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NHS should introduce performance-related pay, says think-tank

By Vivienne Russell | 12 November 2012

The NHS should break away from national wage agreements in favour of performance-related pay systems, a pro-market think-tank has suggested.

Doctors and nurses, a Reform report published on Friday, concludes that there is a ‘glaring contradiction’ between the NHS’s ambitions on efficiency and quality and its adherence to a nationally agreed pay structure.

The report draws out links between employment practices and health outcomes. It cites several organisations in the UK, US and India where improved workforce management has helped transform the quality of the services.

One of these is Salford Royal NHS Foundation Trust, one of England’s highest performing hospitals. It has introduced ‘innovative links’ between pay and performance and staff satisfaction rates have been the highest in the NHS for two years running.

The think-tank says ministers should resist calls from the NHS Employers umbrella organisation for another pay freeze.

‘Pay freezes prevent employers from using their discretion to change working practices or incentivise good performance,’ it says.

Other recommendations included relaxing immigration rules for doctors, a review of career progression for hospital doctors and more performance management for GPs.

Reform deputy director Nick Seddon said: ‘The current negotiations on NHS pay are a test for the new secretary of state.

‘There is a glaring contradiction between his goal of a higher quality NHS and his department’s support for national pay agreements.’

Chris Hopson, chief executive of the Foundation Trust Network, welcomed Reform’s ‘clear thinking’.

He added: ‘NHS trust boards need the flexibility to have an honest and open dialogue with their staff about how they maintain and improve the quality of patient care whilst managing workforce costs, which typically account for between 65% and 70% of an average trust’s costs.

‘It’s the kind of conversation that most large employers have had with their workforces over the past three years but NHS trusts have found impossible to have, due to the restrictions of being tied into a single, very inflexible, national agreement.’

Hopson added that no-one should pre-judge the outcome of a move to more flexible pay systems in the NHS.

‘To imply that they will automatically mean worse outcomes for jobs, pay and staff is wrong. It might mean more and different jobs, better paid, with an employment guarantee, in return for some changes to terms and conditions. We won’t know until that shift occurs.’

On Friday, the NHS Staff Council issued proposed changes to NHS terms and conditions, which would cover staff on the Agenda for Change contract in England.

These include linking incremental pay progression to performance and stopping unsocial hours payments being paid during periods of sick leave. Trade unions have agreed to consult on the proposals which, if agreed, will be implemented next March.

Unison head of health Christina McAnea said: 'The unions' main objective is to defend and maintain a national terms and conditions agreement which can deliver for patients, staff and employers.'



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