Politics - BMA, DDRB and Hewitt

Doctors condemn Government meddling in pay negotiations

The British Medical Association (BMA) is criticising direct intervention by Cabinet ministers in the independent Pay Review Body process describing it as unacceptable and incompatible with the review body system.

BMA Chairman, Mr James Johnson, has written to [Read the letter here] and met with the Chair of the Doctors’ and Dentists’ Pay Review Body [DDRB], Mr Michael Blair QC, to raise concerns about Government interference in supposedly, independent, pay negotiations for doctors.

Health Secretary, Patricia Hewitt, wrote [Read the letter here] to Michael Blair, at the end of 2005, recommending a pay rise for doctors of no more than 1%. This letter followed one sent by the Chancellor a few weeks earlier urging the Review Body to base pay increases on the Government’s inflation target of 2%. The Department of Health already submitted their formal evidence to the DDRB in October 2005.

In his letter and during his meeting with Michael Blair, Mr James Johnson said that Government interference 'seeks to undermine the established process by which evidence is considered, and will provoke anger and further disenchantment among [BMA] members.'

As well as being concerned about Government meddling, the BMA is alarmed that the Government is trying to blame doctors for current NHS deficits. The BMA is calling on the DDRB not to be influenced by Government pressure and to base its decisions on the evidence submitted. It said the Secretary of State’s recent intervention appeared to be based on the criteria of the financial deficits accrued by NHS providers in the current financial year.

Mr Johnson warned that if the pay body accepts these recommendations the effect on doctors’ morale will be devastating. He said:

“These Government recommendations are a kick in the teeth for doctors who have worked tirelessly to improve the quality of patient care and bring waiting times for operations down to record low levels.

“Doctors are as frustrated as patients by financial instability in the NHS; we’re the ones struggling with limited resources to keep services running. Yet for all our hard work, the government is effectively saying that we should be punished for the failure of NHS managers to balance the books.”

He added:

'As a result of European legislation, many junior doctors are already working more intensely for lower take home pay, and the government’s old argument that juniors are guaranteed a job for life simply isn’t valid any more.'

Ends

Notes to editors

Copy of BMA letter to Mr Michael Blair dated 6 January 2006. The meeting took place on 12 January 2006

Mr Michael Blair QC
Chair of Doctors' and Dentists' Pay Review Body
Office of Manpower Economics
7th Floor Oxford House
76 Oxford Street
LONDON
W1N 9FD

6 January 2006

Letter from the Secretary of State for Health

We have now seen the contents of the letter written to you by the Secretary of State on 19 December and are greatly concerned both by its content and its implications for the review body process on this occasion.

As the letter indicates, the Health Departments’ written evidence urged the review body to recommend increases in salaries no greater than 2.5% - their then estimate of general inflation and less of course than both the level of settlements elsewhere and the growth in average earnings. Since than the Chancellor has written to the review body chairmen on 23 November to urge them to base pay settlements on the achievement of the government’s inflation target of 2%. [Go to note 1] The Secretary of State’s new intervention appears to be based on different criteria, namely the financial deficits accrued by NHS providers during the current financial year and a reiteration of the misleading mantra that a zero pay increase can generate substantial earnings growth for the profession.

To deal with deficits; as we have pointed out in our written memorandum, the existing plans for 2006-07 and 2007-08 incorporate growth of 9.2% and 9.4% respectively. The Secretary of State has claimed additionally that the Gershon savings are running £200 million ahead of schedule. It is indefensible therefore to ask doctors to pay for financial mismanagement by a minority of NHS organisations. The Secretary of State has moreover stated that she fully expects the final deficit to be considerably smaller than current forecasts, emphasising that even the estimated shortfall amounted to less than 1% of total NHS funding and that two thirds was due to just 37 organisations (7%, of the total number) [Go to note 2]

Furthermore, for the three years prior to 2004 – 05, NHS organisations reported aggregate surpluses of £240 million, which we cannot recall your being asked to take into account in favour of the profession.

We have already responded to the issue of pay drift in supplementary evidence and provided your secretariat with our model and accompanying arguments. To the extent that incremental drift occurs, this is either specifically related to movement through training or to performance-related thresholds negotiated as part of a wider agreement.

I have signalled to you on previous occasions that over recent years there has been a growing loss of confidence among doctors in the independence of the DDRB and the credibility of the pay review system in the face of the government’s overweening assertiveness. This letter from the Secretary of State, representing a second shift in position from the government within a few weeks, seeks to undermine the established process by which evidence is considered, and will provoke anger and further disenchantment among our members.

In our evidence this year we have argued responsibly that the relative earnings position of those groups of doctors who have benefited from recent contract change is broadly acceptable, having lagged behind for many years, and have asked the DDRB to make recommendations that will recognise and maintain that position. The effect of the government’s recommendation would be immediately and significantly to erode the levels achieved. This would be perceived as a clear demonstration of bad faith in respect of negotiated outcomes which the government signed up to fully. For consultants, structured pay progression and payment for additional work done were an integral part of the 2003 contract package, not factors to be deducted from the annual pay awards. For junior doctors there has not been a recent contract settlement, and total pay levels are already falling significantly as a result of quite modest rota changes, so that the government’s proposal would not even protect current earnings. We have as you will know dealt with this at some length in our written evidence. The comment about the 0% inflation uplift for the GMS contract is singularly inappropriate. We have agreed a complex package of proposals with NHS Employers and it is unreasonable to present this package, which includes a large number of different elements, as a 0% inflation uplift. We have also as you know asked for an uplift in respect of seniority payments. Whilst the Secretary of State’s attempt to prioritise SAS grade doctors is on the face of it welcome, taken in the context of her overall proposals and ongoing negotiations it is clearly both inappropriate and inadequate

We deeply regret the pressure that is being brought to bear on the review body by the repeated intervention of Cabinet ministers, pressure which is unacceptable and incompatible with the review body system. Our members will expect the review body to ignore such interventions.

