APPENDIX 2
Memorandum by the Royal College of Nursing
(FT 3)
EXECUTIVE SUMMARY
— The RCN remains extremely cautious
about the development of NHS Foundation Trusts.
— We believe the proposals could lead
to the creation of a two-tier health service with geographical
disparities of hospital resources that will widen inequality gaps.
— The RCN is opposed to the introduction
of local pay bargaining and performance related pay in the NHS.
— Clarification as to whether Foundation
Trusts will be required to have union recognition is urgently
needed.
— We have concerns that, given the
future plurality of health care providers, the proposed governance
arrangements are not sufficiently robust to protect NHS principles
and values.
— It is not clear how the proposals
will improve capacity, performance or most importantly services
to patients.
— Nurses are the largest professional
group in the NHS and must be represented at executive level on
Foundation Trust Management Boards.
— Many clinicians are suspicious that
Foundation Trusts are a threat to the service to which they are
committed.
TERMS OF
REFERENCE OF
THE COMMITTEE
The Committee will examine Government proposals
to create Foundation Trusts from existing NHS organisations, considering
in particular:
— Financial implications.
— Governance and accountability.
— Impact on quality of management and
quality of patient care.
— Impact on the wider NHS.
1. INTRODUCTION
1.1 With a membership of over 350,000 registered
nurses, midwives, health visitors, nursing students, health care
assistants and nurse cadets, the Royal College of Nursing is the
voice of nursing across the UK and the largest professional union
of nursing staff in the world. RCN members work in a variety of
hospital and community settings in the NHS and the independent
sector. The RCN promotes patient and nursing interests on a wide
range of issues by working closely with Government, the Westminster
parliament and other national and European political institutions,
trade unions, professional bodies and voluntary organisations.
1.2 Approximately three-quarters of RCN
members work in the NHS, and a quarter outside the NHS in a variety
of settings including residential homes, independent hospitals,
clinics and hospices, nursing and care agencies, and in companies
outside the health care sector (eg as occupational health nurses).
The RCN is firmly committed to the NHS and its founding principles
of universal healthcare, free at the point of delivery and based
on need not ability to pay.
1.3 The Secretary of State for Health has
only just published A Guide to NHS Foundation Hospitals[1]
and this memorandum contains our initial reaction to that document.
However, given the timeframe, it is has not been possible to have
any meaningful feedback from our members on the implications of
the proposals and so it is likely that our position will develop
over time. This document represents our key concerns in the wake
of the publication of the prospectus.
2. STAFFING AND
PAY IMPLICATIONS
2.1 The RCN is extremely concerned that
the proposed pay flexibilites for Foundation Trusts could result
in the end of a national system and structure for the determination
of pay, terms and conditions of employment. The Guide to NHS
Foundation Trusts states that Foundation Trusts will "continue
to benefit from wider agreements negotiated by or on behalf of
NHS employers collectively" (6.7); however it does not state
that Foundations will be required to abide by nationally agreed
structures. Therefore although the first wave of staff who move
to Foundation Trusts will have their terms and conditions protected,
there is no guarantee that this will remain the case for staff
who join Foundation Trusts in future years, or indeed staff who
are promoted or who request changes to their existing contacts
(for example to move to part-time work).
2.2 The RCN firmly believes that the annual
pay awards of UK nursing staff should be determined on an NHS-wide
basis by the independent Pay Review Body. Following the disastrous
local pay `experiment', the RCN welcomed the Fourteenth Report
of the Review Body (1997) which reaffirmed the primary role
of the Review Body: "to ensure fair pay for nursing staff"
and which recommended a return to NHS-wide pay increases. In so
doing, the Review Body restored the confidence of nurses in its
reputation for impartiality and independence. The RCN believes
that local pay bargaining could destabilise labour markets on
a local, regional and national basis. Local pay bargaining is
contrary to the idea of equal pay for work of equal value, a tenet
central to the Agenda for Change negotiations. The Guide
states that Foundation Trusts:
"will have the flexibility to offer new
rewards and incentives and explore innovative ways of working
in partnership with staff to deliver local services, with increased
freedom to reward excellence...an NHS Foundation Trust will be
expected to use these new freedoms in a way that fits with key
NHS principles and does not undermine the ability of other providers
in the local health economy to meet their NHS obligations".
2.3 The RCN does not see how a pay system
which offers additional rewards and incentives beyond those permitted
by the nationally agreed framework can fail to undermine the ability
of neighbouring Trusts to recruit and retain nurses and other
staff. The Guide implies that Foundations Trusts will be free
to offer financial rewards for good performance. However traditional
performance-related pay systems do not adequately measure the
complex activity within the NHS and evidence does not support
the idea that performance-related pay actually improves clinical
performance[2].
2.4 Local pay negotiations could lead to
significant capacity and administrative implications for both
staff side and management organisations. This could itself detract
from efforts to improve service delivery and create uncertainty
in service planning due to increased UK labour mobility.
