“further more radical changes to the pay and conditions of the workforce”.

Yet to do this at a time when hospital budgets are under great strain and nurses are being made redundant, each trust paid £10,000 of public money to join the consortium. They have to appoint a consortium director, establish a consortium working group and commission legal advice, so it remains to be seen how much the added bureaucracy of the consortium will cost.

Even more worrying is the lack of transparency or accountability for that spending, given that we still do not know who is responsible for employing the director of the consortium or to whom they are answerable. Perhaps most disturbingly, the project initiation document explained that

“it is likely that Trusts would be obliged to dismiss and re-engage staff to secure such changes”,

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which not only calls into doubt the validity of their proposals, but has serious cost and legal implications.

I can only agree with the BMA that regional pay is a

“costly and time consuming distraction”.

But of course this affects not only the NHS as an institution, but the individual staff on whom the whole service relies, who potentially face a 15% pay cut. The consortium proposes to cut sickness absence payments so that they are paid only at the base rate, yet for staff permanently on nights, the extra payments that they get for working night shifts are an intrinsic part of their salary, on which their mortgage payments often depend. It would constitute, on average, a 20% pay cut if they were ill and were paid just at the base rate.

Reducing annual leave entitlement not only amounts to a pay cut but means that staff who rely on their leave to balance caring responsibilities will face additional costs, if they can even continue to work. At the same time, extra child care costs will be even less affordable if enhanced payments for nights and weekends—payments which are intended to recognise their personal sacrifices and the additional costs that these workers incur—are changed.

The consortium is also considering increasing working hours. Once again, this is an effective pay cut, which ignores the fact that so many overworked staff already work longer hours. According to the Royal College of Midwives, 87% of midwives “frequently” or “always” worked more than their contracted hours, and more than half reported that none of those extra hours were paid for. These are emotionally and physically demanding jobs and the consortium risks leaving staff even more tired, or coming into work when they are really too ill to do so, in order not to lose their extra pay.

The south-west is a net importer of NHS professionals, but our trusts risk losing demoralised and under-appreciated staff to other regions where the terms and conditions are more favourable. NHS staff require the same training, dedication and commitment all around the country, so why should my constituents be paid less simply because of where they live, especially when there can be a greater demand for health services in the south-west because of our older population, and when the cost of living in many places is so high?

Mr Jim Cunningham (Coventry South) (Lab): The same sort of thing happened many years ago with plant bargaining, so to speak, at a regional and a national level in the private sector. The employer did away with the national agreements, did away with the regional agreements, and the end result was people being poorly paid. The Secretary of State has no experience of that and he has the effrontery to come to the House today and foist it on everybody. It is a disgrace, bearing in mind who his paymasters are, when he talks about the trade unions.

Kerry McCarthy: I agree entirely. There is a danger of even greater fragmentation so that we move from national pay to regional pay to very localised pay, with everyone competing against each other—

Mr Deputy Speaker (Mr Lindsay Hoyle): Order. The hon. Member for Coventry South (Mr Cunningham) said “paymasters”. I am sure that he would not want that to be on the record, and that he would want to withdraw it—[Interruption.]

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Mr Cunningham: We were accused of being in the hands of the trade unions as paymasters.

Mr Deputy Speaker: Not individuals? I was worried that the hon. Gentleman was referring to individuals.

Kerry McCarthy: During the first two years of this Government, the south-west’s nursing work force has fallen by more than 3.5%, which is three times the national average. According to the 2011 national NHS staff survey, 11 of the 20 trusts involved in the south-west consortium are in the worst 20% for people feeling satisfied with the quality of work and patient care. The consortium arrangements will not alleviate these pressures and can only make working conditions worse.

These statistics are reflected in the often heartbreaking comments that I have received from constituents, who report on increased work loads, under-staffed wards, and friends and families they rarely get to see. They are considering leaving the south-west, or the NHS altogether. The consortium’s proposals are the last straw when morale is already at an all-time low. One constituent told me:

“I now feel as disposable as the equipment I use. Nursing is on the cusp of disaster.”

When the Prime Minister claimed to lead

“the party of the NHS”,

I do not think my constituents knew whether to laugh or cry.

Health Ministers’ answers on the consortium, like the Secretary of State’s speech today, frequently hide behind “Agenda for Change”, a framework that was agreed only after lengthy negotiations, as my hon. Friend the Member for Birmingham, Erdington (Jack Dromey) said. This prevented there being damaging competition for staff, avoided the risk of ratchet bargaining and minimised the costs of pay negotiation. It meant that nurses were no longer paid as little as £12,000 just because of where they lived. Significantly, “Agenda for Change” has largely eradicated equal pay challenges, so I hope Government Members do not want to replicate the larger gender pay gap that we see in the private sector.

National negotiations on “Agenda for Change” are now being undermined by the consortium, especially when the chair of NHS Employers, who also runs a trust in the south-west, was reportedly instrumental in establishing it. I would be interested to know what conversations Ministers have had with the chair of NHS Employers before she played a leading role in setting up the consortium. The Royal College of Nursing warns that the NHS is simply not equipped for the added bureaucracy, time and expense needed to negotiate pay on a more local basis, and that this ultimately would take the more experienced staff away from the front line.

Health Ministers have sought to defend the possibility of regional pay in the NHS by pointing to its potential under “Agenda for Change”. The inclusion of high cost area supplements and the recruitment and retention premiums, as we have already tried to explain to those on the Government Benches, were designed to help trusts recruit in high cost or low supply areas. They were not intended to drive down pay and drive away staff.

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NHS staff in Bristol are having to work more, with fewer staff and when their pay is frozen. They are stressed at work and stressed at home as they try to make ends meet each month, and now there is a conspiracy to reduce their pay and conditions. My constituents need answers from Ministers. When did the Department of Health first find out about the consortium? I do not mean when it first found out that the documents had been leaked to the public. Who is responsible for appointing the consortium’s director and for its budget? Most importantly, will the Government intervene to prevent the consortium undermining the progress made under “Agenda for Change”, local health services and the NHS as a national service?

My constituents deserve to be paid according to the work they do, not where they live. The proposals for regional pay risk undermining our national health service and undervaluing the work done by those who have dedicated their lives to it. The proposals should be scrapped, and scrapped now.

1.40 pm

Chris Skidmore (Kingswood) (Con): It is a pleasure to follow my constituency neighbour, the hon. Member for Bristol East (Kerry McCarthy). I apologise for not attending the earlier Westminster Hall debate secured by the right hon. Member for Exeter (Mr Bradshaw); I will read the Hansardreport to see what was said. I want to talk about the background to the debate and the south-west pay, terms and conditions consortium, which affects my constituency. We heard the right hon. Member for Leigh (Andy Burnham) and a few other Opposition Members talk of cartels. It is rather unfortunate that such language has been used, because we want trusts to work together to come up with productive solutions to the problems we face in the NHS.

I have heard from constituents, many of them nurses, who are concerned about what is happening. To be honest, I think that they are concerned because there is a lot of scaremongering and a lot of knowledge has not been put out in the open, partly because the unions that are driving the campaign are refusing to speak to the consortium and engage. We need that engagement from the unions, so I urge them to get around the table.

I wrote to the chief executive of the south-west pay, terms and conditions consortium, Chris Brown, to ask for his reasoning as to why the consortium was formed and why it has put the measures on the table—they are not definite and are there to be discussed by individual trusts. This is about flexibility for individual trusts. As has been discussed, the previous Labour Government provided that flexibility. It will be up to the trusts to decide. We should have faith in local foundation trusts to make the decisions that need to be made.

Mr Robert Buckland (South Swindon) (Con): I am grateful to my hon. Friend for breaking down the language that has been used, because one of the worries my constituents have is that Swindon is right on the edge of the south-west region. The prospect of a wholesale regional pay structure causes them real concern. Is not the issue local pay bargaining and how local trusts run their services to the best of their ability?

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Chris Skidmore: The debate is not so much about regional pay because, as my hon. Friend says, there are local considerations to be taken into account; it is about what is the right pay. The right pay is not about lowering pay in poor areas, but about having the right pay in all areas. The right pay is the market rate for an individual, a professional with an individual mix of skills, expertise and experience. One of the problems with the national pay structure is that if trusts want to pay someone more, perhaps an expert, they will be prevented from doing so, which I think is wrong.

