The NHS pay freeze and the end of Agenda for Change

The recent announcement by the government of a pay freeze pay for NHS workers in England and Wales earning below the top of their pay band was the latest attempt to ‘get tough’ on public sector workers. Now band-7 workers at the top of the band will be paid an increase of £405 in addition to their current £40,558 salary whilst those on the bottom of band 1 with a full-time salary of £14,294 receive nothing. Deliberately unfair even by the coalition’s usual definition of fairness, it came with a threat of further pay freezes if the annual increment system is not scrapped.

In response, the major unions issued press releases voicing their opposition and have made noises around taking industrial action. Simultaneously they have already started posturing against each other over their respective dedication to fighting the plans. UNISON for example decided to email their members stating that Unite had offered the government a years’ incremental freeze, whereas they rejected this. Unmentioned was that the unions already accepted that increment rises be tied to performance standards in negotiations in early 2013.

Less reported on, however, is a more general attack on the 'Agenda for Change' national pay structure. In recent years we have seen moves towards more regionalised pay and potentially regional contracts, moves that undermine workers' conditions and pave the way for privatised NHS trusts offering their own private terms and conditions.

What is Agenda for Change
The Agenda for Change pay structure, phased into the NHS from 2004 onwards, is a national replacement for the previous less structured and more inconsistent Whitley system. Under the system, workers are divided into 9 pay bands, with different jobs assigned to one of these bands based on their assessed skill level. Contained within each of these bands are between 3 and 9 pay points which workers move up annually in order to encourage them to stay in the job, while reflecting their improved abilities over time (see graph below). The pay structure is thus designed to provide equal and comparable pay across different positions and to protect the NHS against equal pay claims.

Source: Pay Circular (AforC) 1/2013 http://www.nhsemployers.org/Aboutus/Publications/Documents/Pay_circular_AforC_1_2013.pdf

It is worth noting here that for many workers the introduction of Agenda for Change saw attempts by trusts to deskill jobs and offer lower rates of pay. There were complaints at the time of introduction that skills and abilities were not fully taken into account by managers (particularly for nurses), intentionally placing workers on lower bandings. Indeed it was estimated that 5% of workers had to have their banding reviewed upward from what their managers had initially agreed. Also important are the efforts of trusts since the scheme’s introduction to reband positions downwards, and the general trend towards workers on lower bandings being given ever greater and more senior responsibilities, particularly in recent years as higher banded positions have been cut.

Changes to Agenda for Change and Pay Freezes
Current attacks on Agenda for Change and the national pay structure have to be understood in the context of several years of below inflation pay increases. This year’s pay rise follows a 1% pay rise in 2013 and pay freezes for anyone earning over £21,000 full-time equivalent in 2011 and 2012, with a 1% rise for those below the threshold. This has led to what UNISON estimate to be a real-terms 8 – 12% pay cut since 2010.

A result of this is staffing shortages in certain regions, in particular for qualified healthcare professionals where the private sector and some local authorities offer higher rates of pay. As a consequence some trusts have demanded that they be able to break away from the national structure to offer higher wages. This led to an agreement in early 2013 that managers be given more flexibility in deciding what counts as equivalent experience when recruiting workers from other areas. For example, they are now allowed to decide that one year in a previous role should count as equivalent to two years in a new position in order to offer a higher salary. As a result, managers effectively have the power to bypass the previous structure in order to offer whatever pay point they feel is necessary to recruit staff.

We are thus seeing the reappearance of more regionalised and more inconsistent pay decisions. Previous mechanisms for paying higher wages to workers in more expensive areas operated in a standard manner within the national structure, for example the London Weighting Allowance or the Recruitment and Retention Premium. The latter of these has been phased out of usage by many trusts in recent years. By contrast the new approach means that the salary offered can vary by thousands of pounds based on the decision of a manager.

This also relates to the efforts of some trusts, in particular the already more independent and privatised Foundation Trusts, to break away from the national pay structure altogether and offer their own local contracts. The idea has been floated by individual or groups of trusts for a few years but has so far not been adopted due in large part to the success of trusts in winning major concessions in exchange for remaining within the national structure.

However, as the internal logic of Agenda for Change starts to break down and the national consistency is lost, it becomes more likely that trusts will choose to opt out of the scheme. I have heard senior directors state that, whilst the first trust to break from Agenda for Change is likely to face legal challenge, once this has been overcome many others are ready to follow their lead in breaking away. This would allow trusts to bring in their own terms and conditions that could seek to reduce entitlements such as annual leave and sick pay. It also prepares the ground for fully privatised NHS providers offering their own private contracts in place of the standard NHS terms.

Combating the Changes
I feel that it is important those of us working within the NHS resist these moves towards local pay agreements. This isn’t based on an overly optimistic view of the Agenda for Change system, which has been used as a force for wage depression and deskilling, but rather due to the threat of regional pay being used as part of further attacks on terms and conditions and the opportunity it presents for private companies to take control of services on their own terms.

One problem any resistance faces is that, on an individual level, exceptions from the structure are at present likely to take the form of a higher salary being offered. No worker can be expected to turn down a higher wage in the name of national consistency, nor should they. Therefore to combat regionalised pay we have to get serious about demanding pay increases that go beyond a freeze or token 1% and actually maintain real wages, something that the large unions have so far seemed unwilling to do. Such a demand involves more concerted action than we have so far seen, however it is necessary in order to prevent real wage cuts being used as a tool to break down the national NHS pay structure and pave the way for eroded privatised terms for workers.