2.5 The Department of Health Guide states
that Foundation Trusts will be supported in becoming second wave
Agenda for Change early implementer sites from autumn 2003. The
process for selecting first wave early implementer sites has required
the involvement and explicit agreement of staff; this should continue
to be the case with second wave early implementers including those
applying for Foundation status. It would be wrong to limit early
implementers to three-star trusts. The star rating system is not
perfect and indeed the Department of Health has made it clear
there are examples of innovative practice and quality service
delivery in non three-star hospitals. The exclusion of these Trusts
from the early implementer process could prevent the development
of new roles and ways of working through Agenda for Change, demoralise
staff and exacerbate feelings of unfair treatment.
2.6 Despite the efforts to develop Agenda
for Change as a UK-wide system, the perception in Scotland, Wales
and Northern Ireland, where there will not be any Foundation Trusts,
may be that Agenda for Change is an English system resulting in
the development of different country-specific pay systems. This
would lead to further competition for scarce staff.
2.7 Section 1.42 of the Guide states
that applications for Foundation Trusts status will have to demonstrate
evidence that key stakeholders, including staff, support the application.
It would be useful to have clarification on how this support will
be ascertained, and what percentage of staff approval will be
considered a mandate for change. We would suggest that staff approval
should be canvassed through the appropriate trade unions.
2.8 If staff transfers to Foundation Trusts
are to be in line with TUPE then union recognition should also
automatically transfer to Foundation Trusts. However this is not
stated explicitly and the RCN calls for urgent clarification of
this. Similarly, unions are not included in the organisations
with which Foundation Trusts will have a duty to co-operate. An
inclusion here would be helpful.
2.9 It would also be useful to have clarification
on what will happen to staff working in Foundation Trusts which
lose their licence. The Guide states that services will
be transferred to alternative Foundations Trusts or other NHS
Trusts (3.38); if staff are similarly transferred will their terms
and conditions remain the same?
3. FINANCIAL
IMPLICATIONS
3.1 The RCN has concerns that the transfer
of assets to Foundation Trusts on their establishment may lead
to barriers to joint working between hospitals. Further, clarification
is required as to whether the creation of Foundation Hospitals
would undermine the ability of the NHS to cross-subsidise for
the provision of services, given the right of Foundations to retain
any surpluses.
3.2 The RCN believes further clarification
is required regarding a Foundation Trusts' freedom to make investments.
Will there be any ethical code relating to these? If their value
should significantly reduce will the provision of services be
protected? Similarly, what protection exists to ensure the maintenance
of clinical services should a Foundation Trust be unable to service
the borrowing it has?
3.3 Furthermore it is not clear what influence
those bodies or organisations that lend money to the NHS could
have over strategic and operational decisions. Services provided
by the private sector through public-private partnership would
fall outside the restrictions relating to private work. In the
future the NHS may actually be the provider of very few services
and the private sector may therefore seek further influence in
governance arrangements, perhaps as "the representatives
of partner organisations on the Board of Governors" (Guide
2.6).
3.4 The RCN would also like clarification
on the "suitable comfort" is that is to be provided
to sponsors of existing, pipeline and future PFI schemes (Guide
5.22).
3.5 The RCN is pleased at the stated intention
that financial benefits for Foundations Trusts will NOT be generated
by reducing prices and competing with other NHS Trusts. The emphasis
on services being commissioned on the basis of quality and volume
rather than on cost should be closely monitored by the Independent
Regulator.
3.6 The RCN is concerned about the development
of Foundation Trusts in relation to General Agreement in Trade
and Services (GATS), whereby the continued provision of public
services through the NHS could be called into question. The RCN
has written to the Government in response to the consultation
on the World Trade Organisation GATS negotiations, identifying
the need for a more specific definition of how public services
will relate to GATS agreements.
3.7 The Guide states that there will
be no restriction on Foundation Trusts disposing of non-regulated
assets such as car parks. It is important to note that staff facilities
such as car parks and canteens can impact significantly on the
working lives of nurses and other staff. Given the pressures the
nursing labour market it is also imperative that nursing accommodation
is not further reduced and that facilities such as libraries are
protected.
4. GOVERNANCE
AND ACCOUNTABILITY
4.1 The proposed Stakeholder Councils have
the potential to improve the transparency of decision making,
improve the involvement of patients and the public and enhance
local democratic accountability. The RCN would support these intentions
and is pleased that there is a stated intention for Foundation
Trusts to take a proactive approach to engaging communities where
public participation is traditionally low. However this intention
will be meaningless if the time and financial resources needed
for members of the public to fulfil a governing role properly
is not recognised. This applies equally to staff members who will
need time off and cover arrangements to enable them to become
members of Boards. It is unclear what resources will be available
to support these initiatives and the RCN is concerned that the
absence of such support will mean Governing Boards may not fully
reflect the diversity of the local communities they are representing.
