- Public Administration Committee Contents


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




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