Proposed NHS pay deal: swings now, roundabouts later?

The NHS pay offer is a significant deal that signals the end of the 1% cap on public sector pay rises and as such includes genuine improvements for existing staff. However it also involves future changes that may be less welcome for some. Under the proposed deal, headline rises for those at the tops of their bands are accompanied by changes to the pay structure which mean that staff who have not yet reached the tops of their pay bands would receive significantly higher earnings increases – via progression pay – over the course of the three-year deal. But from 2020 progression for new employees would be more limited than currently.

The offer comprises a three-year deal on pay, with basic increases for staff at the top of each pay band – approximately half of the workforce – of 3% in the first year, from April 2018, and 1.7% in each of the second and third years (2019 and 2020). Increases for the most senior staff, at the tops of the two highest bands, will be slightly lower. In addition, in the second year of the deal staff will also receive a lump sum worth 1.1% of salary. This will be worth around £330 for staff at the top of band 5 – the main grade for newly-qualified nurses.

For the remaining staff who have not yet reached the top of their band and who are still eligible for pay progression, changes to the ‘Agenda for Change’ structure – and provisions for staff subject to these changes – will produce much higher increases in total basic earnings over the course of the deal. In particular, the deal proposes the deletion of pay points from the middle of each band, so that the structure will transition from one with between 6 and 9 points for each band, to one with just two points for most bands and eventually, three points each for bands 5, 6 and 7.  The changes will be phased in as follows:

Proposed changes to NHS 'Agenda for Change' pay structure 2018-2020
No. of pay pointsCurrent2018-192019-202020-21
Band 27332
Band 37642
Band 47652
Band 58754*
Band 69854*
Band 79854*
Band 8a6542
Band 8b6542
Band 8c6542
Band 8d6542
Band 96542
*These bands initially contain an extra transitional pay point, to help manage costs. These transitional points will disappear in 2021/22 as staff move to the top pay point in each band, and each of these bands will then contain 3 pay points.

It has been agreed that in each year of the proposed deal, staff who are due to move up to a point that is to be deleted will automatically move to the point above. This would mean that staff who are eligible for progression could get basic earnings increases of up to 29% in total, including progression, over the course of the deal.

For example, a rehabilitation assistant currently on the bottom of band 3 (£16,968) could – if they progress as expected – be on £21,142 by the end of the deal. This represents a total increase in basic earnings of £4,174 or 24.6%. A colleague higher up in the same band, for instance currently at point 9 or £18,333, could see their basic earnings rise by 15.3%, again if they progress as expected, to take them to the same new maximum of £21,142.

In addition, the gradual removal of overlaps between bands means that the starting salaries in each band will increase significantly over the course of the deal. For example, the starting salary for band 5 will rise from the current £22,128 to £24,907, a rise of £2,779 or 12.6% in total over the three years of the deal. Percentage increases in the starting salaries for bands 6 and 7 will be greatest of all, at 18.1% and 22.7% respectively. These bands are the main grades for roles such as specialist nurses (band 6) and advanced nurses and nurse team managers (band 7).

However, after 2020 progression arrangements will change and as well as there being just 2 pay points for most bands, and 3 points for bands 5, 6 and 7 (the key bands for nursing staff, other professionals and managers), progression between pay points will no longer be annual. Instead, staff will have to remain for a minimum time in their role before they are eligible for progression.

In bands 2 and 3, this will be a minimum of two years; in band 4 it will be three years; and in bands 8a to 9 staff will have to spend at least five years on the lower point before moving to the higher one. For those bands with three pay points – bands 5, 6 and 7 – staff must remain on the lowest point for two years before moving to the midpoint. In band 5, staff must remain on the midpoint for a further two years before moving to the top point, and in bands 6 and 7, they must remain on the midpoint for a further three years before moving to the top of the band.

A new framework for progression, based on appraisals, is to be developed by 1 April 2019. Under this, staff will be required to make evidence-based submissions to show that they have met the required standards before they can progress (though it is assumed that most staff will progress).

The lowest band, band 1, is currently a starting level for roles such as laundry assistants, medical records assistants and porters. It comprises two pay points, worth £15,404 and £15,671 respectively. Under the proposed deal all staff at this level would move to a new salary of £17,460 from 1 April 2018. This represents rises of either 13.3% or 11.4%, depending on the starting point. It also produces a new hourly rate of £8.93, which is over £1 above the statutory ‘National Living Wage’, which rose to £7.83 from 1 April, and a little above the ‘real’ or voluntary living wage, currently estimated to be £8.75 an hour.

