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I am sponsored by UNISON--I do not receive a penny for myself, but money is paid to the Labour party. My union and the Royal College of Nursing have undertaken research. In a report on performance-related pay and United Kingdom nursing commissioned by the Royal College of Nursing, and written by Mark Thompson and James Buchan, the Institute of Manpower Studies concluded that there was no reliable evidence that PRP improved employee motivation and some evidence that it could be demotivating. It also concluded that there was no evidence that performance-related pay helped to retain good performers. It stated that there was no evidence that performance-related pay improved the performance of the organisation.

In an earlier report, the Institute of Manpower Studies considered performance-related pay in both the public and private sector. It looked at 20 different organisations. Its conclusions were : "Few studies have shown any link between PRP and productivity and the claims for PRP were found wanting in practice".

Most people--certainly, most health workers and anybody with any knowledge of the health service--would agree that proposals for performance-related pay for nursing would be bad for patient care. It would be harmful if nursing were to become more financially driven, competitive and preoccupied with meaningless, if measurable, targets. Nurses are already sinking under excessive paperwork as the new market-led approach takes over. Nursing is not a production-line process or a service providing a profit. Performance- related pay would prove an extremely dangerous experiment that could seriously harm patient care.

In other parts of the public sector, performance-related pay is not the success that it is claimed to be. There is evidence in the Inland Revenue that the introduction of performance-related pay is leading to the demoralisation of staff. Surveys for British Telecom, much hailed by the Government as a success story, have found widespread resentment at unfairness in its operation, particularly where cash limits have been applied so that the numbers of staff who can qualify for higher levels of payment is not determined by their performance but by predetermined budget limits. I do not think that anybody doubts that the same would be true of the NHS.

A small number of trusts in the NHS have introduced schemes, but a survey in 1992 by NALGO, as it was then, found overwhelming dissatisfaction with performance-related pay for managers. PRP is not being introduced to support the NHS or the nurses. By imposing PRP linked to productivity, the Government hope to get nurses to fund their own pay increases well into the future. That is the real agenda ; it has nothing to do with patient care of the care of nurses--and, of course, it involves many problems.

Recently, the Royal College of Nursing said :

"One of the greatest difficulties with introducing PRP to nursing is determining the performance indicators to be used. There is a danger that easily quantifiable measures such as the number of patients treated will be used and that factors such as the ward environment, the financial resources available and, perhaps most importantly, the quality of care provided may be overlooked. Current job evaluation schemes introduced into the NHS are already giving rise to these concerns : they concentrate on recognition and reward of management responsibility without giving sufficient consideration to factors such as patient care and communication skills." Will nurses find that they are pressurised into discharging patients too early, in order to meet productivity targets?

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In Ayrshire and Arran trust, among others, there have been proposals for a system linking pay with attendance. Such a system would almost certainly put pressure on sick nurses. Imagine the consequences for a special care baby unit, or a maternity unit, if a nurse with influenza reported for duty.

Another crazy idea relates to throughput. I warn the Minister that nurses will not tolerate a system that encourages them to ignore the quality of care, and to push patients out of the door as quickly as possible. Linking patient discharge rates with pay could cause individuals to suffer ; it could also conflict with the duty not to discharge patients until community services are available. How could the throughput measure be applied to long -stay patients? In an excellent study, appropriately named "Nurses on the Production line", UNISON says :

"Using patient throughput could lead to more productivity but worse care. In addition, at present no measures of readmission rates exist and one of the main dangers of using throughput would be that those patients discharged too quickly would simply be readmitted later with complications."

A development that is already under way--because of the national shortage of beds, especially acute beds--would be massively accelerated.

The Government must have devoted some thought to the proposal, given that they allowed the trusts and the director-managed units to go ahead on such a loose basis. Will there be a practice of including bed utilisation rates and bed occupancy rates? If so, how will it work in practice? Such matters are often beyond the control of individual nurses.

Surely, if patient discharge rates are linked to pay, treatment regimes are bound to be influenced. There must be an effect on the quality of treatment. This idea is dangerous nonsense, and I hope that the Minister will note the points that I have raised on behalf of nurses.

Another way of using performance-related pay is the method employed in the United States, where PRP is linked with performance appraisal. In the United Kingdom, the Homewood trust runs such a scheme, rating employees from "ordinary" to "outstanding" ; there are four grades within the appraisal. Although most unions and staff organisations do not oppose appraisal, they object to a link between pay and appraisal. My union, UNISON, is on record as expressing the fear that staff will be less open if their pay suffers after they have discussed their weak points.

