The Government are committed to the delivery of world-class public services, and ensuring that public sector workers are fairly remunerated for the vitally important work that they do.
Public sector pay restraint was necessary to tackle the deficit left by the last Government. However, in September last year we ended the 1% pay award policy for public sector workforces, recognising that some flexibility would be required in certain areas, including in return for improvements to public sector productivity. There is still of course a need for fiscal restraint—our debt is the highest it has been in 50 years, and it is not fair to pass an increasing burden of debt onto future generations.
As a result of constructive dialogue over recent months, I am today announcing that I have agreed to NHS Employers and the NHS trade unions going out to consultation on a three-year pay agreement for NHS staff employed under the “Agenda for Change” pay agreement. This agreement covers over 1 million staff employed in the NHS excluding employed doctors and very senior managers and is a good example of where public sector employers and unions can work together to agree a pay rise in return for wider reform.
The three-year deal aims to ensure that every pound of the £36 billion pay bill delivers value for and is fair to patients, staff and the taxpayer. It targets recruitment, retention and capacity issues to support staff and help them meet demand within the NHS.
The deal will help ensure the NHS can continue to recruit the skilled compassionate workforce it needs by:
Targeting the greatest pay uplifts at the lowest paid in the NHS, affecting over 100,000 FTE staff, so that the lowest starting salary increases from £15,404 this year to £18,005 in 2020-21, through reform.
Investing in higher starting salaries for staff in every pay band by reforming the pay system to remove overlapping pay points; so a newly qualified nurse will receive starting pay 12.6% (£2,779) higher in 2020-21 than this year and starting pay for a midwife on moving to band 6 will increase by 18.1% (£4,800) as a result of pay band reform.
It will support the retention of staff by:
Guaranteeing fair basic pay awards for the next three years to the 50% of staff who are at the top of pay bands—a cumulative 6.5%.
Guaranteeing fair basic pay awards and faster progression pay for the next three years to the c.50% of staff that is not yet on the top of their pay band.
Through important reforms to pay progression, the deal will help improve staff engagement and ensure that all staff have the knowledge, skills and support to make the greatest possible contribution to patient care.
It will put appraisal and personal development at the heart of pay progression—with virtually automatic incremental pay replaced by larger, less frequent pay increases subject to staff meeting the required standards for their role.
Staff will be supported to develop their skills and competencies and demonstrate that they meet the required standards before moving to the next pay point.
The system will be underpinned by a commitment from employers to fully utilise an effective appraisal process.
The deal will release capacity for provider organisations:
The partners commit to working together to improve the health and wellbeing of NHS staff so as to improve levels of attendance in the NHS with the ambition of matching the best in the public sector. NHS Digital data suggests that latest sickness absence rate for the NHS is 4.13%. For AfC staff, this is estimated at 4.5%. Estimates suggest that a 1% drop in sickness absence could save the NHS £280 million.
Finally, the deal will encourage greater consistency and modernisation of terms and conditions:
New provisions will be agreed to give staff access to consistent child bereavement leave, enhanced shared parental leave (extension of statutory), and a national framework for buying and selling annual leave.
Steps will be taken to ensure that, over time, the calculation for sickness absence pay is the same for all staff.
There will be very modest changes to the value of the higher rates of unsocial hours pay for staff in pay bands 1 to 3 over the period of the multi-year deal to ensure the difference between these staff and all other AfC staff is narrowed over time.
Overall, this pay deal is fair to staff and taxpayers and will help to improve productivity through stronger evidence-based appraisal systems and through that, better staff engagement which we know can help improve outcomes for patients.
At the Budget in November my right hon. Friend the Chancellor of the Exchequer announced that if discussions with health unions on pay structure modernisation for “Agenda for Change” staff were successful, he would protect frontline services by providing additional funding for such a settlement. I can confirm that through autumn Budget 2017, we set aside in the reserves £800 million per annum which funds the first year of the “Agenda for Change” pay deal. If the NHS trade unions accept this agreement following consultation with their members, the Government will release this funding. The Chancellor will provide for additional funding required to fulfil his commitment through the 2018 autumn Budget, and so make available the £4.2 billion over three years needed to fund the deal. This is all part of our balanced approach that keeps debt falling, while investing in our public services and keeping taxes low.
I will also be publishing a draft equality statement to meet my public sector equality duty. A final equality statement will be published when the agreement is implemented.
This agreement will be shared with the independent NHS Pay Review Body and I look forward to its report in due course.