In addition, all band 1 roles will be altered to become band 2 roles. Staff will receive training and support to take on any necessary changes. Salaries at this level will be further increased under the deal, to £17,652 in year 2 – a further rise of 1.1% – and to £18,005 in year 3, a further increase of 2%. From December 2018 band 1 will be closed and new staff will be recruited straight onto band 2.

Background and context

This is clearly a significant offer. It marks the end of the 1% pay limit and as such the balloting process will be watched closely by employers and trade unions (and staff) in other parts of the public sector. If accepted, the headline rise of 3% in year one, which is currently above CPIH (and CPI) inflation but below the all-items RPI, could set a benchmark for other public sector pay awards, even if the government is insisting that this is the only public sector pay award that will be funded to a level above the previous pay cap.

The trade unions will also regard it as important to maintain a national pay structure for all NHS staff other than doctors and dentists. The ‘Agenda for Change’ pay structure was negotiated in the late 1990s, and implemented in 2004, partly as a way of trying to ensure equal pay for work of equal value. But since then it has been under a certain amount of pressure, with some NHS trusts threatening to break away from it unless changes were made, particularly in the area of progression.

Other ‘wins’ for the trade union side of the negotiations include only small changes to unsocial hours payments for NHS staff after major changes to junior doctors’ terms in this area last year, and importantly, some recompense for the past seven years of pay restraint, in the form of significant increases for those staff, around half of the total workforce, who are still ‘in-band’.

Given the changes to the pay structure being proposed the discussions had to involve collective negotiations under the aegis of the NHS Staff Council, rather than via the NHS Pay Review Body. As such the offer shows that collective bargaining is still an important aspect of industrial relations in the most totemic part of the public sector.

But negotiations involve compromise, and the employers’ side looks to have won a number of important concessions. There are changes to sick pay, but the most important change relates to progression, where the significant increases for in-band staff effectively constitute a means of buying out a major portion of progression.

The proposed progression arrangements, if accepted, will produce significant savings on future wage costs for NHS employers. The employers look to have been able to use the opportunity provided by the ending of pay restraint to provide funding for transition to a potential new approach. They are keen to move away from the concept of automatic increments, with a shift in terminology to ‘pay points’, and perhaps more crucially, a move towards making staff rather than managers responsible for (more limited) progression.

When the Agenda for Change pay structure was introduced in the early 2000s, it heralded the advent of pay progression for lower-paid staff for the first time, and facilitated the creation of more skilled support roles such as nurse assistant practitioners. As such, the latest proposals could be seen as representing a partial reversal in this regard. One argument in favour of the change being proposed is that some of the lowest-skilled roles do not require lengthy development periods and as such, pay progression may not be suitable for these roles. But this rationale applies less to medium or higher-skilled roles.

Most of the NHS unions are backing the negotiated offer, but one, the GMB, which represents many of the lower-banded staff, is calling for rejection. The partial reversal in respect of progression may be a factor here but the GMB is also concerned about the potential for contracting-out inherent in the proposed deal. In a context of increased marketization of the NHS, some trusts have created subsidiary companies to contract for NHS services like cleaning and facilities. The proposed new structure will make the costs associated with such contracting-out lower than they would be if progression were maintained in its current form. GMB National Officer Kevin Brandstatter said that the deal ‘leaves the door being opened to new employees in the NHS being employed on worse terms and conditions than existing health service workers through third party shell companies’.

Finally, the lower headline rises and lack of a safeguard against higher inflation in the subsequent years of the deal may be an issue for some staff. Inflation protections are common under long-term deals in the private sector but less so in the public sector where governments seek to be prescriptive about pay costs and are reluctant to link future pay movements to the vagaries of the economy and inflation.

Proposed new pay structure 2020/21
BandPay points£paFrequency of progression (min)
Band 2118,005
219,3372 years
Band 3119,737
221,1422 years
Band 4121,892
224,1573 years
Band 5124,907
226,9702 years
430,6152 years
Band 6131,365
233,1762 years
437,8903 years
Band 7138,890
240,8942 years
444,5033 years
Band 8a145,753
251,6685 years
Band 8b153,168
262,0015 years
Band 8c163,751
273,6645 years
Band 8d175,914
287,7545 years
Band 9191,004
2104,9275 years
Note: bands 5, 6 and 7 each contain an extra transitional pay point that will be removed in 2021/22, after which they will each contain 3 pay points. The figures for progression frequency for these bands refer to progression to the midpoint, and from there to the top, from 2021 on.

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