John Pugh (Southport) (LD): The hon. Gentleman objected to the use of the word “cartel”. In what sense is it inappropriate in this context?

Chris Skidmore: I believe that “cartel” is a rather offensive word to use in this context, because it has connotations that are inappropriate for health care professionals who are doing their best to ensure that the NHS survives in the long term. That is the crux of the debate. Let us look at staffing costs. The Labour Government made a significant investment in the NHS over 13 years. It would be churlish to deny that, but it would also be churlish to deny the fact that a huge proportion of those costs were soaked up in pay.

Jack Dromey: The hon. Gentleman has just spoken about paying people the market rate. Sadly, there is a low-wage economy in much of the south-west. That is precisely why regional pay was rejected in the lead-up to “Agenda for Change”. It would lead to the market rate being applied in much of the south-west, driving down pay and conditions of employment. Does he, as a south-west Member of Parliament, support regional pay bargaining for the south-west?

Chris Skidmore: What I support is south-west trusts coming together as health care professionals and working out what is best for them in order to survive financially for the future.

I want to read from Chris Brown’s reply to my letter:

“The Consortium was established in response to the serious financial and operational challenges facing the NHS, both now and in the future, and will work to identify ways in which taxpayer funding may be more efficiently used in order to protect both employment and the continued delivery of high quality healthcare.”

There is a significant point in that. I do not want redundancies in the NHS, but if we do not come up with a workable solution for the future, that is what Opposition Members will see, and it will be on their watch if they believe that we should follow the national pay structure. I do not want to see redundancies, and neither do the trusts, which is why they have come together constructively, and they should not be scolded for doing so.

Mr Brown’s letter continued:

“More than two thirds of NHS expenditure is on staffing costs. In recent years NHS organisations have largely exhausted other avenues of potential cost-saving (including reducing reliance on bank or agency staff and implementing service improvement initiatives). Monitor, the independent regulator for NHS Foundation Trusts, has also estimated that NHS organisations with a turnover or around £200m will need to produce savings of around £9m a year for each year until at least 2016/17 to remain in financial health.”

That is why the consortium has been formed. We cannot forget the financial challenge.

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Andy Burnham: The hon. Gentleman said that the Labour Government gave too much to nurses and midwives in pay—[Interruption.] He said that we spent too much on pay. He also said that the market rate of pay should apply in his area. I want to ask him a direct question. Does he think that his constituents who work in the NHS are overpaid?

Chris Skidmore: No, I think that the right hon. Gentleman is misrepresenting what I said. The fact is that we have got to the point—[Interruption.] Nurses, doctors and health care professionals should be paid according to their skills. They should be paid according to what the trusts can afford. The problem we have is that, with an ageing population—

Andy Burnham: So they should be paid less?

Chris Skidmore: No, they should not be paid less. The right hon. Gentleman should stop splitting hairs. If we want a health care service that is viable for the future, where will the money come from? Perhaps he can answer that. What would he do to be able pay for the future of the NHS, given the demographic challenge we face?

Andy Burnham: If the hon. Gentleman gets rid of national pay in the south-west, does he think that the trusts in the consortium, or cartel, should receive a national tariff that factors in a national rate of pay, or should they be paid less for the work they do?

Chris Skidmore: What I find so frustrating about this debate is that the right hon. Gentleman has thrown his principles out of the window. He once defended flexibility for foundation trusts, but he now no longer trusts professionals in the way he really should.

Mr Dorrell: My hon. Friend asked the shadow spokesman a question as though it was academic, but actually it is not academic. When the right hon. Gentleman was responsible for these things, we know what he thought because it is there on the record. The policy was

“to increase regional and local flexibility in public service pay systems.”

That is what he thought was necessary when he had responsibility.

Chris Skidmore: I thank my right hon. Friend for his intervention, which is much appreciated.

The key point is that staffing costs will have to be managed for the future. We cannot get away from that fact. If I am honest in making that point, I am sorry, but we all, regardless of political parties, have to understand the financial pressures the NHS will come under in the decades to come. Staffing costs make up between 70% and 75% of NHS spend. The Nicholson challenge is absolutely vital, and it is not just over four years, as the right hon. Member for Leigh well knows; it will be for ever. We will have to commit to making those efficiency savings so that they can be reinvested in the service if we are to keep the NHS free at the point of delivery. I want an NHS that is free at the point of delivery for my children, yet to be born, and I want it to be there at the end of the century. In order to do that, we need to be responsible about where savings will be made. We are pushing savings at the moment on the outside staffing costs of

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20%. The pay freeze has managed to save around £2.5 billion for the Nicholson challenge, as we have heard Mike Farrar from the NHS Confederation explain.

There is a problem, in that the NHS pay freeze will come to an end next year and will have to be renegotiated. Rather than cutting staff numbers, the NHS Confederation is pushing for us to be responsible about what is put into the NHS. That is what we have to consider. We cannot get away from this challenge. It is irresponsible to fly in the face of reorganisation. We need to make savings so that they can be reinvested for the future. That is why it is responsible for the trust and the south-west consortium to take the issue seriously, and it will be up to the individual trusts to decide at the end of the year.

I cannot see any reason why local trusts and health care professionals, who know what is best for their local areas, should not be able to take advantage of the regulations for local flexibilities set out in “Agenda for Change” to ensure that the NHS has the best possible productivity. Let us not forget that the NHS is not free; it is paid for by taxpayers, who deserve the best possible value for money. If the south-west consortium can deliver that, it should be applauded.

1.50 pm

Ms Margaret Ritchie (South Down) (SDLP): The motion in the name of my right hon. Friend the Member for Doncaster North (Edward Miliband), the Leader of the Opposition, comes at a time when public sector workers face a continued pay freeze, an increased pension age and increased pension contributions throughout their careers. It would seem that some are “all in this together” more than others. This Government’s flirtation with regional pay is merely the latest ill-advised policy that undermines the valuable work done by front-line staff in the health service and across the public sector.

A good starting point would be for the Government to clarify their position on the issue, because the current indecision will do little more than breed further uncertainty and bad feeling. Today’s debate should bring a greater degree of clarity from Ministers, but I say that more in hope than in expectation.

Although the focus of this debate is on NHS pay levels in England, it is important to point out that this could have serious ramifications for the public sector in Northern Ireland. Make no mistake: any movement in this direction will put extreme pressure for similar measures to be implemented in Northern Ireland by way of both principle and precedent and as a result of any possible corresponding decrease in block-grant consequentials.

The suggestion that the measure is being considered as a means of equalising pay between the public and private sectors is fundamentally disingenuous. What seems to lie at the centre of the argument is the misplaced notion that public sector workers are paid too much. That contention is rife with misleading comparisons between the public and private sectors, which, as the Institute for Fiscal Studies notes, often ignore factors such as age and levels of qualification, and compare highly selective samples for the purpose of making a political argument. Indeed, any move towards regional pay in Northern Ireland will likely bring the worst

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aspects of the private sector to our public service, while removing the social guarantees that are the bedrock of a fair system. It will be a case of equalising down rather than levelling up.

In standing up for the public sector, we should not ignore the severe problem of low pay in parts of the private sector. This is a particularly pressing problem in Northern Ireland, where in 2010-11 the pay of private sector employees was 21% below the UK average for private sector workers. The recent discussion of introducing a living wage is much more instructional and productive than any cut to public sector pay. Put simply, low private sector pay in Northern Ireland will not be helped by decreasing public sector pay through the introduction of regional pay scales.

The likely effects of such a move on our public services and our regional economy are clear. There is a strong possibility that it would lead to skills shortages in the NHS and across public services, and to a shortage of much-needed front-line staff in areas where pay is kept low, as I fear it would be in Northern Ireland. That could result in a scenario whereby regions invest in educating and training staff only to lose them to an area with higher pay. The Government have offered no explanation of how they would guard against that. Any such proposal would also remove much-needed money from our local economy. The cost has been put at about £10 billion and the corresponding cut in the Northern Ireland block, at a time when families and businesses are already struggling, would be, frankly, a step too far.

In the Income Data Services report, “Crowding out: fact or fiction?”, researchers found absolutely no relationship between public sector pay levels and private sector job creation, and that regional pay would have a greater impact on women than men. Indeed, they state that most private companies employ national pay scales.