I believe that there are many problems to do with

performance-related pay that the Government have not taken seriously enough. What criteria will be used ; how objective will it be? Performance- related pay systems are usually related to the individual, but nursing, by its very nature, is a team-based job in which people rely on each other and work together for the good of the patients. How much will this system upset what is a life-saving service? Experience of performance-related pay linked to appraisal schemes in other areas suggests that racial and sexual discrimination will be a major problem if the scheme is applied to nursing.

There are so many drawbacks that it is difficult to know which ones to pinpoint in this debate. The Government's proposals to impose these measures mut be resisted as hard as possible. The public, Members of Parliament and all decision-makers must fight this just as hard as the police

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fought the Sheehy plan. If we can get the issue on the political agenda, I am sure that the Government will back off as fast as they did when the police resisted Sheehy.

I appeal to all who may hear or read this debate, and to past and present patients and all hon. Members, to join me in praising the skills and commitment of nurses and in sympathising with them for the fraught time that they are having as they undergo some appalling changes to a market-led health care system. I appeal to everyone to condemn the scheme and to lobby the Government, to ensure that their thoughts on this dangerous and unnecessary experiment are put across to them.

This crackpot scheme deserves to be put in a hospital incinerator. 1.1 am

The Parliamentary Under-Secretary of State for Health (Mr. Tom Sackville) : I am grateful to the hon. Member for Halifax (Mrs. Mahon) for raising the topic of the proposed performance-related pay for nurses, because it gives me an opportunity to explain the importance that the Government attach to the development of performance-related pay in the public sector. How we take this forward for nurses, the largest staff group in the NHS, is very important to the success of our whole approach.

We want to extend the link between performance and rewards to all NHS staff groups, and to make it much more explicit. The Government's policy on rewarding perform-ance in the NHS can be traced back to the 1989 White Paper "Working for Patients", which set out a programme of reform. One of the objectives of the changes subsequently made to the NHS was to provide greater satisfaction and rewards for those working in it who successfully respond to local needs and preferences. The White Paper proposed that NHS trusts should be free to settle the pay of their staff. The Government's objective throughout the service is progressively to introduce greater flexibility in order to allow managers to relate to local labour markets and reward individual performance.

Performance rewards are not new in the NHS. By April 1994 it is expected that 95 per cent. of all hospital and community health services will be provided by trusts, employing 90 per cent. of all staff. Many trusts are now actively drawing up local reward strategies, with firm plans for their introduction this year. The Government's objective is to devolve pay bargaining to a local level, and we are examining how trusts may make more progress.

Evidence suggests that, contrary to what the hon. Member for Halifax said, trusts are using their pay freedoms responsibly and are thoroughly researching their overall strategies before deciding the best way forward. They are pursuing the general aim that a well-motivated and rewarded work force will enjoy greater job satisfaction and will improve standards of patient care.

In evidence to the review body last autumn, the Government stated our belief that the link between pay and performance should be achieved by linking a larger proportion of the pay bill to performance. Any overall increases in pay must of course be affordable on a basis similar to that in the civil service : in general, any increase in pay must be funded from efficiency improvements.

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Against that background, the Health Department, in evidence to the review body, urged it to recommend only modest increases in remuneration nationally to leave maximum scope to encourage local bargaining on self-financing pay increases. Local NHS employees should be free to adopt performance schemes most relevant to their needs. Local schemes might include the introduction of

multi-disciplinary group awards, which could also recognise individual contributions to team effort and individual performance where one person is clearly responsible for ensuring that a particular service target is achieved.

The review body, in its 1994 report published on 3February, made it clear that it wanted to facilitate a significant step towards local pay determination and productivity bargaining. It supported the Government's wish to move towards locally devised performance-related pay schemes. The report further commented that by next year a framework would be established for effective local pay determination with clear prospects for achieving pay increases based on local achievements and needs. It said :

"These are transitional arrangements for a transitional year. We would prefer not to make recommendations in this form next year. By that time we expect to see a framework established for effective local pay determination, with clear prospects for achieving pay increases based on local achievements and needs."

The review body was clear that its recommendations should not inhibit local productivity pay bargaining in any trusts that have prepared for this in 1994. It went on to say that had the discussions between parties at a national level and the preparations at local level been more advanced, it would have recommended an increase of 2 per cent. in national pay rates, with strong encouragement for local determination of increases beyond that.

We welcome the review body's enthusiasm for local determination of performance-related pay. My right hon. Friend the Secretary of State, commenting on the review body report, said :

"I afford the highest priority to the early introduction of arrangements which will link a significant proportion of pay increases from next year to the performance of staff achieving improvements in local services."

