn in a year.

While not denying the high rate of the bonuses, NHS Confederation stated that “far from being widespread”, just seven NHS chief executives received bonus payments in the year ending March 2013.

Rob Webster, the organisation’s chief executive, said that at a time of great change it is important that all parties come together in the NHS.

He added: “Our experience from members is that they have continued with pay restraint for executives. This is a matter for individual trusts, who may also be guided by the national Very Senior Managers Framework. In each trust there will be clear governance through Remuneration Committees, with non-executive chairs of any pay awards made.”

Webster also noted that as the trade union representing nurses, the RCN is right to represent its members’ interests, and to argue for pay rises, benefits and other incentives for the nursing workforce. But, he said, pitting clinicians against managers will not improve patient care.

Questions have also been raised over the RCN’s figures, which include termination payments. This could suggest a drop in the numbers of executive directors, not an overall rise in pay.

A Department of Health spokesman said: “The RCN’s figures should be used with caution – they have included exit packages for executive directors but not nurses.

“In fact, the latest independent evidence shows that for the third year running, there was no increase in median executive board pay.”

RCN head of policy Howard Catton dismissed the DH response, saying that while redundancy packages were included, they made up a small part of the RCN figures.

In it together

Although the figures can be debated and manipulated to suit each cause, the overall recommendations from the RCN seem fair.

For instance, it would like to see the levels of reward for NHS executive directors and senior managers reflecting the similar pay restraint being experienced by other NHS staff.

It also says there is need for greater fairness between the levels of reward for frontline staff, senior managers and executive directors, and greater transparency is needed in the process for setting levels of reward for executive director teams in the NHS.

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