Heat is on for NHS pay

For many HR professionals who worked in the NHS in the 1990s, the phrase ‘local pay bargaining’ will probably prompt them to break out in a cold sweat.

The great local pay bargaining experiment of that decade – where hospital trusts were given the freedom to set pay and conditions for all employees except junior doctors, with the aim of breaking down traditional distinctions between professional groups and linking pay to performance – is now widely regarded as having been divisive and, by and large, ineffective.

As Gerry O’Dwyer, senior employment relations officer at the Royal College of Nursing, put it: “In the 1990s, you had the Pay Review Body fixing a pay level and then local hospitals set an additional pay amount – but in reality, they all went much the same way. It is grossly inefficient to have 400 or 500 trusts all negotiating their own pay.”

A new agenda

The introduction of the Agenda for Change national pay framework in 2004, described at the time as the biggest overhaul of pay and conditions within the service for 50 years, was supposed to put an end to all that.

But the decision by Southend University Hospital NHS Foundation Trust – backed, it has to be said, by a near unanimous staff vote – to ditch Agenda for Change in favour of locally negotiated terms (Personnel Today, 4 July) has once again raised the spectre of a return to local pay bargaining.

More widely, the creation of autonomous foundation trusts across the NHS (Southend became one last month) has led to fears that Agenda for Change is as good as dead and buried, as they have a degree of flexibility to negotiate pay and conditions locally.

As MP and general practitioner Dr Howard Stoate put it in recent questions to the House of Commons health select committee: “If we are moving towards all hospitals being foundation hospitals by 2008, which is the government’s stated aim, then surely Agenda for Change is theoretically dead, so why bother with it?”

But it may be a little early to jump to such dire conclusions. Unison, for one, has written to the Department of Health calling for an investigation into Southend’s decision.

The health service union is arguing that the vote backing the move was largely the result of staff frustration at the trust continually dragging its feet when it came to implementing Agenda for Change in the first place.

Under strain

In an organisation as disparate as the NHS, any single structure, whether for pay or anything else, is bound to come under strain from time to time, according to Michael Pyrah, chief executive of Central Cheshire Primary Care Trust and president of the Healthcare People Management Association.

“There are real dangers in organisations going it alone and starting up different systems, both in terms of potential equal opportunities claims, but also in terms of competition between other hospitals,” he warned.

There has been considerable consternation within NHS management circles at Southend’s move.

Peter Smith, director of pay modernisation at NHS Employers, is particularly concerned. “Having gone through all the work associated with Agenda for Change, I am surprised that an organisation now wants to embark on a different pay scheme,” he said.

“I’m also disappointed that an organisation is saying that Agenda for Change doesn’t appear to meet its needs, when we felt it had sufficient employer flexibilities within it.”

The difficulty and worry for HR executives is that, even if Southend is a one-off, will the fact that one trust has blinked mean others, particularly as the move to foundation status gains momentum, start to look at the system with fresh eyes too?

Profound impact

If this comes to pass, the implications for HR could be profound. Agenda for Change, it needs to be remembered, is not simply a pay structure, but has within it a knowledge and skills framework that guarantees workers access to education and training.

Karen Jennings, head of health at Unison, pointed out to Stoate at the same health committee that, while in the 1990s most trusts stuck with national terms and conditions because it made no sense to re-invent the wheel at a local level, some “maverick” trusts did break away.

“If that begins to happen, particularly as it becomes more and more competitive, I think we are going to see more industrial relations problems and differences between staff and how they are trained,” she warned.

Southend’s move in itself may not have buried Agenda for Change. But, at a time of change within the NHS, it certainly makes the future when it comes to pay, training and industrial relations a little less certain. And that can’t be good for HR.


  • Agenda for Change was introduced into the NHS in 2004.
  • It was designed to bring in a fairer, more transparent pay structure and system for career progression.
  • Under Agenda for Change, employees are paid on the basis of the jobs they are actually doing, rather than simply their job title, underpinned by an NHS-specific job evaluation scheme.
  • There is also a Knowledge and Skills Framework, linked to annual development reviews and personal development plans.
  • On top of pay, Agenda for Change standardised arrangements for hours, annual leave and overtime.

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