HC Deb 20 April 1995 vol 258 cc409-20

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Bates.]

7.50 pm
Mrs. Margaret Ewing (Moray)

As you, Madam Speaker, will be aware, after several attempts I have managed to raise on the Adjournment the subject of funding for health boards in Scotland and its implications for the pay of those who work in the national health service. I am pleased to see that, although there is a fairly small number in the Chamber this evening, there are more hon. Members present than is normal for Adjournment debates, which are often attended by only the hon. Member who has the Adjournment and the Minister. I hope that that reflects the genuine interest of everyone present in the implications for pay of those who work in the national health service.

I must declare an interest: I serve on the parliamentary panel of the Royal College of Nursing. I am also in regular contact with the Royal College of Midwives, the British Medical Association and other groups involved in health. But that having been said, I think that I speak as an individual and someone who reflects the views of all our constituents.

All of us, irrespective of our standing in society, our income or where we come from, need the national health service. We must recognise the dedication and commitment of those who work in that organisation. We are all indebted to them for the work that they do. I speak as someone who went through a long illness and appreciated the work done by the nurses and others in the hospital. I am also a daughter with an aged mother who suffers from Alzheimer's disease and I recognise the contribution of the staff to people such as my mother.

In tonight's debate we are talking about the values and principles of the society that we want to see. It is often said that nursing is a vocation, which has somehow become almost a derogatory term. We give those with a vocation a pat on the head and a lump of sugar, but do not, as a society, recognise the commitment that they give to individuals. They are people who carry out tasks that are important to the well-being of those we love and those we want to see cared for. We should look at ourselves, as the House of Commons and as representatives of the public, and ask whether people who take a vocational job should be dismissed as unimportant and not worthy of national recognition.

I have raised the subject in tonight's debate because I have seen what has happened over the past several weeks in the context of the discussion on the pay of nurses, midwives, health visitors and others in the health service. It is essentially a Scottish debate because I have made specific reference to the health boards in Scotland in recognition of the different administrative system in Scotland. But the principles about which I want to speak, and which underpin the debate, are UK-wide. I trust that the Under-Secretary of State for Scotland, the hon. Member for Edinburgh, West (Lord James Douglas-Hamilton) will accept that rationale of the comments that I shall make.

A review body report was published on 9 February. It recommended a two-tier approach to salaries. It was the review body's 11th report and it was the first time that the Royal College of Nursing or any other organisation had rejected a review body's report. The reason that the college rejected it was the recommendation of a two-tier approach.

What was being offered was that 1 per cent. of a pay increase would be guaranteed as a national increase. The assumption was that it would be directly funded by the Government. But the reality was that the 1 per cent. was not being directly funded by Government, but had to be met by the trust boards—so many of our organisations are now represented by trust boards. The figure was going to be part of the payments that were to be made by the trust boards.

It is important to remind ourselves of that, because many people thought that the Government were directly funding the 1 per cent. and the trust boards had to find another 2 per cent. or whatever. But the figure was part of the final negotiations on the national health service funding system. Any additional funding had to come from the trusts, along with that 1 per cent.

Many people regard that aspect of the Government's policy as the beginning of an attitude that will lead to local pay negotiations in many professions and many trades where we would expect to have national recognition of the contribution made by those who work in them. If we add to that the fact that the trusts will, in future, theoretically be able to ensure that negotiations relating to conditions of service—such as sick leave, sick pay, annual leave and hours of work—could be included, we realise that national standards are being demeaned. If all aspects of negotiations and discussions of the conditions in which our health service workers operate are put alongside pay levels, we see that, even if they are diluted in one trust, the idea of equality of standards and equality of service delivery has been destroyed once and for all within what we call a national health service.

An editorial in the Nursing Times and Nursing Mirror of 8 to 14 March 1995 states: We also predict that within one or two years, the national element will have withered away altogether. Were I to be suddenly afflicted by appendicitis in London or Lossiemouth, I would expect the same standards of treatment to be allocated to me as a member of the national health service. Wherever our nurses, doctors, health visitors and midwives happen to work, we should ensure that they are given equal recognition for the service that they offer us.

