Memorandum from Managers in Partnership
(MiP)
Managers in Partnership (MiP) welcomes the opportunity
to give the Committee a short submission about executive pay in
the NHS.
MiP is the trade union organisation for over 5,300
senior healthcare managers, including more than 300 NHS chief
executives. MiP gives evidence to the Senior Salaries Review Body
(SSRB) for its board-level members in primary care trusts, strategic
health authorities, special health authorities and ambulance trusts.
Our most recent evidence to the SSRB is attached to this submission.[17]
1. Are the right arrangements in place for
setting and monitoring pay and other benefits for top posts in
the public sector?
(a) Are they fair?
(b) Are they transparent?
(c) Do they produce the right results?
(d) Do they provide value for money?
(e) Do they inspire public and political
confidence?
Our members in receipt of Very Senior Managers
Pay in the NHS have made it clear that they do not think the current
arrangements for pay are the right ones. They are not fair or
transparent and there are many examples of their failure to produce
the right results, either for the responsibilities of the post
or in relation to other posts within the NHS and in other public
and private bodies. Moreover, it is our view that the current
arrangements leave organisations vulnerable to challenge under
equal pay legislation. We would therefore argue that they do not
provide value for money and cannot inspire confidence. Our evidence
to the SSRB provides a more detailed critique.
2. Does there need to be consistency regarding
these arrangements between different parts of the public sector?
We are not against the principle of consistency between
different parts of the public sector, but some key questions include
whether the market factors for pay levels for senior managers
are broadly the same in all public services and therefore whether
a common approach is possible.
We would certainly like to see greater consistency
within the NHS. We argue that consistency can only be realistically
achieved by giving all NHS remuneration committees the same powers
to appoint and remunerate directors as applies to foundation trusts.
3. Does there need to be comparability of
pay between top posts in the public sector and equivalent posts
in the private sector? If so, how should equivalent posts in the
private sector be identified?
Yes. There are job markets that cross the sectors.
The finance duty in the NHS is a good example. Salaries below
board-level compare well with the private sector, but directors
of finance in the NHS are paid much less than their counterparts
on private sector boards.
Most NHS boards mirror the corporate governance of
most private sector boards. On the face of it comparators are
available. However, the question will be how we can ensure that
we are comparing the boardroom posts of comparable organisations.
There is, of course, also a private healthcare sector in the UK
from which to draw potential comparators.
4. Is there evidence of executive wage inflation
caused by public sector organisations competing with one another
for candidates?
The latest IDS report on NHS boardroom pay suggested
that salary rises are driven by starting pay rather than pay rises
to existing postholders. We have no evidence about the factors
considered by remuneration committees, but anecdotal evidence
suggests that NHS foundation trusts and local authorities use
their greater pay freedoms to outbid the rest of the NHS for the
best managers.
The Committee might like to note that MiP's advice
to our members is, where possible, to maximise starting salary
in pre-appointment negotiations, in order to counter (1) the absence
of pay progression after appointment and (2) the likelihood of
relatively short tenure in post.
5. What role should consultancies play in
the determination of pay for top public sector posts?
Consultancies have a role to play in ensuring
boards make informed decisions about market rates and job evaluation.
The commercial terms on which such consultancies are engaged should
be open to scrutiny.
6. Is the balance right between executive
pay and other benefits? eg bonus, pension
The bonus arrangements for NHS managers covered by
the SSRB are modest. The current arrangements for those on VSM
are criticised in our evidence to the SSRB.
The pension scheme, especially for those managers
with long service, is a valuable benefit.
The balance with risk, however, is completely
wrong. Tenure is seen as short, with senior executives held to
account by a system that is often arbitrary, subjective and amateurish.
Good HR practice, which is a benefit of any employment, is normally
non existent. Many organisations have struggled to appoint key
people, in circumstances where pay is not the only factor. In
our evidence to the SSRB this year we intend to explore the views
of many assistant directors that directorships are not worth the
candle. They don't see the relatively small increase in pay compensates
for the career risks and exposure of working at board-level.
7. Do the pay levels for top posts in the
public sector have a direct impact on the performance or qualities
of the people filling those posts? What impact does the performance
or qualities of the people filling top posts in the public sector
have on the performance of the organisations for which they work?
We don't believe that, in the short to medium
term, pay levels have a direct impact on the performance of people
filling top posts. Vocational rewards drive many managers. For
example, our members in primary care trusts are highly motivated
by the commissioning agenda, despite feeling hard done by compared
to their colleagues in trusts and foundation trusts. For the reasons
given in the answer to question 6, we believe pay does prevent
the best managers seeking directorships.
When things go wrong in the NHS, politicians and
regulators blame managers. This is the negative side of the coin.
The other side is that managers are very important for the performance
of NHS organisations.
8. Is there an appropriate benchmark or ceiling
for top public sector salaries—eg the salary of the Prime
Minister or a factor of average pay?
No. Pay in the NHS tends to be viewed hierarchically,
ie the highest salaries should be in the Department of Health,
then the strategic health authorities, and then trusts. Why should
this automatically be the case? If the politically acceptable
salary at the top of the tree is set too low, then salaries lower
down are artificially depressed. This is the experience of our
members in Scotland. Salaries ought to be compared using commonly
recognised principles of executive remuneration and job evaluation.
These would provide a degree of benchmarking.
The elephant in the room is, of course, the pay of
top doctors.
9. Can England and the United Kingdom learn
from the experience of other countries or the devolved governments
in this area?
It may be useful to review the arrangements
for remuneration in other countries, ensuring the review covers
a cross-section of models of healthcare provision. Please note
our comment in the answer to question 8 above about the problems
with the arrangements in Scotland.
In conclusion, MiP welcomes this inquiry into executive
pay in the public sector, and we would be happy to elaborate on
any of the answers provided.
June 2009
17 Not printed. Back
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