In essence, the Government seem to be attacking a problem that does not exist, while ignoring the problem that does, namely the lack of jobs and the low growth in the economy. This can be seen as nothing more than an ideologically motivated attack on the public sector and we will oppose it. As my right hon. Friend the Member for Leigh (Andy Burnham) has said, this is important, and we in the Social Democratic and Labour party will uphold the principle of national pay agreements.

1.56 pm

John Pugh (Southport) (LD): The submission made by 25 of my colleagues to the regional pay consortium—copies are still available, if people want them—has an excellent conclusion:

“Richard Disney, an expert on regional pay at Nottingham University, has said, ‘everyone thinks it’”—

regional pay—

“‘makes sense until they try to work it out.’ The Government is no different.”

Let us be brutal: this debate is not just about regional pay, but about a set of hospitals that are desperate to save money in any way they can by cutting their wage bill and that are stupid enough to think that how they treat their staff and human capital simply does not matter. This debate is not even just about getting the Government to intervene; it is also about exposing

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differences between the coalition parties and about the coalition trying, to an extent, to paper over the cracks, which is what the amendment endeavours to do.

We all know that the Secretary of State does not want to intervene and that he will wait, quite legitimately, for the pay reviews to report. He cannot do that much anyway, because the guys on the Opposition Benches created independent foundation trusts—they were conned into agreeing to them in 2003, I think—which has resulted in the current situation.

To be fair, some people believe that regional pay will revive economies in the regions, that pumping extra money into areas with high housing costs will not drive up house prices still further, that it will not reduce demand in the regions and that it is a great way of ensuring that everyone gets good quality public services. They are the sort of people who believe that it will allow us to create not only more private sector jobs, but more public sector jobs. That view was expressed by the hon. Member for Norwich North (Miss Smith) when we last debated this issue.

Ian Mearns: Would the hon. Gentleman care to speculate on how the quality of front-line care for our patients will improve by threatening tens of thousands of hospital workers and NHS front-line staff with a further reduction in their living standards?

John Pugh: Some proponents of regional pay argue that teachers would work harder, nurses would be more caring and skills shortages would disappear, and that we would not squander useless time on endless boundary, demarcation and wage disputes. Bizarrely, however, those same people usually believe that this principle and its effects are applicable only to lower paid jobs, not to the top jobs. In other words, the proposal applies only to the plebs.

A prejudiced northerner such as me might be tempted to call those people, “southerners,” but the truth is that they are only a tiny subset of southerners who are upwardly mobile, found in think-tanks, male and disproportionately London-based. Their arguments will change, but no evidence to the contrary will satisfy them, because they have a Tea party-like faith and simple creed that public services should and can be run as simple markets, that people respond only to financial incentives and, most preposterously of all, that nothing worthwhile is lost by turning our great public services into markets full of acquisitive agents. That is not so much market ideology as a form of market idolatry: an unreasoning faith in the omnipotence of idealised markets of the kind that we find only in economics textbooks. Regional pay—and market-facing pay—is part of that faith, and the principle of equal pay for equal work is not part of it. In all honesty, we have to say that we have such people in our midst, some of whom are in positions of power and influence, but equally we have many colleagues around us who have a better grip on reality and the complexities of life and who question such crackpot ideas as regional pay and where they might take us.

I pity the Minister, who is probably aware—I looked this up—that house prices, wages and the cost of living in his Suffolk constituency are very similar to those in many parts of the south-west. He certainly will not welcome telling hordes of his constituents that they are a tad overpaid.

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Yasmin Qureshi: The hon. Gentleman said that as somebody from the north of the country he accepts that there is already a north-south divide in pay. Does he agree that regional pay would make that even worse?

John Pugh: Absolutely.

I was enlarging on the fact that the Minister has to keep peace between sectors of the coalition, and I do not envy him that role. To be fair, many Members from the majority party are also finding this issue uncomfortably irrelevant.

So what can the Minister do, and what can we do? I have a suggestion. The south-west trust was set up by Labour as an independent providers foundation trust with, frankly, pathetic levels of public accountability. Trusts were set up to operate within a market competing with other NHS providers and private providers, and they do not in law have to consider themselves as part of the wider NHS—as part of national bargaining or “Agenda for Change”. Apparently the trusts in the consortium do not to want to so consider themselves and want to ignore national agreements. If they see themselves as independent free agents in competition with other free independent agents, then surely they cannot all form a cartel with a huge share of the health market and conspire collectively to keep wages, and so their costs, down. That is not a free market—it is market abuse. It is not even fair trading. It is the sort of thing that in the United States would lead to a class action as wage fixing.

That is why my colleagues and I are referring this issue to Monitor and the Office of Fair Trading for investigation. This misguided lot in the south-west cannot be allowed to be freebooters when it suits them and freeloaders on the NHS when asked to play by market rules. If the Government are a bit schizophrenic on this issue, the south-west consortium appears to be even more so.

Mr Bradshaw: The hon. Gentleman mentions referring this to Monitor and the OFT. Does he accept from me, as a former health Minister, that all it would take is a word from the Minister to say “Stop it”, and it would stop?

John Pugh: I do not think that that is the case, or that the right hon. Gentleman thinks so, but he ruined my punchline, which goes like this: if the South West consortium is even more schizophrenic than the Government on this, it must be made to come to its senses.

Dr Sarah Wollaston (Totnes) (Con): I ask the hon. Gentleman please to withdraw his comment about this being a schizophrenic response. It is really unfortunate when people use the term “schizophrenic” to refer to very important decisions, because it minimises the impact of schizophrenia on sufferers. May I ask him to rephrase his comment?

John Pugh: I cannot take it off the record, but I do take the point that the hon. Lady has made.

2.4 pm

Mr Iain Wright (Hartlepool) (Lab): It is a pleasure for this pleb and prejudiced northerner to follow another self-confessed pleb and prejudiced northerner, the hon. Member for Southport (John Pugh).

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Much of this debate, and the excellent Adjournment debate in Westminster Hall this morning, has focused on the south-west. I would like to focus on what is happening with regional pay in the NHS in the north-east and, in particular, in my local NHS trust. As my right hon. Friend the shadow Secretary of State said, last month North Tees and Hartlepool NHS Foundation Trust issued HR1 “advance notice of potential redundancies” forms to almost 5,500 trust staff based not only in my constituency but in Easington and Stockton. I am pleased to see my hon. Friend the Member for Stockton North (Alex Cunningham) in his place and hoping to catch your eye, Mr Deputy Speaker. The trust was asking staff to sign new contracts that specifically end the practice of enhanced sickness pay.

I am very concerned about the tactics employed by the trust, which can be seen only as hostile, intimidatory and confrontational. Through the issuing of the HR1 forms, the trust, in effect, said to staff, “Sign this or be sacked.” In its last annual report, published earlier this year, North Tees and Hartlepool NHS Foundation Trust stated that

“our most valuable and important resource…our staff. The value of our staff cannot be over-emphasised. Quality, value and recognition are the themes which run through all our activities, to enable us to attract, retain, reward and develop our current and potential future staff.”

I could not agree more with those sentiments, and I want to put on the record my tribute to all the hard-working NHS staff all over the country, but especially in my north-east constituency, who work valiantly on behalf of my constituents. However, I do not think that the 5,500 trust staff issued with HR1 forms feel particularly valued or recognised at the moment.

Staff who are most affected by those proposals comprise the lowest-paid in the trust, such as band 1 nurses, porters, domestic and catering staff and midwives. However, the proposals will affect all employees. I understand that staff who are new starters, those who might gain promotion and those who are changed on to flexible working for whatever reason—whether it be that they are looking after a child or a sick and elderly relative—were automatically put on to the new contract as of last Thursday, without consultation.

The specific issue—enhanced sickness pay—could and should be resolved amicably through negotiations between unions and management on a national basis. I understand that the matter is subject to national negotiations as part of “Agenda for Change”, but, as regards my trust, I am concerned about what is coming next for workers’ terms and conditions.

Stephen Gilbert (St Austell and Newquay) (LD): I think we know what is coming next, whether it is in North Tees and Hartlepool or in the south-west—cuts to pay and reduced employment benefits. In my part of the country, and I am sure in the hon. Gentleman’s, this does not have public, patient or political support.

Mr Wright: The hon. Gentleman makes a pertinent point. I am about to come to the financial condition of my trust, which I imagine is true of other trusts.

