§ Following recommendations made by the Royal Commission on Doctors' and Dentists' Remuneration in 1960, the Review Body of which I have the honour to be Chairman was constituted in 1962 to advise the Prime Minister on the remuneration of doctors and dentists taking any part in the National Health Service. Our first report was submitted to your predecessor, Mr. Macmillan on 27th February. 1963, and published with his answer to a question in the House of Commons on 25th March, 1963, in which he announced the Government's acceptance of our recommendations.
§ 2. In our report last year we recommended that the target average net income from the General Dental Services of all principals, full time and part time together, working wholly or partly in those services should be raised by 14 per cent., from £2,400 to £2,740. The new target, like the old, was related to the average number of hours worked of 2,040 a year. It was to take effect from such time (not earlier than 1st April, 1963) as the Dental Rates Study Group agreed upon the adjusted scale of fees necessary to secure this result. Following the Royal Commission's recommendation and example, we made clear that the new level of target net income was intended to stand for at least three years. We also stated that our attention had been drawn to certain unsatisfactory features of the present system of remunerating dentists practising in the General Dental Services, and gave notice that we intended to give further thought to the basis of remuneration and to possible alterations to the present system, so that if we could find a more satisfactory one we should be able to consider recommending it at a subsequent review.
§ 3. General dental practitioners are paid by means of fees for each item of treatment given; these fees are gross fees designed to reimburse practice expenses as well as to provide the dentists' target net income. The level of gross remuneration thus depends on the level of output. If output in the profession increases, for whatever reason—longer working hours, better equipment or increased personal effort, for instance—actual average gross remuneration also increases; and, if the resulting level of actual average net income (after 239W allowing for practice expenses) is higher than the target net income at the time, and target net income is not revised, then the fees have to be reduced so as to bring the level of actual average net income down to the target. For those dentists whose level of output remains constant or increases by less than the average, a reduction in the scale of fees as a result of a general rise in output means a reduction in their annual net income. Although this is a consequence of the arrangements recommended by the Royal Commission and accepted at that time by the Government and by, the British Dental Association, it is one of the features to which our attention was drawn last year as being unsatisfactory.
§ 4. Output has in fact been rising continuously since 1957, at an average annual rate of nearly 5 per cent. When the Dental Rates Study Group came to consider what adjustment should be made to the scale of fees to give effect to our recommendation last year (which was accepted by the Government), it found that, because output (and therefore gross remuneration) had been increasing, the then current scale of fees was already yielding average net income some 10 per cent, in excess of the old target of £2,400. After allowing for an estimated further increase in output, the Group fixed a new scale of fees, to come into effect for courses of treatment beginning on or after 21st October, 1963, and designed to yield an average net income of £2,740 for the level of output expected during the succeeding months, which represented an increase of only 1 per cent. in the gross remuneration (2.3 per cent. in net income) actually being received by dentists at that date. Since then output has continued to increase. In the first half of 1964 it was running at a level some 6 per cent. higher than in the first half of 1963. Remuneration has risen accordingly: to bring average net income back to the target of £2,740 today, the scale of fees fixed by the Dental Rates Study Group in 1963 would now have to be reduced, and, if output continued to rise as expected, another reduction in fees would be necessary in a year's time to keep the average net income down to the level which we recommended last year.
§ 5. The British Dental Association took the view that this state of affairs demanded attention before the Review Body's next general review and before the completion of the reconsideration of the system of remunerating general dental practitioners which was foreshadowed in our report to your predecessor. In April, 1964, therefore, they put to us interim proposals which were designed to replace our recommendations of February, 1963. We had recommended a single increase of 14 per cent., to raise the target net income from £2,400 to £2,740, making it clear that the new target was intended to come into effect as soon as possible after 1st April, 1963, and to stand for at least three years. The British Dental Association proposed that we should vary this recommendation for the three-year period by fixing a rising series of target net incomes for each of the three years, to allow for the rise in output, and providing a system of "tolerances", again to take account of increased output, which would allow actual net income to rise to a level of about 3 per cent. above 240W the target in the first year, 2 per cent, in the second year and 5 per cent, above the target in the third year before a reduction in the fee scale was called for. They also proposed that the total net income yielded by any given scale of fees should be related not to the actual population of principals in practice during the year in which the income accrued but to the population of principals which the Dental Rates Study Group took into account in formulating the scale.
§ 6. While we were considering these interim proposals, the result of the latest inquiry by the Dental Rates Study Group into the hours of work by dentists was made available to us. This indicated that in 1963 principals in practice (whole time and part time) providing general dental services had worked an average of 2,120 hours, compared with the 2,040 hours to which our recommendation last year was related. The British Dental Association consequently further invited us to recommend an increase in target average net income to take account of the increase in hours, while making it clear that the submissions made in their interim proposals still held good.
§ 7. We have carefully considered the interim proposals put to us by the British Dental Association, and we have had the benefit of discussions with representatives of the Association and of comments, both written and oral, from the Health Departments.
§ 8. Our report to your predecessor last year made clear our view that the system of remuneration of general dental practitioners needed further thought. It follows that we see some force in many of the considerations which have led the British Dental Association to put interim proposals to us, and their submissions are relevant to the full review of the system of remuneration which we have in hand. Nonetheless we have concluded that we cannot accept these interim proposals. We have reached this conclusion partly because we are not convinced either of their intrinsic merits or of their economic justification at the present time. But, even if we had been satisfied on these two counts, we should still have hesitated to recommend interim changes in the system of remuneration. We do not think that when only half the period which our recommendations were intended to cover has passed it would be right to change the nature of them on account of features in the existing system which were already in our minds when they were made last year. Nor do we wish to prejudge the issues which we shall have to consider in the course of our full review of the system of remuneration.
§ 9. The recently reported increase in the average number of hours worked is another matter. The Royal Commission clearly envisaged that a significant change in the number of hours worked would constitute a ground for altering target net income:
§ "We recommend that it [the general level of remuneration] be broadly linked instead to the hours worked by the average practitioner. If the number of hours worked by the average dentist remains constant, or remains within defined limits, the net remuneration to be earned by the average 241W dentist should not alter—except to the extent that the Review Body might consider this desirable on other grounds. If hours increase or decrease substantially remuneration ought to alter accordingly—though not necessarily in strict proportion." (Cmnd. 939, paragraph 384).
§ We are clear that, if the Dental Rates Study Group's latest report had been available to us when we were considering our recommendations last year, we should have regarded it as a material factor to be taken into consideration in recommending a new level of target average net income.
§ 10. After considering evidence about present and future levels of output, practice expenses and net income given to us by the Health Departments and the British Dental Association, we have decided to recommend that the level of average net income from now on until our next review should be that which would result from leaving the scale of fees now in operation unchanged during that period. The effect of this will be to increase average net income over the whole of the period covered by our recommendations last year, by an amount which we consider to be justified by the increased personal effort which the dentists have been putting into their work, including particularly the longer hours of working. This recommendation is not intended to preclude adjustments within the fee scale that do not alter average net income.
§ Yours sincerely,
§ The Rt. Hon. Harold Wilson, O.B.E., M.P..
§ 10 Downing Street,