In answer to a parliamentary question that I put to the Minister of State on 29 March 1995. he told me that funding to health boards in Scotland had risen in real terms over the past year by 3.9 per cent. and, apparently, the projection for 1995–96 is that it is to rise by 3.6 per cent.

I do not dispute the figures, but they do not represent a standard pattern throughout the health boards in Scotland. In my area, the Grampian health board will receive a funding increase of only 2.66 per cent. How will areas which are receiving an increase of less than 3 per cent. pay their staff the salaries that they seek? It would cost the Moray health trust £600,000 to pay the 3 per cent. pay increase which the nurses have requested and which I endorse.

The Minister will probably respond by saying that efficiency savings are required within the health service. The efficiency savings target in Scotland this year is 2.75 per cent. or £75 million. A 3 per cent. pay increase across the board for the staff to whom I have referred tonight would cost £23.2 million. When we compare that sum with the efficiency savings target of £75 million, we can see how little it would cost to ensure that our health service workers are paid the salaries that they so obviously deserve.

What does it mean when we talk about efficiency savings within the health service? In reality, it means a reduction in all kinds of services. Services within the NHS have already been pared to the bone. Are we now expected to drain the marrow from those services?

What efficiency savings does the Minister envisage making in Scotland while maintaining the current standard of service delivery? What would happen if health service staff asked to be paid for the overtime they work—overtime that is not recognised at present? Those committed and dedicated staff work that overtime because no nurse, midwife or health visitor will be dictated to by the clock. None of them would walk away from a case because they had already worked an eight-hour day. We must recognise their commitment and their dedication.

Staff turnover among nurses in Scotland continues to rise, and last year it increased from 12 per cent. to 19 per cent. There is also a shortage of student and trainee nurses. Between 1988 and 1992, the number of student nurses in Scotland fell by 35 per cent. Those figures were supplied by the Department of Employment, whose labour force survey also showed that unemployment in the nursing profession is just 1.7 per cent.

Against that background, variations in local pay deals will set nurse against nurse and trust against trust. I represent a rural area where vast distances must be travelled. A local Lobby correspondent recently asked me why nurses in Moray should receive the same pay as nurses in London, when the cost of living is so different. I argue that the dedication of nurses and the care that they provide is equal throughout the length and breadth of the United Kingdom. Low wages must not be introduced to the rural areas of Scotland.

The Royal College of Nursing, to which I referred earlier, does not accept that increases in nurses' pay should be self-financing or funded through productivity improvements. Will there be arguments in favour of performance-related pay for nurses? How does one measure the productivity of a nurse, midwife, health visitor or someone working in the area of community care? A broader range of factors must be considered—I return to the issue of principles and values in society—including recruitment and retention, fair pay comparisons, morale and projections for future demand.

The Minister will be aware that, of the 46 trusts in Scotland, only four have made offers so far in the context of pay negotiations. In Greenock—I am glad to see that the hon. Member for Greenock and Port Glasgow (Dr. Godman) is in the Chamber—there has been an offer of 2.5 per cent. Grampian Health Care in my area has made an offer of 2.83 per cent., but that is conditional upon the acceptance of a trust contract. The Southern general hospital in Glasgow has offered 3 per cent., 1 per cent. of which has unspecified conditions attached. North Ayrshire has offered 3 per cent. with no conditions attached. Only four out of the 46 Scottish trust boards have made offers, two of which are conditional. What conditions are people being asked to accept in fulfilling their duties to society?

By 13 April this year, 127 out of almost 500 trusts had made local pay offers. Of those, 80 per cent. offered an increase of 3 per cent. or more. I think that we must accept that most trusts wish to recognise the level of demand and the merits of the case that has been advanced. Some 75 per cent. of the 3 per cent. minimum offers are seemingly without strings: they are not conditional upon the acceptance of trust contracts, employment or changes to conditions of service, leads or allowances.

The Scottish Office has not issued any guidance to trusts in Scotland about local pay, unless it has done so in the last few hours. It is allowing individual trusts to make their own arrangements at their own pace—which may explain why a relatively small number of offers have been made in Scotland so far. I think that it is unfair and unjust that health service workers do not know what the trusts are prepared to offer.