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A total of £40 million needs to be cut from the trust’s budget in the three-year period from 2011-12 to 2013-14—so much for real-terms increases in NHS budgets, as put forward by the Secretary of State at the Dispatch Box. Given that pay costs represent over 68% of the trust’s total income, it seems inevitable, given the financial pressures that the Government are putting the trust under, that there will be a need to cut pay costs still further, whether through redundancies, recruitment freezes or changes to terms and conditions.

The change on sickness enhancement pay is the first of many, and I suggest to the Minister that we must see it as the thin end of the wedge. The proposal on sickness enhancement pay will go through, and then, as the hon. Member for St Austell and Newquay (Stephen Gilbert) said, there will be changes to or cancellations of increments for staff, cuts in overtime, and further pay freezes for lower and middle-paid staff, leading to less money in the local economy. The actions of North Tees and Hartlepool NHS Foundation Trust on sickness enhancement pay simply amount to regional pay through the back door.

As a result, we will see a steady deterioration in pay and other terms and conditions for NHS workers in my constituency relative to other areas and other trusts, even within the north-east. I do not want a race to the bottom with regard to health care in my area. I am concerned that recruitment and retention of staff in North Tees and Hartlepool NHS foundation trust will become an issue because pay will be higher elsewhere, even within the region. Staff may want to move elsewhere, or may not want to work in the trust in the first place, which will lead to a deterioration in quality health provision.

Ian Mearns: Will my hon. Friend give way?

Mr Wright: Before I give way to a fellow regional MP, let me point out that my constituency has huge health inequalities and low life expectancy, and we therefore need the best possible health provision and the best possible staff.

Ian Mearns: I have an additional concern. Eroding morale within the NHS and hospital trusts to such an extent that staff turnover increases, will lead to an inherent increase in costs due to the additional training required when new people replace those who have left, at a lower rate.

Mr Wright: My hon. Friend makes an important point. As the shadow Secretary of State will know from when he was in office, we have had debates, concerns and anxieties about the future of health and hospital services in Hartlepool and north of the Tees for many years. That has not helped staff morale, recruitment or retention. I think that this is the thin end of the wedge, and regional pay through the back door will make matters in my area even worse.

In his response, will the Minister comment on what is happening at North Tees and Hartlepool NHS Foundation Trust and explain why, if NHS spending is increasing in real terms, it has to find £40 million of savings? Why is regional pay being pushed in through the back door? Does he think that the ideas put forward by the trust are

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good, and what impact will that have on recruitment, retention, morale, and ultimately health care provision in the NHS in areas such as mine?

I will conclude with a broader point about the economic rationale—or rather, the lack of it—behind regional pay. If the national economy’s major problems are caused by a lack of demand, an erosion in the confidence of consumers, households and businesses, and structural imbalances in regional economies—in the north-east especially, relative to London and the south-east—I cannot emphasise enough that it seems economically ludicrous to contemplate policies that widen the regional imbalance, restrict demand still further, and result in further private sector austerity in regions such as mine. That is precisely what Lord Heseltine argued against in his review on growth published last week. We must ensure balance between the regional economies, so that the great potential of areas such as mine can be fulfilled. Regional pay in the NHS, or elsewhere, is not the way to do that.

The 5,500 people employed by the North Tees and Hartlepool NHS Foundation Trust live in my area and contribute to the sub-regional economy. They buy things such as cars; they might add a conservatory to their house. That will all stop as a result of regional pay, which will strip out money from the north-east economy to the tune of £0.5 billion a year, according to the TUC. That will result in reduced economic activity in the private sector, and increased private sector unemployment in an area that already has the highest unemployment and the lowest wages anywhere in the country. That is economic madness. We cannot say, “Public sector work over here, private sector enterprise over there”. Modern economies simply do not work like that.

If the Government wish to rebalance the economy geographically—as I think they should—regional pay and a race to the bottom is not the way to do it. The national health service needs a national pay agreement. I strongly support health care provision and health care workers in my area, and on that basis I support the motion.

2.13 pm

Guto Bebb (Aberconwy) (Con): It is a pleasure to follow the hon. Member for Hartlepool (Mr Wright), although I am concerned about his claim that regional pay is being introduced by the back door. The Government have made no change to the legislation, so I suspect that the change taking place is a result of policies and Bills passed by the previous Administration.

I speak in this debate as a Welsh MP—perhaps my red plaster cast gives that away, although I stress that I have it because the plaster technician at my local hospital wanted to give a Conservative MP a red cast in which to go to the House of Commons and make an impression.

I must take issue with the right hon. Member for Leigh (Andy Burnham), who stated that he was responsible for the national health service in England. I accept that devolution has changed and complicated the situation, but when my constituents in north Wales think of the national health service, they do not think about what happens in Wales and what happens in England, because that is not how it works. The health service in north Wales is regularly dependent on specialist services offered in north-west England, and when we think of the health service, we think of it as one body.

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There is no doubt, however, that the differences between what is happening in England and in Wales should be taken into account. It is all well and good to carp that figures suggest that spending on the health service in England is more or less flat in real terms—that was the claim made by the right hon. Member for Leigh—but that should be contrasted with actual and significant cash cuts to the health service in Wales that are being implemented by the Labour Administration as a choice. Those cash cuts would have been implemented in England too if the right hon. Gentleman and his party had won the last election.

When trying to ensure best value for money within the NHS, it is crucial to take into account that the health service in England is facing real challenges while maintaining a position that takes inflation into account. In Wales, however, the hospital staff who serve me, my family and my constituents are facing significant cuts as a result of decisions by the Welsh Assembly Government. That is the context and it is important to make that point.

The hon. Member for South Down (Ms Ritchie) made the important point that public sector workers have recently been facing difficult situations due to a pay freeze and increases in pension contributions. Those two provisions, however, were implemented in an equitable manner throughout the United Kingdom. People may disagree with the changes to pension contributions in the public sector, but there is no doubt that workers in Wales, Northern Ireland and south-east England have been treated in the same way. People might complain about the freezing of public sector pay, but that too has been done in an equitable manner throughout the United Kingdom.

There is real concern in constituencies such as mine that a change to regional pay—which is not being implemented by the coalition Government, merely consulted on—would be inequitable. Somebody in my constituency would be paid at a different rate from someone doing exactly the same job 40 miles down the road in Chester, for example. That is the difference between the pay freezes in the public sector and the pensions changes—those were difficult choices but were implemented in an equitable manner throughout the United Kingdom—and moving forward with regional pay, which would be damaging.

Jim Shannon (Strangford) (DUP): I appreciate this opportunity to make a quick intervention. As the hon. Gentleman rightly said, the four regions of the United Kingdom have parity and equity. Will he explain what will happen when it comes to retrospective payments? In Northern Ireland, a number of retrospective payments have had to be made. Are the same retrospective payments applicable in Wales as in Northern Ireland, for those who have been upgraded and should therefore get more money?

Guto Bebb: I am not sure whether I am qualified to answer that question in detail, but perhaps the Minister will respond from the Dispatch Box in due course.

The changes in the south-west are taking place under current legislation and without any changes to the law, and we must be careful. We are proud to have a national health service and national public services that we take seriously. Although sacrifices are asked of people in the public sector, it is important that they are requested on

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the basis of equality throughout the United Kingdom. Ultimately, I am concerned that we are discussing a Labour motion that contradicts a lot of what has happened over the past few years.

I recently took part in a television debate on regional pay in Wales with a Labour Member who said that the changes to HM Courts Service pay rates were not about regional pay but about zonal pay. As it happens, zonal pay in Wales is lower than in other parts of the United Kingdom. I am sure that workers in Wales were cheered that they were subject not to regional pay in that context, but zonal pay, which made it all right.

There is a degree of opportunism from the Opposition Benches in initiating this debate at this time, and there is no recognition that many of the issues that have given rise to concern are a direct result of policy changes that the Labour party implemented when in power. I accept, however, the need to ensure we get the best possible value for money for the taxpayer from public services, and it is important to look at the degree to which we can be flexible in the way we deliver public services, whether in England or Wales. My view is that a person should not be discriminated against in pay if they are doing a similar job in the same manner as someone within 40 miles of them. The Government should take that extremely seriously.

