Monday, 16 April 2012

NHS redundancy costs force government to 'sacrifice a core principle of its health service reform'

The following article was written by Sally Gainsbury and published on the Financial Times website on 15th April 2012

The government has been forced to sacrifice a core principle of its health service reform to avoid a potential multimillion-pound increase in the redundancy bill for NHS administrative staff. The health white paper originally stated that groups of GPs – who will be handed responsibility for up to £65bn of NHS spending from next April – would have the flexibility to run their organisations as they saw fit. But the government is now preparing to tie the groups to a pre-existing agreement with trade unions, committing them to collective bargaining and fixed terms and conditions for their staff.

The move – described by one GP leader as leaving “a yoke around our heads” – is the latest compromise the government has had to make to its health reforms to make them politically acceptable and affordable at a time when the NHS faces the most sustained period of spending restrictions in its 63-year history. The compromise has been forced because of a technicality in the employment contracts of some 35,000 administrative and managerial staff who work for the 151 NHS primary care trusts that are scheduled to be abolished next April and replaced by the GP groups as the main purchasers of NHS care for patients.

At least a third of those staff are forecast to lose their jobs. But around 10,000 are expected to be offered new posts with GP groups, which would keep the redundancy bill at about £800m. GP groups are not currently party to the national NHS pay and conditions deal with unions, and the government has been advised they therefore do not formally constitute “NHS organisations” for the purpose of staff employment contracts. If that is not changed, existing NHS staff would be able to turn down posts in the new organisations without invalidating their ability to claim redundancy – which averages £63,000 a head.

If half of those expected to be offered jobs in the new GP organisations refused the posts and instead claimed redundancy, the lay-off bill would soar by £300m, tipping it over £1bn. The advice sent a ripple of panic around NHS organisations late last month. The director of one large organisation told the Financial Times: “We’ve got to find more to spend on redundancy costs because the [health] department has messed this up”.

But the department has now told the Financial Times it would try to avoid the extra costs by adding the new GP groups to the list of organisations subject to the agreement with NHS trade unions, known as Agenda for Change. The 275-page agreement dates from 2004 and sets national pay and conditions for NHS staff. It includes a contractual right to automatic annual pay increments, in addition to cost of living increases, and national job evaluation criteria for setting pay rates for posts.

The health department denied that using NHS employment contracts contradicted the government’s original vision, saying the Health and Social Care Act “isn’t about employment terms”. “It’s about more control for patients, more power to doctors and nurses and less bureaucracy in the NHS,” it said. However, Michael Dixon, chair of the NHS Alliance, which represents GP commissioning groups in the NHS, said that would leave the new organisations “between a rock and a hard place”. “We want to avoid the restraints of the terms and conditions, but in order to stop people claiming redundancy we have this yoke around our heads of Agenda for Change which is contrary to [GP groups] being fleet of foot and able to decide their own destiny.”

Charles Alessi, chair of the National Association of Primary Care, which similarly represents GPs, added: “It’s certainly not part of what [GP commissioning groups] were originally meant to be”. “If all they are is part of the original establishment, then one questions as to why one bothered to do this in the first place.”

Sally Gainsbury, Financial Times