NHS Pay (Hansard, 19 July 1994)

§ The Parliamentary Under-Secretary of State, Department of Health (Baroness Cumberlege)
My 139 Lords, the Government are encouraging local pay arrangements for all NHS staff. This policy is being endorsed for doctors and dentists by their pay review body. Pay for clinical academic staff is a matter for the university which employs them.

§ Lord Walton of Detchant
My Lords, I thank the Minister for that reply. Does she accept that the doctors, dentists and nurses have great faith in the continuation of the review body system? Does she also agree that one of the strengths of the National Health Service has been the existence of nationally agreed salary scales irrespective of specialty; and that there is great concern in all of those professions about the proposal to introduce performance-related pay, a policy now being discarded by many major companies including, for example, British Telecom? Does she accept, too, that if crude criteria such as those used in the recent league tables relating to hospitals are to be used to introduce performance-related pay there is a serious danger that such criteria could result in assessment of throughput without careful attention to the quality of outcome?
Finally, in relation to academic medicine, which is suffering very severely from diminished recruitment, what account will be taken of contributions to teaching and research at a time when universities are having increasing difficulty in maintaining parity of payment of salaries with those working in the NHS?

§ Baroness Cumberlege
My Lords, as with school examinations, I shall attempt three out of the four questions. First, of course, GPs have had a form of performance-related pay since the inception of the National Health Service. So have clinicians; theirs is called the merit awards scheme. A number of companies—I understand from the CBI, about 60 per cent.—operate a policy of performance-related pay. They include ICI, Glaxo, Ernst & Young, the Abbey National Building Society, the Wellcome Foundation, British Aerospace and others. I accept the view that once one introduces performance-related pay it has to be reviewed on a regular basis. I also accept the noble Lord's view that quality of outcome is essential. When I operated performance-related pay, that was one of the criteria built into the objectives of the person whom I reviewed.
Finally, the pay review body welcomes the move towards local determination. Clearly, whatever moves take place will not happen overnight. We shall have to review the future of the review body as matters move forward.

§ Lord Molloy
My Lords, does the noble Baroness agree with, and can she comment on, this important fact? The change of pace within the NHS should be undertaken in a manner which suits all those employed in the NHS, ranging from every nurse through to every specialist. In that way the necessary changes would not merely benefit those employed in the NHS but those who receive remarkable treatment and help from that service.

§ Baroness Cumberlege
My Lords, I agree with the noble Lord in that I believe that performance-related pay 140 should be directly related to the quality of service given to patients. In my experience, I found performance-related pay a great motivator. I believe that increasingly many companies and other organisations are moving away from national across-the-board agreements and are seeking to reward people for their personal effort, commitment and expertise.

§ Lord Rea
My Lords, is the noble Baroness aware that there are other —and, some feel, much better— ways of encouraging high quality professional performance than performance-related pay and that the best results come from agreements freely negotiated with the representatives of the staff or profession concerned? Is she further aware that where performance-related pay has been introduced into NHS trusts it has run into difficulty and is not motivating the staffs concerned; for example, in Dorset, Derby City and West Cumbria?

§ Baroness Cumberlege
My Lords, the National Health Service, as I said, has had performance-related pay for doctors since its inception. Very specific performance-related pay was introduced for its managers in 1986. We have found that to be successful. But, as I said, I believe that the schemes need reviewing from time to time as circumstances change. Other local trusts which are introducing the policy are finding it an incentive and are able to reward their staff for the work they do.

§ Lord Peyton of Yeovil
My Lords, while the idea of performance-related pay for other people may at first sight sound attractive, will my noble friend agree that establishing acceptable criteria is a matter of very great difficulty and may lead Ministers into all sorts of problems which they do not presently contemplate?

§ Baroness Cumberlege
My Lords, at present doctors working in hospitals have their performance reviewed annually. It does not seem to have presented any problems. On the contrary, it concentrates minds on the work being done, on seeing whether it can be done better, and on the taking on of new duties or the discarding of those duties no longer considered relevant. What we are talking about here is linking performance to pay. That is what is concerning the BMA. Quite naturally, because it is a trade union body it wants to negotiate nationally. We are also looking at pay being locally determined. There is great strength in that.

§ Lord Hylton
My Lords, does the Minister recall the famous gynaecologist who once said, "The most difficult thing is to stand there and keep one's hands in one's pockets." How does performance-related pay take into account the healing effect of listening to the patient?

§ Baroness Cumberlege
My Lords, I have also heard gynaecologists say that the first few moments of life are the most dangerous. Other people retort that the last few are equally dangerous. It does depend on the objectives that are set. I do not accept that quantity is necessarily the objective one would go for. It would be quality, and a whole range of different objectives. I was talking this week to a clinical director who is doing that. He said 141 that the effect on his colleagues had been altogether good. They appreciate that somebody is looking at the work they are doing and that it is being assessed. It has led to improvements in that particular hospital.