The economic argument for regional pay is difficult to make by a party that claims to believe in the Union. One advantage that a rural, low-pay area such as mine derives from the relationship with the UK is the transfer of money from richer to poorer parts of the country. We could argue for a stronger regional policy and that we need to do more in that respect, but it would be difficult for me, as someone who believes that the Union brings a great deal of benefit, to argue that workers in my part of the world should be given a different degree of support from the state from workers doing exactly the same job in other parts of the country.

I find it difficult to disagree significantly with the motion, but I welcome the Government amendment. The one thing we can say about the coalition Government is that they are willing to throw difficult, controversial matters out into the open—that often creates problems for MPs because we need to sell those policies on the doorstep. I feel comfortable with the amendment. Ultimately, when Members are elected, they have a responsibility to look into issues carefully, to read around them and take on board the evidence. The amendment states:

“there will be no change unless there is strong evidence and a rational case for proceeding”.

I can live with that—it is great deal better than the Labour motion. Labour Members are basically hiding behind a discussion in the coalition. The fact is that the changes are happening as a result of legislation they proposed and voted for, and now regret.

2.21 pm

Alison Seabeck (Plymouth, Moor View) (Lab): It is a pleasure to follow the hon. Member for Aberconwy (Guto Bebb), who very openly mulled over some of the problems posed by regional pay.

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The unfairness, irrationality and economic illiteracy of the proposal made by the south-west cartel, as highlighted by the hon. Member for Southport (John Pugh), who is no longer in his place, are stunning. The upshot of the documents that have been leaked to the public has been an outcry in my region. I, too, have received hundreds of e-mails and letters from local people who are concerned about what they see as an unfounded and unfair attack on hard-working Plymouth families.

The south-west proposals are tacitly supported by the Government. When questioned in the House, they washed their hands of any responsibility for the action being taken by the 20 trusts in my region. Why is that? Is there something about the south-west? Did the Government believe that the south-west would be supine because there are lots of Government MPs in the region? Did they think they would try regional pay in the south-west and put their toe in the water and perhaps that nobody would notice—after all, it is a long way from London? Did they think, “We now have regional pay in the south-west. It’s a good idea, so we’ll roll it out in the rest of the country”? The response from people across the party divide in the south-west, including those working in the NHS, has put the proposal firmly in its place. We will not accept it or take it lying down.

Dr Wollaston: Does the hon. Lady agree that there are concerns in the south-west that regional pay will impact on the ability to recruit in certain key specialties?

Alison Seabeck: The hon. Lady speaks from a wealth of experience of working in the NHS. She is absolutely right on that point, which I will make more of later in my speech.

The public have a right to know what the Government’s position is, but as with so much else, confusion reigns. The Deputy Prime Minister has said at times that he is not in favour of regional pay, but it will be interesting to see how he votes today. The Chancellor of the Exchequer is clearly in favour, but the Prime Minister says nothing. The Secretary of State for Health has not helped to clarify matters today. The amendment, which is in the name of the Chief Secretary to the Treasury, is interesting. It states that the Government will not go down the route of regional pay

“unless there is strong evidence and a rational case for proceeding”.

How will the Government consult and gather the evidence to decide whether there is a rational case for regional pay? When will the Minister make the evidence available to Members of the House?

The Government must understand that the proposal is causing huge concern. The debate is not just about public sector pay restraint. Labour Members have accepted that there needs to be restraint in the public sector. We are not saying that that should not happen in times of austerity, but there is a need for equal pay for equal work. It is wrong if a nurse in Plymouth, working the same hours, doing the same job and providing the same high-quality care, is paid less than her counterpart in a hospital in Peterborough or Preston.

Chris Skidmore: Does the hon. Lady therefore disagree with the concept of London weighting, which has been around since the 1920s? There are 44 London MPs in the London area, so I would be interested in her views on London weighting.

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Alison Seabeck: The hon. Gentleman dug an enormous hole for himself earlier, and I think I will leave him in it. As hon. Members know, London weighting has been around for quite a long time.

Even NHS employers in the south-west have admitted, in their submission to the consultation that the Government are allegedly carrying out, that the breaking up of national pay systems could jeopardise the progress made in delivering equal pay for women, a hard-fought right being all too easily diminished. “Agenda for Change” was a challenge for the NHS when it was introduced, but it has been a driver for change and fairer pay.

Although the Government are unlikely to listen to questions of principle, it is normally incumbent on Governments to look at evidence to understand the history of a policy that they are considering introducing or broadening. NHS regional pay was tried over a period of about a year in the 1990s. When the evidence was looked at, the differentials across the region were so small that it was put to one side. Regionalised pay is not an idea whose time has come; it is an idea whose time has long since passed. It should be left to lie in peace.

However, as the Government have chosen to resurrect regional pay, perhaps it is worth questioning why they think it is a good idea. The Chancellor claims it is good for the economy, but all the evidence speaks to the contrary. It would be nice if we had a Government who were willing to accept the facts. Instead, their plan is to introduce pay cuts for nurses while introducing tax cuts for millionaires. They are looking to make savings by hitting people throughout the health sector. Regional pay is not just about nurses—the paperwork from the consortium is clear about the impact on doctors and consultants as well as people on lower pay grades.

The Government are ignoring the impact that regional pay would have on living standards and the private sector. It risks a brain drain from the regions. I had an e-mail from a man, now in his 70s, who told me that he had voted Conservative all his life, and that he had even campaigned and canvassed in south Wales for the Conservative party, which takes some courage. The issue that moved him was regional pay. I went to have a chat with him, and while I was there, his daughter—a nurse—came in. I asked her about her experience and how morale was, and she said, “I’m already looking for jobs outside the region. I went to a jobs fair in London, where I spoke to the people from Devon NHS. They did not tell me about regional pay and were not up front about the fact that it’s being discussed.” She found that absolutely shocking. She has considerable experience, but she is looking to move out of our region.

Can the Government look hard-working families in the south-west in the face and tell them that their food bills are lower than anywhere else? Can they claim that south-west gas and electricity bills are not going up in the same way as those in the rest of the country? No. Would they dare say that water bills in the south-west are the same as for everybody else in the country? No. They certainly cannot say that housing is cheaper. The mortgage to income ratio in the south-west is exceeded only by that of London and the south-east. If rising living costs are having the same pernicious effects in the south-west as elsewhere, why should the south-west be singled out for the policy of regionalised pay cuts?

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Once again, the case simply fails to hold together. By not opposing this policy, the Government are, by stealth, supporting it.

The Government also claim that they need to address the differences in pay in the private and public sectors. Higher pay in the public sector is supposed to be skimming off the best talent and holding the private economy back. They work hard to pit worker against worker, but the evidence shows that 55.8% of public sector workers have a degree, diploma or equivalent, compared with only 28.5% in the private sector. That is comparing apples and pears. People in the public sector are better qualified and can quite reasonably expect to be better paid. Many hon. Members have experience of the law, and barristers and others would certainly expect to be paid better because they have their qualifications.

We also see a skewing with unskilled workers. In the private sector, we often see corners being cut—unfortunately —and very low levels of pay, whereas in the public sector, we expect unskilled workers to be paid a decent wage. It is not yet always a living wage, but that is a separate debate—and one that we certainly need to have.

Is it fair that a nursing graduate in Plymouth, with a degree and £30,000 of debt, should, if she wants to stay in the area and work for the NHS—a job for which she has been training for many years—have to take a pay cut? That does not work for me.

The issue of foundation trusts has been raised on many occasions. Foundation trusts have members, and they all encourage people to join and become members. Plymouth Hospitals NHS Trust is no exception. I suggest that people who have very strong views on regional pay might want to consider becoming a member of a trust, because that will give them a direct line to the chief executive and chairman of the trust, and the board, and they can make their views very firmly felt.

We should support the motion tonight. I hope that Members from across the region who have publicly opposed the measure will join us, and we can put an end to the nonsense of regional pay once and for all.