Mrs. Audrey Wise (Preston) : The Minister is carefully not defining performance. The main burden of the speech of my hon. Friend the Member for Halifax (Mrs. Mahon) was on the impossibility of satisfactorily defining performance in nursing work. Will he kindly address that point?

Mr. Sackville : The hon. Lady knows that we intend to leave employers to define how they wish to use this freedom. All employers in the private and public sectors must make their own assessments of the performance of their employees. It is absurd, although the hon. Members for Preston (Mrs. Wise) and for Halifax may not agree, to pretend that all employees have the same determination and commitment.

It is surely open to employers to assess their staff's performance, commitment and success in meeting targets and to use the freedom to reward them.

Mrs. Wise : What kind of targets?

Mr. Sackville : There are a number of ways in which employers can measure their employees' performance, and they do so in most professions. There is no reason to

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exempt any profession from such a policy, no matter how unwelcome that might be to someone with the hon. Lady's political background.

Mr. D. N. Campbell-Savours (Workington) : I must declare that I am also sponsored by UNISON and receive no personal remuneration. The Minister is talking absolute rubbish and is not defining what he means by performance-related pay. The aim of the debate is to establish what criteria the Minister has in mind for the measuring of performance. He cannot leave it to the trusts or to people outside to decide ; we want him to tell us so that the unions and work force in the hospitals know what he has in mind. Rather than abdicating his responsibility, he should give us an answer from the Dispatch Box.

Mr. Sackville : The hon. Gentleman knows perfectly well that I am not going to attempt to prescribe to employers a set of rules on how they should assess their employees. Only they are capable of doing that. Assessments are carried out throughout the world of work. It is a ridiculous myth that in the public sector, with its rigid collective bargaining background, it is impossible for employers to assess their staff.

We understand that people do not work in the health service primarily for money. They work in the service for various reasons--they might wish to serve patients or they might get satisfaction from the work. That does not negate the idea that those who are able to demonstrate a high level of commitment and who are able to make a particular contribution should not be rewarded. We have every intention of ensuring that employers in the health service, like those in other spheres of activity, should have the freedom to assess employees, whether they be nurses or other NHS employees. I have no hesitation in commending that approach.

The hon. Member for Halifax gave a series of gloomy predictions about the effects of such a policy. She suggested that people would be measuring bed occupancy and trying to link pay to discharges. There is no reason for an employer to use his powers insensitively. It is perfectly possible for employers in the health service, as elsewhere, to assess which employees they believe especially deserve a higher level of performance-related pay. There was nothing in the hon. Lady's speech to deter me from that view. I commend the concept of performance-related pay in the NHS to the House.

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1.13 am

Mr. D. N. Campbell-Savours (Workington) : I have listened carefully to the Minister's speech and I have about three minutes in which to speak. He has added nothing to the sum of our knowledge of this topic. He has not replied to the debate. My hon. Friend the Member for Halifax (Mrs. Mahon) was trying to extract from him some information about what people should consider important when measuring employers' peformance. He was prepared to rule out some measures--he said that there was no reason for insensitivity- -but he was not prepared to say which measures were ruled in.

I have spent some time in hospital recently. I have been in wards for some fairly long stretches over the past few years and I have been able to sit and watch, and lie and listen, and hear conversations with nurses, doctors and other people in the medical profession. My experience of being on a ward over a prolonged period--an experience that I understand that the Minister has never had--leads me to believe that it is not possible to measure the performance of a nurse fairly.

The only result of the policy will be to encourage resentment and jealousies--a feeling that some people are being preferred over others, and that, because certain friendships exist with hospitals and wards, favours are being given in the form of enhanced pay. The Minister will make some nurses feel that they are being badly treated. I can give him a copper- bottomed guarantee that he will undermine morale on the wards in hundreds of hospitals throughout the country if he continues along that route.

If the Minister wants to implement and impose local agreements for nurses, which my hon. Friends and I also oppose, that is another argument and another discussion. But when he insists on the introduction of some sort of measurement, he is beginning to meddle with the relationships that build up communities in wards and in hospitals--something that Ministers fail to understand.

The Minister need not take it from me; he can take it from the people in the profession. He should ask not the Tory doctors but the apolitical doctors, the senior nursing officers, the registrars, the nurses and the cleaners. The effects will work all the way through a hospital ward. People will see relationships that have been built up over decades at every level between professionals, and between people who are not professionals--

The motion having been made after Ten o'clock and the debate having continued for half an hour, Mr. Deputy Speaker-- adjourned the House without Question put, pursuant to the Standing Order. Adjourned at sixteen minutes past One o'clock.

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