I contrast that situation with what has happened in England and Wales. Ken Jarrold, the national health service executive and director of human resources, wrote to all trust chief executives in England and Wales on 11 April. He said: Ministers have expressed concern that there have not been more pay offers". He continued:

It is very important that all employers give an early indication of their intentions … It would be helpful for staff … to be made aware of the local pay offers being made by employers. Why has no instruction or advice along those lines been offered to the chief executives and executive and non-executive directors of trusts in Scotland? In responding to the debate tonight, I hope that the Minister will assure me that he intends to offer similar advice to Scottish trusts and that he will clearly endorse the argument for a 3 per cent. pay increase. He must make it clear that the Government recognise the worth of health service staff.

I believe that health service workers would be more interested in the colour of the money that the trusts intend to offer than in the colour of the BMWs which are driven by the administrators and managers who are not involved in service delivery. It is critical in this debate that we argue the case on behalf of the committed and dedicated people to whom many of us owe our lives. We must have a proper sense of values.

8.8 pm

The Parliamentary Under-Secretary of State for Scotland (Lord James Douglas-Hamilton)

I congratulate the hon. Member for Moray (Mrs. Ewing) on securing this debate on the Adjournment. She has been assiduous in her concern in this area, and she recently secured another Adjournment debate about community care.

I welcome the opportunities that the debate offers, not least because it allows me to acknowledge the valuable work performed not only by nurses, midwives and health visitors, but by all those who work in the national health service in Scotland. I pay tribute to their commitment. A very distinguished hospital, the Western general, is located in my constituency. It is involved with many areas of specialist care and I am full of admiration for the work that is performed there. The Scottish Office fully recognises that fact also.

As the hon. Lady will no doubt be aware, we allocate £4 billion per year to funding the national health service in Scotland. It represents almost one third of the resources available to the Secretary of State for Scotland and provides clear evidence, if such evidence is required, of the importance and the priority that the Government continue to attach to the provision of health care services.

Since 1979, we have increased the annual level of resources available for the NHS in Scotland from £1 billion to today's figure of £4.1 billion. That represents a real-terms growth of more than 53 per cent. and, despite competing financial pressures from other quarters, the Government have continued to honour their 1992 manifesto pledge to a year-on-year increase in the level of real resources committed to the national health service in Scotland.

As I just stated, for the first time, net expenditure on the NHS in Scotland will exceed £4 billion in 1995–96. In broad terms, just over £1 billion will go towards family health services and centrally funded services, but by far the largest element—just over £3 billion—will go to hospital and community health services.

Some £2.5 billion of that £3 billion has been allocated to health boards through a standard and long-accepted weighted capitation formula. In essence, the formula weights individual health board populations for age and sex, relative health care need and geographical differences in the costs of providing services. The aim is to ensure that, across Scotland, there is equal opportunity of access to health care for people at equal risk.

By now, in respect of 1995–96, most of the £2.5 billion allocated to health boards—as purchasers of health care services—will be committed to NHS trusts—as providers—through service contracts. The trusts' contract prices will, of course, include provision for pay together with the trusts' other operating overheads.

On whether health boards—and hence the NHS service as a whole—have sufficient resources to meet possible pay awards, the short answer is yes. The total resources available to health boards through their general allocations and expected cash-releasing efficiencies are, as I have just said, £2.5 billion. That is an increase of just under £130 million or 5.4 per cent. on their 1994–95 provision. Those additional resources are required to meet the cost implications of demographic change, medical advance and, of course, pay and price increases.

The Government's policy is that public sector pay must be met from within efficiency gains.

Mrs. Ewing

I hear all that the Minister is saying in the context of those complex figures, but, basically, does he believe that throughout Scotland every worker—nurses, midwives or health visitors—should have access to the same pay increase? If that does not happen, how does he intend to cope with the fact that nurse will be set against nurse and trust against trust?

Lord James Douglas-Hamilton

I shall explain the Government's position exactly. The hon. Lady asked specifically about guidance. The management executive of the NHS in Scotland will issue guidance to the trusts on local pay within the next week and that will encourage the trusts in Scotland to make offers and point out the review body's anticipation that increases will range between 1.5 per cent. and 3 per cent. I shall return to that in more detail in a moment.