2.32 pm

Dan Rogerson (North Cornwall) (LD): It is a pleasure to follow the hon. Member for Plymouth, Moor View (Alison Seabeck). She was, at times, at pains to say that we were all largely speaking with one voice across the far south-west of the United Kingdom on this issue. The right hon. Member for Leigh (Andy Burnham) introduced this debate and framed the discussion as though, when the Government took office two years ago, Nye Bevan had just left the Dispatch Box, the NHS was as he set it up, and we had a national health service based on a monolithic central structure. Of course that is nonsense. What we had—as my hon. Friend the Member for Southport (John Pugh) pointed out—was a very different NHS, one of foundation trusts. In my town, over my back garden wall is an NHS treatment centre operated by Ramsay Health Care, employing people who do a great job in providing services but who are not NHS employees. At the time, they were given a contract which basically said, “Here’s a chunk of money. Off you go. If you perform some procedures, that’s good, but if you don’t, it doesn’t matter, you still get the cash.” Fortunately the set-up is now different.

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Andy Burnham: We could have a debate about foundation trusts, their powers and their freedoms, and there is an argument that some of them have improved in recent times, especially the big city trusts, but that is for another day. Will the hon. Gentleman at least do me the courtesy of acknowledging that during our time in government not one NHS trust broke away from “Agenda for Change”, and only one sought to add an increment?

Dan Rogerson: Absolutely, and of course the process of trusts becoming foundation trusts was just under way—it has gathered pace over the last two years—and they were bedding down. It is likely—especially given the challenges of efficiency savings that his party would still have imposed if they had won the 2010 election—that the same set of circumstances would have prevailed. In fact the managers in those trusts who are taking those decisions are the same people who would have been in post had Labour won. It is nonsense to say that because the coalition is in power, those people woke up one day and made those decisions. Those things would have happened anyway. To be fair to the right hon. Gentleman, perhaps we should say that we cannot know what would have happened because we are not in that world. We are in the world in which his party lost the last general election. However, the NHS that he left behind is the one that is allowing this to happen, and it is the one that we have to deal with.

We have private providers next door to the NHS treatment centre I mentioned. Bodmin hospital is full of great staff. It was built under a PFI contract and is now staffed by Peninsula Community Health, a community interest company on the social enterprise model. It had to move those nurses into the private sector—or the social enterprise sector, depending on how one views that form of body—on the basis of the provider/commissioner split in the primary care trusts that was set up by the right hon. Gentleman’s Government.

We also have the issue of funding, which is the background to much of this debate. It is no accident that trusts in Cornwall are looking at this. I disagree with them, and I agree with the hon. Member for Plymouth, Moor View about the process they are engaged in, but one of the reasons they are doing it is that the “distance from target” for NHS funding was massive for trusts in the area under the last Government. I have to say that I am not satisfied that our coalition Government have tackled that problem either. The problem also existed under the previous Conservative Government—health funding in our region has been lower than it should have been for decades. Trusts such as the Royal Cornwall Hospitals Trust are having to deal with the problem of funding for those historic reasons. It is not something that has suddenly been invented.

Sarah Newton: I am sure that the hon. Gentleman is proud, as I am, to be part of the coalition Government who have put lots more money into the NHS in Cornwall, so that the distance from the England average has really shrunk. Like him, I will not be happy until we hit the target, but it is now just 2% less. Under Labour, it was a maximum of 7%.

Dan Rogerson: I agree with the hon. Lady up to a point, in that there has been a narrowing in the “distance from target” figure. Of course, it is much easier to get

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closer to target when there is more cash around and more money is being put into the NHS—in the good times. That is when the distance from target should have been tackled. We are obviously very much not in the good times in terms of the economic circumstances, for reasons that all parties would agree with.

If the trusts continue down this path, and create efficiencies by doing so—as well as making life much more difficult for their valued employees—we run the risk of what I call the boa constrictor approach. Snakes that kill by constriction wait until their victim breathes out and then tighten up, so they cannot breathe in again. My worry is that if trusts in Cornwall make these changes first, before other areas, they will make it easier for the distance from target funding to continue. The view will be, “Well, they don’t need the cash now, because they’ve dealt with the problem.” But the burden will have been borne by NHS employees, and that cannot be right.

I think this process is wrong because, as hon. Members on both sides have pointed out, there is an existing process for NHS employers and employee representatives to engage in to examine terms and conditions and pay levels, and see where savings can be made.

Alison Seabeck: Does the hon. Gentleman agree that the document that became public contains clear reference to the fact that the consortium had already been working with those staff-side organisations effectively to find some changes? We need to build on that rather than pursue this policy.

Dan Rogerson: That is exactly the point that I was going to make. Given the history of the two sides of the House, it is interesting to note that the motion tabled by the Opposition does not refer to the role of the trade unions in these negotiations. However, the amendment calls on the Government

“to continue to support employers and trade unions to work together for the benefit of patients and staff.”

I very much agree with that. I do not think that the approach set out by this consortium—or cartel, as others have called it—goes along with that, and that is why the amendment would send a powerful signal to those employers to get back round the table with the representative organisations, the trade unions. I do not join in the trade union bashing—talking about Labour’s paymasters and so on. Having met trade union representatives here, as the hon. Member for Plymouth, Moor View and others have, I know that some give a certain amount of cash to the Labour party and that others do not. That does not matter. They are local representatives representing their staff and doing the job that they are there to do. I have always supported, and continue to support, officials having time to do that job, as it actually saves the public sector a great deal of money. There will be accord from some parts of the House on that issue, too.

This is about market-facing pay versus a top-down, imposed regional pay structure. The Deputy Prime Minister has said that we will not have that. I am delighted that he said that, and I support him. I think that all hon. Members on these Benches—including many of our coalition partners—would say that that is not the way to go. We are not going to have a regional structure that mandates a different level of pay in

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different parts of the country. However, there is a risk with the market-facing approach, of which the hon. Member for Kingswood (Chris Skidmore) seems unfortunately to be a fan, that that could happen via another route.

The argument has been made repeatedly that public sector pay somehow holds back private sector employment. That is absolute nonsense. The idea that the widget factory next door to the hospital is struggling to employ people, and that if we pay nurses less they might suddenly all decide to go and work in the widget factory, is absolute rubbish and I hope we can knock it on the head right here and now. However, if there are challenges facing the NHS, as there are in other public services, as a good employer it should get around the table and look at ways it can defend jobs and make sensible changes that have the support of the work force. Local government has done that in a lot of places. The challenges facing local government have been great, but in a number of areas that process has protected jobs, so it is possible. There is a national process under way to deal with that, as other hon. Members have said.

I am opposed to the process that is going on independently of national pay bargaining. The motion effectively states that the current system is encouraging that process and that the Secretary of State needs to step in and stop it. I would like a stronger message from the Secretary of State—do not get me wrong about this—and I hope that the Minister will listen to remarks from all parts of the House about the message that we would like the Department to be sending to the trusts. However, if I look at the motion and the amendment, it is the amendment that mentions the continued role of staff, employers and trade unions working together, and that is what I will be supporting tonight.

2.42 pm

Hugh Bayley (York Central) (Lab): It would be a good thing, when debating the future of the health service, to talk a little more about the work done by health service professionals. If a woman has breast cancer and consults the oncologist, and he is working out what the best chemotherapy would be, she would want him to be as well qualified and skilled whether he lived in Plymouth or in a part of the country where wage levels were higher. She would expect her doctor to be as well remunerated. Exactly the same would apply for a nurse planning a care and rehabilitation regime for an elderly stroke victim. A number of colleagues made the point that a nurse in Plymouth should get the same rate of pay as a nurse in the City of London. The reason why they should receive the same rate of pay is that we, as their patients, want the same level of care, the same level of service and the same likelihood of survival if we have an illness.

My remarks are based on my experience before I joined the House. We heard a number of Conservative Members trashing the trade unions. I spent seven years as a full-time trade union official for the National and Local Government Officers Association, now part of Unison, negotiating pay and conditions in the national pay bodies for nurses, midwives, ambulance officers, and administrative and clerical staff. I put the interests of the health service and patients very high on my agenda when I did that job. I spent a number of years as

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a health economist, working at the university of York, advising health authorities and trusts on how best to use their budgets. I spent time as a member of York health authority—they were called health authorities in those days—which would now be the equivalent of being a non-executive member of a trust board. Before the debate, I consulted senior NHS managers, finance directors, chief executives, a trust chair, and Professor Alan Maynard, a professor of health economics who was an adviser to the Health Committee, and my remarks reflect what they told me.