§ Baroness Jay of Paddington
My Lords, following that reply, surely the Minister would agree that merit awards for doctors, based on clinical excellence in dealing with patients and judged by their peer group, are very different from the type of performance-related pay which may be suggested by these new arrangements? The problem is: who is to decide the standards, and who is to decide the pay? What concerns many people is that the standards will be set by NHS managers who are inexperienced in this field; that numbers of those managers will be greatly inflated even beyond what they are now; and that they will be making judgments about activities they are not professionally qualified to carry out.

§ Baroness Cumberlege
My Lords, where this system is operating, the objectives and standards have to be agreed by the person who is being assessed. It is absolutely essential that both parties must feel that the objectives are relevant, fair and measurable. For the people who assess, that is equally important. Again, it is important that it is clinical directors who carry out the assessment and not only managers. One does want one's own peers, who understand the business fully, to make the judgment; not someone who does not understand the particular stresses and strains of the job and what it entails.

§ Baroness Gardner of Parkes
My Lords, can the Minister confirm that although national health dentistry has always been in effect performance-related in that it has been item-of-service paid and therefore the more work you did, the more you were paid, there has been an essential, independent quality control? Does the Minister agree that retaining a totally independent quality control will be very important?

§ Baroness Cumberlege
Yes, my Lords. I entirely agree with my noble friend.

§ The Countess of Mar
My Lords, will the noble Baroness agree that there is a direct relationship between the quality of performance and the morale of the performers? Will she also agree that at the present moment a great deal is being said about low morale among members of the National Health Service, and among doctors in particular? There have been a number of suicides among doctors, who are suffering stress and strain. Can she say what Her Majesty's Government are doing to relieve that stress?

§ Baroness Cumberlege
My Lords, we are working very carefully and very closely with the people in the service—doctors, dentists and indeed all staff. We meet them on a very regular basis. We are taking up the matter with the managers in the service who are responsible for the morale of staff. I disagree, however, when it is said that morale is at a very low level. It depends entirely where you go. In some of the trusts I have visited I have never seen morale higher. They are 142 achieving their objectives; they are treating more patients; the whole ethos of the place has risen. So morale is a very patchy situation.

§ Baroness Jay of Paddington
My Lords, forgive me for coming back again, but I wonder whether the Minister can confirm what she said in answer to my previous question. Is it the case that under the new arrangements performance-related pay will be established exclusively by clinical directors and not by trust chief executives?

§ Baroness Cumberlege
My Lords, at the moment we are working towards local determination rather than performance-related pay locally determined. So it is a question of the shift towards local determination. Each scheme will depend on how the local people want to implement the scheme. But clearly, we would want some sort of control over it through the management executive. I cannot reply in detail yet; these are very early days. The position has not been worked out fully.

§ Lord Skelmersdale
My Lords, does not the difference between performance-related pay and merit awards lie in the fact that performance-related pay can go up and down while merit awards tend to be seen by consultants as part of the pay scale and never disappear?

§ Baroness Cumberlege
Yes, my Lords, I think that there are some concerns, not least among doctors, about merit awards. In fact, the top awards can double a doctor's salary. They are awarded very often towards the end of a doctor's life. That perhaps says more about their pensions than it does about their performance.

§ Lord Mackie of Benshie
My Lords, does the Minister's reply mean that Her Majesty's Government consider money to be the main motivation of the medical profession?

§ Baroness Cumberlege
My Lords, I do not think that it is the sole motivation at all. There are a whole range of things that motivate people in all walks of life. However, it would be unrealistic to think that money did not have a part to play.

§ Lord Walton of Detchant
My Lords, will the Minister accept that we are at one in wishing to see quality of service and quality of outcome improved within the National Health Service? She referred to the incentives that are at present available to general practitioners and, through the distinction award system, to consultants in the NHS. There are many in the medical profession and in related professions who feel that such long-term incentives are preferable to performance-related pay. Does she accept that there is a danger that the introduction of performance-related pay could lead to the establishment of "have not" and "have" trusts with different standards and levels of staffing and service? Will she therefore urge her right honourable friend the Secretary of State to embark upon discussions with the professions involved in order to establish a workable and acceptable system?

§ Baroness Cumberlege
My Lords, members of the management executive met the BMA last week. They are discussing schemes. Clearly, we will want to 143 introduce schemes that are acceptable or largely acceptable to most of the bodies concerned. But I do think that the alternative of not having locally determined pay is that we continue to have an outdated, unresponsive national system of pay determination which does not reflect the skills and talents of individuals and of the groups and organisations which work so hard in the National Health Service.