Health boards have been set a minimum cash-releasing efficiency target of 2.75 per cent. for 1995–96. That equates to some £70 million, which in itself amounts to just over 4 per cent. of the estimated pay bill for 1994–95. An element of that £70 million will be required to meet demographic change, medical advance and general price increases, but with total additional funds of almost £130 million in 1995–96, health boards have been given sufficient resources and have sufficient flexibility within those resources to budget for and meet all potential cost increases.

I now refer to the actual pay awards for nurses, midwives and health visitors. Recommendations on their pay are made by an independent pay review body, as the hon. Lady appreciates. For 1995–96, the review body recommended a two-tier approach, comprising a 1 per cent. increase in national salary rates and local negotiations on pay and/or conditions.

The Nurses and Midwives Pay Review Body recommended that 1 per cent. increase, as I mentioned. The review body also recommended further local negotiations on pay. Both national and local increases are to be effective from 1 April 1995. On local negotiations, the review body did not prescribe an upper limit—and that is most significant—but it expected that in the majority of cases, the outcome of local negotiations plus the 1 per cent. increase in national rates would provide improvements for the staff concerned, totalling between 1.5 and 3 per cent.

Regarding those local negotiations on pay, it is of particular note that Whitley councils, representing all the 40 per cent. of NHS staff not covered by review bodies, have already accepted a provision that enables an element of their pay to be determined locally.

The review body believes that trusts should be able to reach agreements in local negotiations. It did not prescribe an upper limit, but expected that in the majority of cases the outcome of local negotiations plus the 1 per cent. increase would provide improvements totalling between 1.5 and 3 per cent.

It must be made clear that the review body is quite independent. Let me also make it clear that the Scottish Office and the Government hold nurses, midwives and health visitors in the very highest regard. It was largely because of that regard that we set up their independent review body in 1983 and we have accepted its recommendations every year since.

If one went entirely by the coverage of the matter in the media, the impression would be gained that the figures in the recommendations were somewhat arbitrary and that they suddenly emerged in the public domain from nowhere and without any basis. I am therefore glad of the opportunity to dispel misconceptions and mythologies. The best way of doing it is to draw attention to the facts.

This year, the review body again considered the main issues that had influenced its recommendations in previous years. Those issues are: first, the need to recruit and retain sufficient staff of the right quality in the long term as well as the short term; secondly, the need to maintain their morale and motivation at levels necessary to secure provision of the level and quality of service required; thirdly, the need for nursing, midwifery and health visiting staff and the public to feel that the nursing staff had been treated fairly; and fourthly, the need to avoid imposing an unfair burden on the taxpayer. The review body explained that those issues continued to be important to it as indicators of the adequacy of pay levels for nursing staff overall.

Evidence on those issues was submitted to the review body by the Health Departments, including the Scottish Office Home and Health Department. Evidence was also submitted by the staff side of the Nursing and Midwifery Staffs Negotiating Council and other individual staff organisations, such as the Royal College of Nursing, the Royal College of Midwives, the Scottish Health Visitors Association and Unison.

For its present report, the review body made a number of visits to hospitals to see the work of staff on whose pay it makes recommendations and to listen to their views on pay issues and related matters.

All those issues, as well as local pay, were carefully considered by the review body before it reached its conclusions and made its recommendations.

We fully accept the review body's recommendations. I regret talk of industrial action, as we all do. It is singularly regrettable that such talk has arisen simply because the Government have again accepted the recommendations of the independent pay review body.

There is nothing unusual in the Government having accepted the recommendations. We have accepted all the previous recommendations, which have resulted, for example, in nurses' pay rising in the past six years by 78 per cent. compared with some 48 per cent. in the private sector and 49 per cent. in the whole economy. Recognition also needs to be given to the fact that in seven of the 11 years since they have had an independent pay review body, nursing staff's pay awards exceeded those for doctors and dentists.

In accepting the current recommendations, the Government recognise that the way forward is through local negotiation. The way for nurses, midwives and health visitors to achieve fair pay increases that reflect their value to the NHS is through local negotiation, not confrontation. At the same time, local pay is a vital part of achieving a more efficient NHS, much better at responding to the needs of patients.

Mrs. Ewing

I think that we all accept the importance of the review body—no one is arguing against its retention—but surely even the Government must recognise that we are talking about the first report out of 11 that has been rejected by serious organisations. That must cause some concern, even on the Treasury Bench.