James Johnson
Chairman of Council
British Medical Association

1. In the past, the Treasury has indicated that increases averaging 4.5% are consistent with its target
2. Read more on the BBC website here - http://news.bbc.co.uk/1/hi/health/4489164.stm

Copy of the Health Secretary’s letter to Mr Michael Blair dated 19 December 2005

Mr Michael Blair QC
Chair of Doctors and Dentists Pay Review Body
Office of Manpower Economics
7th Floor Oxford House
76 Oxford Street
London
W1N 9FD

19th December 2005

Dear Mr Blair,

I was pleased to have the opportunity to meet with the review body on the 12th December and to give evidence in person. As promised, I am writing to confirm our position, as I outlined at the session.

There is a great deal in our evidence to be positive about. For example, we have seen the number of doctors increase by 29% since 1997; that is over 24,000 more doctors in the NHS. Vacancy rates are on a downward trend, with a three-month vacancy rate for consultants at 3.3%. In addition, there is an increase in the number of medical students. We are also seeing more dentists recruited to the NHS, with a net increase of 1,100 in the last 12 months.

In our written evidence submitted in September, we recommended an award of no more than 2.5%. This was followed by supplementary written evidence informing you that we were reviewing the appropriateness and affordability of this in the light of further evidence of earnings growth and associated cost pressures.

We now have a better understanding of the earnings position. Following our written evidence in September we looked again at the earnings data (based upon NHS Trust Financial Returns and the NHS Workforce Census) and saw a consistent growth in average earnings for medical staff in the NHS from 2001/02 to 2003/04. Our estimates show that, yet again, this is going to be higher than the national average (around 4%) at approximately 5.8% for 2005/06. The trend of strong earnings growth looks set to continue into 2006/07, with our latest estimates that even with no uplift, earnings growth would be 3.6%, at 2.5% uplift earnings growth could exceed 6%.

As the Chancellor made clear in his letter to Review Body chairs on 23rd November, there is concern that the recent short-term increase in inflation, caused mainly by oil price rises, could become locked-in if employers respond with higher wage rises. This was followed by his Pre-Budget Report where he re-iterated that the UK is on course to meet its inflation target of 2%.

It is important that public sector pay settlements do not contribute to inflationary pressure in the economy. Public sector earning growth in recent years has been above the private sector.

In 2004/05, around 170 NHS organisations finished the year with a combined deficit of £780m. Overall, the NHS finished the year in deficit by £250m. Unfortunately, it has become clear that a significant minority of NHS organisations are continuing to struggle to achieve financial balance this year and it is likely that a number will again finish the year in deficit. These deficits will be the first call on resource next year and will, therefore, impact on the affordability of pay awards. The issue of deficits is a real problem and one that we would ask you to take into account in your recommendations.

Turning to dentistry, the issues are somewhat different. A committed NHS dentist earns around £80,000 per year. The BDA has consistently made the point that it is not levels of pay that discourage dentists from working in the NHS, but the “treadmill” effect of the fee-per-item payment system.

Our reforms will abolish the fee-per-item treadmill once and for all. The evidence of Personal Dental Services pilots show that the average items of service undertaken within each course of treatment have fallen by around 30%. This means a huge change is working practices. It will clearly free up time for dentists to adopt a more preventive approach to dental care and it will reduce workload. We also expect it to reduce practice expenses significantly. This means that a gross award of up to 2.5% (as requested in our evidence) will feed through into an increase in net pay of over 2.5%.

As I indicated, we have also now reached a view on the financial envelope for the negotiations that we have asked NHS Employers to take forward with the British Dental Association to reform pay arrangements for salaried primary care dentists. I am pleased to confirm that the envelope will be 10% of the current pay bill, around £7.5 million.

In the light of the emerging deficits, and the continued evidence of strong medical earnings growth and the need to keep to the Chancellor’s inflation target, we now think that there is a good case for a pay uplift this year of 1% which we estimate would result in an average earnings growth of around 4.6%.

However, I would make two exceptions.

Staff and Associate Specialist Doctors – where I would suggest an award around 2%, to maintain stability pending the planned reform next year.

Dentists – where we would support an uplift of 2.5%. We do not, however, see any case for a higher award than this, given the impact that we can expect from the dental reform programme in changing working practices and reducing practice expenses – and given the pay reforms that the BDA and NHS Employers will be taking forward separately on salaried dentists.

We are not singling out hospital doctors in this respect. We have just concluded an agreement with the BMA for a 0% inflation uplift for the GMS contract, and I have also given evidence to the Nurses and Other Health Professions Review Body also arguing for an award that we believe would deliver around 4.6% earnings growth next year.

I look forward to seeing recommendations in due course.

Patricia Hewitt
Secretary of State for Health
Department of Health

(19/1/06)