In the context of the stunning nature of the wholesale structural changes announced in the coalition’s white paper on NHS reform, it was easy to miss a single sentence on the pay and reward implications. Its states that 'in future all individual employers will have the right to determine pay for their own staff', seemingly signalling the end of the national Agenda for Change framework on bargaining and terms and conditions.
Some will react positively to the new freedoms. Some HR directors, particularly those new to the NHS, feel constrained at having so little control over the pay 'levers' to support organisational change. Local pay rates, productivity schemes, flexible benefits schemes could all be on their agendas.
But for others of us, the sentence in the White Paper induces a wry and knowing smile. As far back as 1993, I and others were warning about the dangers of the NHS adopting local pay strategies that had been rejected by the private sector.
This was at a time of NHS reorganisation to introduce independent health trusts. My remarks (in HSJ) were unfortunately prescient, and after the very mixed experiences of the 1990’s there was widespread support for the Agenda for Change reforms and the introduction for the first time of a national structure of bands covering all non-medical NHS staff. I have heard very, very few voices within the health service, since it was introduced five years ago, calling for the removal of this structure.
Research in the private sector and amongst local authorities confirms that local pay undoubtedly gives the freedom to better react to specific employer needs and market conditions. But it also leads to a huge duplication of effort and often too raises questions about the capability of those managing these freedoms at the local level. It can defeat organisation-wide objectives, for example for career development. And most worryingly of all for the government, as can be seen from the experience of the few local authorities who have opted out of national bargaining, it is a more not less expensive strategy to operate.
Even heavily devolved companies such as Arup and Canon are moving to more consistency at the regional level, trying to achieve a balance of the benefits of both local freedom but transnational co-ordination. But in the NHS of course, the regional structure is being completely removed, with a huge loss of HR and OD expertise in the process.
I am currently working with NHS Employers, trade unions and the Department of Health to try and achieve the same balance in reforms being made to the national Knowledge and Skills Framework. The KSF was introduced as part of the Agenda for Change reforms, acting as a national framework for personal development. The system was complex, over-prescribed and difficult to apply, particularly for non-professional staff. But while now encouraging simplification and local tailoring, maintaining the national framework approach will support career development and avoid the expense of every trust having to develop their own approach from scratch.
Political dogma must not be allowed to obscure the very real dangers of repeating the 1990s experiences with local pay in the NHS, from which staff and we as patients and taxpayers, are likely to suffer.
Duncan Brown is director of HR Business Development at the Institute for Employment Studies