The Minister mentioned the motivation and morale of staff. I have never found motivation and morale lower. I say that having read speeches that I made in the House in March 1979 in the days of the Labour Government, when there was an argument about whether to establish a review body.

The Minister talks about the need for local negotiation. Is he prepared to say clearly that in no circumstances will local conditions be attached to pay negotiations in future? That is one of the strongest fears within the nursing profession and all the other professions that are involved in the discussion.

Lord James Douglas-Hamilton

I cannot say to the hon. Lady that there will be no variation anywhere within Britain.

The hon. Lady talked about the weighted capitation formula and whether the area that she represents has been properly treated. It has. There is no question of Grampian health board having been unfairly treated or disadvantaged in the 1995–96 allocation round.

Mrs. Ewing

rose—

Lord James Douglas-Hamilton

I shall continue with the point that I was making; the hon. Lady may intervene again in a moment.

In keeping with normal practice, the health board's general cash allocation has been calculated on a weighted capitation formula. In short, the formula determines the board's target share of national resources that are available on the basis of its relative need for funds. That relative need is determined by taking account of the age and sex composition of each board's resident population and, most important, the relative health needs of the population group.

The measurement used for determining health need is the standardised mortality ratio for those under 65 years. That, in effect, acts as a proxy for morbidity by contrasting the number of actual deaths in a board area within that age group with the expected number of deaths. The average standardised mortality rate for Scotland is set at one, and Grampian's rating is 0.82. In other words, the population in Grampian is presumed to be healthier than the national average. That is why the board received not its 10.1 per cent. pro rata share of Scotland's general allocation provision but a target share of 9.36 per cent. Despite that, over the past three years the board has continued to receive an allocation increase above the national average percentage increase for 1995–96. That has been worth almost £500,000.

Mrs. Ewing

I accept that vital factors work in Grampian. Has the Minister, however, or anyone within the Scottish Office, when deciding the allocation of funding, considered referral rates from, for example, West Unit as it was previously called? I know that many general practitioners in the area that I represent have not referred patients to Aberdeen royal infirmary or to Raigmore. They prefer to keep them at home and within travelling distance to monitor them for 24 or 48 hours. That has led to a non-recognition of the additional burden that GPs have taken on in rural areas such as my constituency.

Lord James Douglas-Hamilton

In terms of capitation, the health needs of Moray, considerable as they may be, must properly be taken into account. I shall certainly examine the detailed point that the hon. Lady has made and write to her. However, if we take the west central belt of Scotland, a part of which the hon. Member for Greenock and Port Glasgow (Dr. Godman) represents, we see that health needs indicators are higher than in the hon. Lady's constituency. The Scottish Office is properly entitled to take that into account in the allocation. I must stress that allocation is carried out strictly according to formula. It is not done at the discretion of Ministers. The Scottish Office follows the formula that is laid down.

A strong motive in our NHS reforms is that, the nearer to patients decisions are taken, the better they are likely to be. We believe that that also applies to pay. It is our view that responsibility for devising pay arrangements should, like other aspects of management, be delegated wherever possible to those who are responsible for the delivery of services. It is for that reason that the Health Departments submitted evidence to the review body not to recommend an across-the-board increase.

We suggested that, instead, the review body should assist in the introduction of local arrangements by leaving employers with maximum scope for local action. By providing for a degree of local negotiation, the review body has endorsed and encouraged the aim of introducing local pay into the NHS. I hope, therefore, that nurses, midwives and health visitors will participate fully in the local negotiations to secure pay settlements that are both entirely fair to them and affordable to their employers: I stress, both fair and affordable.

I fully expect NHS employers in Scotland to approach the local pay negotiations in a responsible manner. The local pay increase must be seen to be fair. Local pay is not about delivering very low pay awards. That would be rightly regarded by staff and the public as unfair.

Public perception of the pay of nursing staff was one of the matters taken into account by the review body. The issues of fairness and comparability were considered. In doing so, it commented that there is a wider sense in which the pay of nursing staff should be "felt fair" by the community as a whole, as well as by the staff themselves, and that is central to the job that the review body is required to do. The issue was therefore considered by the review body, and that informed its recommendations.