I can tell hon. Members from real experience that negotiating pay and conditions is a slow, painful and labour-intensive task. There is an opportunity cost. If health service managers spend time determining pay on a regional or local basis, that removes them from focusing on something else—driving up productivity, improving care outcomes or developing new prevention services, perhaps. There is a cost if more effort is put into regional pay negotiations, because less is done on something else. Regional pay would divert hundreds of managers from thousands of hours of managing the health service into doing something that they currently do not need to do. The Labour Government permitted a measure of local flexibility, but we specifically did not go for the introduction of regional pay.

Dan Rogerson: The other approach that, unfortunately, the consortium seems to have taken is putting aside money and employing consultants to come up with a model for it. That has the potential to be even worse than the approach the hon. Gentleman describes.

Hugh Bayley: I am grateful to the hon. Gentleman for enhancing my argument. As has been pointed out, the limited flexibility that was introduced by the Labour Government has been used by only one hospital to date, Southend, and in that case it was to raise, not reduce, pay.

Abandoning a national pay framework for the NHS is likely to be inflationary for NHS pay. Let us start with doctors. We know from experience that doctors are tough negotiators—[Interruption.] I can see the Under-Secretary of State for Health, the hon. Member for Central Suffolk and North Ipswich (Dr Poulter) smiling. When GPs were negotiating with the previous Labour Government about the cost of the change in out-of-hours services, they—let us be blunt about it—did extremely well out of the agreement. Why did they do well? Because they have immeasurably high leverage. If they were to withhold their services, in whole or in part, from patients, the consequences would be dramatic.

If we had regional pay, the charge would be led by groups, such as doctors, in the highest-cost areas such as London, and they would be in a position to leverage large increases in pay. What would then happen? Doctors would inevitably be drawn away from areas of the country where they are paid 20% or 30% less. What would happen in an area such as mine, which would lose doctors to high-cost areas in London and the south-east of England? Of course, my area would have to raise pay to attract people back. There would be a general pressure, raising wage costs across the NHS, not just in the medical profession, but in other health professions too.

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If the Department of Health loses control of pay in the NHS, which accounts for 70% or 75% of its budget, it would blow the Nicholson challenge straight out of the water. The Government have set the NHS the challenge of finding £20 billion of efficiency savings. If regional pay is introduced, they have no prospect whatever of achieving that because of the inflationary pressures of the change that they are making. Fragmentation and liberalisation of pay regimes only reduce pay where there is a surplus of labour—where the employer has the economic power and the leverage.

The health professions are highly regulated, however, and the professionals are extremely skilled workers who train for a long time, which makes it an inflexible labour market, and that gives health professionals immense bargaining power—a power that, as we know from experience, is used. If the Government really want a levelling down of pay in the NHS, they should train more doctors, nurses, physiotherapists and radiographers, so that there are 10% more than we need, which would have two advantages: first, the NHS could get rid of poor performers, and secondly, there would not be the same inflationary pressure on pay.

If we had regional pay variations, there would be an impact on quality of care in those regions that paid less, because the best clinicians would go to the best jobs paying higher salaries in high-cost areas. It would inevitably divert resources from poorer regions of the country to richer regions, which would fly in the face of the “No Stone Unturned” plan for growth produced for the Government by Lord Heseltine.

I want to respond briefly to the Secretary of State’s statement that under this Government spending on the NHS has increased in real terms. If he or other Members were to consult Her Majesty’s Treasury’s public expenditure statistical analyses of 2012, in table 1.8 they would find that expenditure on the NHS in 2009-10—the last year of the last Labour Government—at 2011-12 prices was £105.1 billion. In 2011-12—the first year of the coalition Government—it fell to £104.4 billion, and last year to £104.3 billion. That is a real-terms reduction in expenditure on the NHS. In comparison, under the Labour Government, we had on average a 6.2% increase each year. That shows why the NHS is in such a parlous financial position now.

2.52 pm

Mr Geoffrey Cox (Torridge and West Devon) (Con): It is never pleasant not to be in complete concurrence and happy harmony with one’s own Front Bench, but I hope the Minister will not ignore the fact that, despite voicing concern about the Government’s position, I strongly deplore the Labour party’s behaviour in taking a position that can only be described as cynically opportunistic. It is simply untenable for the right hon. Member for Leigh (Andy Burnham) to contend that he can, like Pontius Pilot, take his hands off the situation and wash them clean of what is going on in the NHS in the south-west today.

It is precisely the implementation of the freedoms granted under the right hon. Gentleman’s stewardship that these consortia are operating. He is in exactly the same position as the householder who opens the door

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to the burglar, and then complains when he walks in and burgles the property. He opened the door with his changes. It was his policy that introduced flexibilities, and to suggest that he was blind to the probability that trusts would exploit it by introducing differentials in pay up and down the length of the country is not merely naive but wilful irresponsibility and will be judged by people listening to this debate. The people in the low-wage areas I have the honour and privilege to represent will not be fooled by the Labour party’s position.

On the other hand, it is perfectly fair to say that the introduction of regional pay in the NHS would be a retrograde and wrong step. The fact is that low-wage areas, such as those I represent, are already suffering: 26% of families and homes in Torridge are on the edge of poverty. Only two constituencies in Cornwall, an area that receives special help in the form of objective 1 money from the EU, are in a worse position than those in Torridge and West Devon.

Andrew George: I represent one of those constituencies. In view of the hon. and learned Gentleman’s comments about the right hon. Member for Leigh (Andy Burnham) and his criticism of regional pay—a stand I entirely agree with—would he acknowledge that the Conservatives voted in favour of the legislation that brought in foundation trusts and flexibilities, and does he regret that? I recognise, of course, that he was not in the House at the time.

Mr Cox: I do not believe that any party can take its hands off and claim to be not responsible for measures that allowed trusts to exploit the ability to drive down pay by forming such consortia. The Labour party cannot disavow responsibility, and neither, if it voted for it, can the Conservative party.

I want to say something about regional pay. I hope and I am sure that the Minister is listening. I have already written to my right hon. Friend the Secretary of State. In areas such as Torridge and West Devon—areas that depend on public sector pay to create the spending and buying power that puts at least some life into its economy—the concept that pay could be even lower than it is now is unconscionable and inconceivable to those of us who represent them. I hope that the Government will think again in this review. I am comforted by the Secretary of State’s words when he says that they are committed to national pay scales. I hope that those words can be counted on.

I, for one, could not support a measure that introduced regional pay as formal NHS policy, unless I was satisfied that there were sufficient safeguards for the low-wage areas I represent. People often associate rural areas such as Torridge and West Devon with prosperity, but that is a grossly inaccurate caricature. In Torridge, 26% of households are on the edge of poverty, wages are in the bottom 5% of all areas in the country, and West Devon is not far behind. It is simply inconceivable for me, as its representative, to agree to a proposition that would further depress incomes in those areas.

Having said that, it is clear that the NHS has to do something about the pay bill, which is 70% of its budget, and the only appropriate way of dealing with it is for the unions and all parties, including all political parties, to tackle it at a national level. I am disturbed that those national negotiations are apparently not taking place. I hope that the right hon. Member for

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Leigh will encourage the unions to take part in those discussions, because we all have to accept that there is a major national problem with the burden of the NHS pay bill.

Mr Bradshaw: Those discussions are taking place. Does the hon. and learned Gentleman think that a parallel process, as undertaken by the south-west cartel, is helping or hindering a successful outcome of the national negotiations?

Mr Cox: To be blunt, I am not happy about what I am seeing in the south-west in relation to those 20 trusts, whom I encourage to engage with staff and the unions, as my hon. Friend the Member for North Cornwall (Dan Rogerson) said, and to engage in a process that tries to reach some form of consensual agreement.

To answer the right hon. Gentleman’s question, however, I suspect that those 20 trusts have joined together only out of desperation at the static and stagnating nature of the discussions at national level. They are desperate to manage their budgets. Many are in extremely difficult financial circumstances. I see my hon. Friend the Member for North Devon (Sir Nick Harvey) in the Chamber. I will be meeting the chief executive of Northern Devon health trust shortly, and I know the budgetary pressures that it is facing. He will tell me that it cannot wait for the slow convoy of the national negotiations to take place. I urge it to do so. I hope that we can re-engage at a national level and that there are serious and mature discussions going forward. The truth is—nobody can doubt it—that the pay bill in the national health service needs to be tackled. That is why I say again to the right hon. Member for Leigh that the position adopted by the party he represents is not responsible. What he should be doing is calling for national negotiations to take place as swiftly as possible.