4.2 It is also unclear whether the Stakeholder
Council will have real "teeth". The right to receive
information and be consulted is an inferior model of governance
to one that includes rights of negotiation, veto and endorsement.
If governance arrangements are not seen to be truly effective
then it is less likely that members of the public and patients
would wish to come forward to take on these new roles. Furthermore
there is a danger that the governance process could become politicised
with different political factions seeking to shift blame or take
credit on a district, county, unitary, regional and national basis.
The Guide states that the Independent Regulator will publish
guidance on eligibility for members to sit on boards which will
include conflict of interest issues, and these will be key to
the proper running of boards.
4.3 It is imperative that nursing is represented
on Foundation Trusts Management Boards. Nurses are the single
largest professional group in the NHS and have been at the leading
edge in developing new roles, services and ways of working. Many
of the current and future modernisation initiatives depend on
nursing roles and it is impossible to see how Foundation Trusts
can successfully achieve their stated intentions without nursing
representation on the Board. The RCN believes that nursing representation
should be at Executive level.
5. IMPACT ON
THE WIDER
NHS
5.1 The Secretary of State has stated that
Foundation Hospitals will be part of the NHS, providing NHS services
to NHS patients according to NHS principles. However questions
remain as to whether a national system of standards and inspection
is sufficient to protect this vision. The Guide refers
to statements in the NHS Plan[3]
on what NHS principles and values are; however these are not definitive
and it is not clear that there are sufficient checks and balances
to prevent Foundation Trusts from breaching these. For example,
could Foundation Trusts seek to extend patient charges? If Foundation
Trusts are not required to share receipts from land sales will
this undermine the NHS' ability to cross-subsidise services?
5.2 Local Government Overview and Scrutiny
Committees only have authority to refer matters to the Regulator
where there is a "substantial change in service" (Guide,
3.12) which raises the question as to what constitutes a "substantial"
change. To what extent can a Foundation Trust choose to no longer
provide a service? It appears that if such proposals had been
subject to local consultation (which does not in itself imply
consent) then the Independent Regulator would not have power to
intervene. There appears to be no power to require a Foundation
Hospital to provide a new service, which could potentially result
in huge gaps in services. As health care needs and demands change
this could undermine the principle of universality. Whilst services
such as learning disabilities and mental health might be at greatest
risk, we are also concerned that there might be a diminution in
core services. In these circumstance the "light touch"
regulation referred to by the Secretary of State could be insufficient.
5.3 The Guide states that in future
years NHS Foundation Trust status could be opened up to organisations
that are not currently part of the NHS (Guide 1.41). Greater
clarity is needed on this point. Could this lead to non-NHS organisations
being effectively taken over by the NHS and their capacity being
opened to NHS patients? These questions aside, the proposals do
not indicate that capacity in the NHS will be expanded by the
introduction of Foundation Trusts—surely the problem that
most urgently needs addressing in the NHS.
5.4 The RCN is pleased to note that Foundation
Trusts will be required to co-operate with other public sector
providers and NHS bodies, in particular NHS and social care service
providers and commissioners in the local health economy, education
and training bodies. It is especially refreshing to see that representatives
from local universities with responsibilities for undergraduate
training and research activity will be represented on the Board
of Governors or Management Board of Foundation Trusts. It will
be important for the Independent Regulator to monitor this partnership
working.
5.5 We note that Foundation Trust status
will only be available to acute trusts, which seems at odds with
the primary care focus on the modernising NHS. Further, clarification
is needed on how Foundation Trusts will work with Primary Care
Trusts. It is possible that the boards of these organisations
will not share the same vision for providing health care to the
local community, and mechanisms will need to be in place to resolve
this.
6. CONCLUSION
6.1 The RCN remains extremely cautious about
the development of NHS Foundation Trusts. We believe they could
lead to the creation of a two-tier health service with geographical
disparities of hospital resources that will widen inequality gaps.
The RCN is opposed to the introduction of local pay bargaining
and performance related pay in the NHS. We call for clarification
that Foundation Trusts will be required to have union recognition.
6.2 We have concerns that the proposed governance
arrangements are not sufficiently robust, given the future plurality
of health care providers, to protect NHS principles and values.
We recommend that nursing is represented at Executive level on
Foundation Trust Management Boards.
6.3 The NHS and its staff are working at
full stretch to deal with the vast number of organisational changes
introduced by this Government. Foundation Trusts may be a change
too far, not only in terms of the NHS' capacity to manage it,
but also because it is not clear how it will improve capacity,
performance or most importantly services to patients. Many clinicians
are suspicious that Foundation Trusts are a threat to the service
to which they are committed.
Royal college of Nursing
December 2002
1 1 Department of Health A Guide to Foundation Trusts
HMSO December 2002. Back
2
Guide on Performance Related Pay RCN Publishing 1994. Back
3
Department of Health The NHS Plan: a plan for investment,
a plan for reform HMSO July 2000. Back
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