While the local pay increase must be seen as fair, it must also be affordable. This issue was addressed by the review body, which recognised that where some element of pay is determined locally, affordability for pay purposes will also need to relate to the financial circumstances of individual trusts. In these circumstances, affordability will be influenced by trusts' success in negotiating contracts with purchasers, including some outside the NHS, as well as by their ability to control their costs.

How should this matter now be taken forward? At national level, talks are continuing in the Nursing and Midwifery Staffs Negotiating Council on an agreement that would promulgate the 1 per cent. increase in national salary rates and facilitate local negotiations on the additional payments.

At local level, the vast majority of NHS trusts in Scotland have concluded their discussions with various NHS purchasers regarding the costs and quality of service that they wish for 1995–96. Trusts in Scotland can now ascertain their income for 1995–96, and I expect them to engage in local negotiation with bodies representing staff on the implementation of the review body recommendations. The outcome of the negotiations in any particular trust will be a matter for that trust and its respective staff interests.

I appreciate that there are anxieties and fears, which is only natural when there are changes to pay determination mechanisms. Having to negotiate locally on an element of pay is a challenge, but it should also be regarded as an opportunity.

Concern has been expressed in some quarters about the readiness of the service to take on the job of local pay bargaining. The review body explained that it understood and had some sympathy with that concern. It concluded, however, that the necessary confidence and expertise will be fully developed across the NHS only when the parties are confronted by the actual process of making local pay arrangements. That is what the service, management and staff representatives alike now need to do.

Implicit in all that I have said is that pay is not an end in itself. That is well known to all those who work in the NHS in Scotland, where the objective is to deliver the highest standard of patient care.

Mrs. Ewing

I shall not reopen the argument about the establishment of trusts—that argument is in the past. Is the Minister convinced that the trusts, which are essentially in their infancy, are capable of negotiating and dealing with issues such as pay and conditions for their staff?

Lord James Douglas-Hamilton

Yes, I am. I should take the opportunity to say that in terms of funding generally in Scotland, health expenditure is 23 per cent. higher per capita in Scotland than in England. That is significant. The boards in Scotland have substantial resources and I would expect them to deliver awards that are both fair and affordable taking all the relevant circumstances into account.

This has been a useful debate and it has been good that so many hon. Members from Scotland have attended, including my hon. Friend the Member for Aberdeen, South (Mr. Robertson), who is keenly interested in the matter, and the hon. Members for Angus, East (Mr. Welsh) and for Greenock and Port Glasgow.

I should like to make several points to draw the strands of the debate together. Since 1979, resources available to the NHS in Scotland have grown from £1 billion to £4.1 billion. Since 1979, resources within those figures available to the hospital and community health service in Scotland have increased from £801 million to £3,146 million. Between 1979 and 1994, overall staffing in the NHS increased by 4.5 per cent. However, in that period, the nursing work force increased by more than 20 per cent., and the qualified nursing work force by 34 per cent.

Mrs. Ewing

I want the Minister to pin carefully the argument that Ministers propound so often—that somehow or other the Scottish national health service is subsidised and given additional funding. Does he agree that, in the five years since 1986, in England and Wales additional funding has been 18.2 per cent., whereas in Scotland it has been only 14.6 per cent.?

Lord James Douglas-Hamilton

The settlement in England this year, of 1 per cent., is greater than that in Scotland, which is 0.35 per cent. Scotland has had a substantial increase and, as I have mentioned, health expenditure per head is 23 per cent. higher than in England. The hon. Lady would not wish us to be put on the same basis as England, because health expenditure in Scotland would be cut to an extent that she would hardly have dreamed possible.

Before making its current recommendations, the nurses' review body considered evidence from both staff organisations and management. We have implemented in full all the recommendations of the nurses' review body since its inception. This has contributed to an increase in nurses' salaries of 53 per cent. in real terms since 1979. Resources are available to meet the increases recommended by the review body.

Taken together, those points surely demonstrate our continuing commitment to the provision of very high-quality NHS health care in Scotland, and they recognise the contribution made to this by the broad group of nursing staff.

Question put and agreed to.

Adjourned accordingly at twenty-eight minutes to Nine o'clock.