A new report - 'An NHS Bonus' - by the Centre for Policy Studies (CPS) has examined the pay structure of the NHS and argues the current system is failing both staff and patients.
With approximately 1.7 million employees*, the NHS is the fifth biggest employer in the world. Almost two thirds of its budget goes towards staff salaries. However, its system for rewarding and motivating staff is outdated, inflexible and frequently unfair.
An NHS Bonus argues that by introducing greater flexibility into the system and linking pay more closely with performance and objectives, both NHS productivity and patient outcomes could be improved. It urges the government and NHS managers to make reform of the pay system an urgent priority as part of the new funding settlement.
Among the problems highlighted in the report are the lack of geographical flexibility that can impact on the ability for hospitals in poor areas to recruit suitable talent; no way for team leaders to incentivise best practice; and career progression and management are often neglected.
It also says that bonuses are often reserved for senior doctors and not shared among staff; despite the cap on consultants' salaries many are earning far more; and compared to international rivals the NHS is relatively well-staffed in clinical terms.
Misleading pay freezes
The report also says that talk of pay freezes and 1% pay caps for the NHS is highly misleading. Thanks to automatic progression along the NHS pay 'spine', the average annual pay rise between 2012 and 2017 has in fact been between 2.5% and 3%, which is broadly comparable to the private sector.
Robert Colvile, Director of the CPS says: "NHS funding has captured the headlines recently, but even more important than funding is that the money is spent wisely.
"The bulk of NHS funding goes towards pay. Yet the NHS pay structure is deeply flawed, in ways that make it hard to address gaps in care between rich and poor areas, or to incentivise staff to perform better.
"The headline figures in the media about pay freezes also completely fail to reflect the reality of what people are earning, which could potentially damage recruitment and distort spending priorities.
"If we care about the NHS we need to ensure that money is spent wisely and that good staff are rewarded for good work."
Dr Paul Goldsmith, Consultant Neurologist and author of the report adds: "The NHS is full of incredibly bright, talented and dedicated people with lots of excellent ideas and initiatives, but is really poor at scaling and spreading innovation.
"The report shows how one can create an environment to achieve this, without central government meddling."
Core recommendations:
* Reform of the NHS's current rigid pay schemes
* Adjusting base pay levels to reflect the relative attractiveness and popularity of particular NHS institutions and the nature of the work
* A new bonus scheme for which every member of staff is eligible
* Objectives that reflect the need for team co-operation to drive efficiencies and quality patient outcomes
* Organisational objectives set with both yearly and longer delivery timeframes, cutting across individual teams - and organisations - where necessary
* Better recording and sharing of health data, and better integration of it into the reward system
* Reallocation of current 'bonus' money, plus a component of additional pay awards which would otherwise be applied unconditionally and uniformly
* Discussing overall NHS pay in terms of overall rises, rather than the headline national settlement figure, to avoid giving a distorted picture of salary progression and thereby discouraging recruitment.
Click here to download the full report.
* The report provides a breakdown of staff in different categories. NHS infrastructure support, which includes central functions; hotel, property and estates; senior managers; and managers comprises 191,619 employees.
