The first NHS chief executives to publicly support a freeze on pay increments have spelt out why they believe the move is vital to protect services.
Twelve NHS chiefs have signed a letter to HSJ supporting NHS Employer's proposal to freeze increments and guarantee not to issue compulsory redundancies to those on Agenda for Change bands 1 to 6 for two years from 1 April.
As revealed by HSJ last September, many trusts have been privately lobbying for the change, but until now few have been prepared to speak openly (September 23, p4-5).
The letter says the deal is "not only desirable as a way of dealing with financial pressures, it is essential in order to be able to protect employment and staffing levels".
Wrightington, Wigan and Leigh Foundation Trust chief executive Andrew Foster warned that failure to broker a deal could result in cuts in posts exceeding the figure of 35,000 being mooted within the NHS as the likely consequence of not restraining pay.
However, he told HSJ the deal appeared "fragile" because unions were reluctant to sign up, fearing employers could later abandon the guarantee on job security.
Those in higher pay bands would not receive any guarantee regarding compulsory redundancies but trusts would make "best endeavours" to maintain jobs. Mr Foster said there was a need to "flesh out" what this meant in practice.
NHS Employers believes a national framework agreement would save £1.9bn a year. It would come on top of the freeze on cost-of-living pay rises for all public sector staff earning more than £21,000.
Unions are due to meet on 20 January to decide whether to proceed.
One of the main sticking points for unions is the fact that staff in bands 7 to 9 will not necessarily benefit from the freeze.
However, NHS Employers director Dean Royles said controlling pay would "also enable more certainty of employment for other bands" because trusts would be in a healthier financial position.
He added that the agreement would be "binding" as employees would be able to seek an injunction to prevent compulsorily redundancies. Alternatively, they could potentially sue for wrongful or unfair dismissal.
"The reality is employers would be determined to make it work. It isn't something they would enter into lightly," he said.
You have reported on the NHS Employers proposals to the staff side of the NHS Staff Council, for a national framework agreement involving a freeze in incremental progression that NHS organisations can use where there is agreement locally.
In summary, each organisation adopting the framework would freeze pay increments for all staff for a two year period, and guarantee not to make compulsory redundancies for staff earning at or below the equivalent of the maximum of Agenda for Change band 6 during the same period.
We, the undersigned, support the need to make such a proposal and believe that the proposal is one we are very willing to work with. This letter aims to make clear the reasons why trusts see this proposal as a win for them and a win for staff. Although the NHS has been offered significant protection of funding in the most recent spending round, rising costs and increasing demand for patient care make the next two years a huge challenge and we expect to have to make efficiency savings of well over 5 per cent per year. We are looking at all areas of expenditure to find savings, but salaries represent 60 to 70 per cent of our costs so we need to explore measures to contain the pay bill. NHS Employers' proposal represents a practical way forward, which maintains the integrity of the nationally agreed pay systems.
Each of our organisations has plans to improve quality and productivity over the period of the spending review, but these will take time to deliver benefits. In the meantime, we want to maximise employment security for our staff and retain their skills in the NHS. We know from local feedback and surveys that trade unions have undertaken, that job security is a key concern for staff. We will be having a very open dialogue with our staff locally, so that the benefit of these ideas can be explored with them.
Foundation trusts are drawing up plans to freeze automatic pay increases in a move which could affect up to half a million NHS staff.
NHS Employers – the body that represents the Department of Health in pay negotiations with NHS staff – has proposed to freeze Agenda for Change pay increments for two years in exchange for a "no compulsory redundancy" agreement.