Andy Burnham: But all the evidence says that a national pay system is more cost-effective because it does not lead to inflationary pressure around the system, so ours is not an irresponsible position. The hon. and learned Gentleman began with a very trenchant criticism of the foundation trust legislation, which has been echoed on the Liberal Democrat Benches. At the same time as that legislation was enacted, Labour was bringing forward the most ambitious ever programme to overhaul national pay in the NHS, called “Agenda for Change”. He needs to give us some credit for doing that.

Mr Cox: I hope I have been as balanced and fair as I can. I am not suggesting that the right hon. Gentleman has been stewarding the national health service while trusts have taken these actions; I am saying that, like the householder, he opened the door to the burglar. He cannot say now, when he has opened the door, that he deplores the fact that the burglar has gone in and robbed the property. The truth is that he presided over it when he opened the door, and he must have known that that would happen.

There are two things that the Labour party should do now. If the right hon. Gentleman left aside parliamentary games, which we all know he has engaged in, he could offer to try to tackle these grave problems at a national level by encouraging the unions to engage. He should

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not seek to exploit the situation by scoring political points in the way that he currently is. I say to him and to Ministers on my Front Bench that I very much hope that the outcome of the review will not be that regional pay is recommended as the way forward. I would oppose it. I cannot in conscience sit in this House, representing thousands of people on the edge of poverty in a rural economy that is sustained largely by expenditure that those on public sector salaries in the national health service receive, and preside over a situation where their incomes are further depressed.

3.2 pm

Barbara Keeley (Worsley and Eccles South) (Lab): Like many right hon. and hon. Members in this and earlier debates—we are lucky to have two debates today—I am against the Government’s move to regional pay in both the NHS and other parts of the public sector. I am a little less clear about the speech of the hon. and learned Member for Torridge and West Devon (Mr Cox), who talked a lot about the pay bill. If we were not spending £1.6 billion on redundancies or £3 billion on an unnecessary NHS reorganisation, the pay bill would not be quite the worry to the NHS that it is—but let us leave that aside.

One of the most important reasons for opposing regional pay is that, as we have heard—I think the hon. and learned Gentleman was saying something similar—regional or local market-facing pay is bad for the economy not only in the south-west but in the north-east, Yorkshire and the north-west. Public sector workers are already suffering. They have had a two-year pay freeze and have suffered greatly from budget cuts and redundancies. The TUC believes that local or regional pay would effectively mean a further freeze, holding back public sector pay for years. That would take even more demand out of our regional economy, with staff having even less income to spend in the local shops and businesses that the hon. and learned Gentleman mentioned. In the north-west, which has 780,000 public sector employees, a 1% reduction in earnings would take almost £190 million out of the regional economy.

A key point is that any reductions would particularly affect women, who account for around two thirds of public sector jobs on average, although the figure is higher in some parts of the north-west. For instance, the neighbouring authority to my local authority of Salford is Bolton, where female employment in the public sector is over 71%, and a number of my constituents work in Bolton hospitals. Proposals that would cut public sector pay would therefore be a further attack on the living standards of women, who we know are already being hit hardest by the recession and the policies of this coalition Government. Figures from Personnel Today show that since May 2010 the number of qualified nursing, midwifery and health-visiting staff has fallen by 6,588, as my right hon. Friend the shadow Secretary of State said earlier. Indeed, between June and July this year, a further 808 posts were lost, which is serious.

That fall in the number of front-line nurses, midwives and health visitors has been clear in my local area for some time, due to the level of efficiency savings being forced on to the NHS to pay for the reorganisation. Figures in The Guardian show that Central Manchester University Hospitals Foundation Trust has announced that up to 1,400 jobs are to go, with Salford Royal

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Foundation Trust announcing a reduction of 750 posts—including 146 nursing posts so far—Wrightington, Wigan and Leigh Foundation Trust planning a reduction of 533 posts between 2010 and 2014, and Bolton Royal Foundation Trust planning to make a reduction of 248 posts, with two thirds of the first 61 posts removed being nursing and midwifery posts. Even our regional cancer hospital, the Christie, plans a reduction of 213 posts between 2010 and 2015, including, sadly, 43 posts in nursing. That means a total of more than 3,100 jobs going at just five foundation hospital trusts in the Greater Manchester area over three to five years. These are the jobs and careers of my constituents, and we know that women’s jobs are disproportionately affected, because women account for 80% of the jobs covered by “Agenda for Change”. It is in that context—the attack on women and their standard of living—that regional pay in the NHS is a cause for further concern.

The British Medical Association believes that the move from national terms and conditions for NHS staff would have a significant negative impact on the NHS because, as a number of Members have said, the national pay system in the NHS provides benefits for both staff and employers. It has maintained good industrial relations, prevents the duplication of negotiating efforts and has helped to support the recruitment and retention of staff. The Royal College of Nursing believes that any move towards local and regional pay would lead to damaging competition between trusts for staff, because it would entrench low pay in certain areas. There is great concern that places such as Cheshire, which could perhaps offer higher pay, would attract staff from Greater Manchester. That would entrench low pay in areas that are already deprived, such as parts of the north-west, where it would become difficult to attract and retain staff. Regional pay would therefore be unfair and bad for the economies of regions such as the north-west, as well as hitting women harder than men.

The TUC also argues that the case for regional pay is not backed up by evidence, and it makes some important points. As we have heard, comparing public and private sector pay is not comparing like with like. Half the employees in the public sector have a degree, compared with only one in three in the private sector. Importantly, the public sector has a smaller gap between top and bottom pay, and a lower gender pay gap, both of which are welcome. We want to hold on to those. The RCN argues that a move to replicate the pay structures of the private sector would also lead to the replication of inequalities in the private sector, which would be a backwards step. Indeed, I want to challenge the notion put by advocates of regional pay that the public sector somehow crowds out the private sector. In my constituency, there are six people chasing every job vacancy, which is more than the national average. In some parts of the country, such as Hull, as many as 30 people are chasing every job vacancy. It is the lack of growth, jobs and demand in our region that is causing the problem. Budget cuts and redundancies in the public sector, which have already hit our local economy, would be made worse by regional pay.

It is argued that local pay is what the private sector does. However, I worked for many years in the IT industry. I worked in London, the west midlands and

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Manchester, and we did not have different pay arrangements in those places; in fact, my company would not have been able to persuade people to move from place to place if it did. Of course there is London weighting; that has been with us for a long time. Regional pay would be unfair and bad for the economy of our regions. The arguments are not backed up by evidence. Regional pay is not what the private sector does and it would hit women harder than men. There is no reason a nurse in Salford should be paid less than a nurse in another part of the country. As my hon. Friend the Member for York Central (Hugh Bayley) said, it is important that the NHS should have a work force of the same quality in different parts of the country.

Let me make my last two comments. A nurse in my constituency wrote to tell me that she was against the move from national pay because it would

“pit…employers against each other in bidding wars for staff,”

and would also be completely unfair. A midwife in my constituency told me:

“I have, like all other NHS staff, received no annual pay rise for three years now despite the cost of living rising. The cost of raising four children (one of whom has profound disabilities) on one wage is challenging, as my husband provides 24/7 nursing care. Basic pay for a nurse or paramedic should be the same whether they are saving lives in Preston, Peterborough or Plymouth. Anything else is unfair.”

I support the motion tabled in the name of my right hon. Friend the Member for Leigh (Andy Burnham) on behalf of nurses and midwives such as those.

3.10 pm

Andrew George (St Ives) (LD): It is a pleasure to follow the hon. Member for Worsley and Eccles South (Barbara Keeley), a fellow member of the Health Committee. I endorse her comments. She, like many others, has emphasised the reason it is so important that the House rejects the concept of regional pay and urges unions and employers to accelerate the process in order to reach a speedy conclusion on national pay bargaining. This is a serious issue, and it deserves a serious response from all parties in the House. It should not become a subject to be kicked around the playground of an Opposition Day debate in an opportunistic manner, as has so often happened—before the election as well as after it, to be fair. A matter as serious as this should not be debated in that way.

I intervened on the right hon. Member for Leigh (Andy Burnham) to ask whether he would acknowledge that we are where we are today because of the freedoms the previous Government created for the cartel in the south-west, or in any other part of the country. We are aware that other trusts are looking closely at what is happening with that cartel. The previous Government should be applauded for introducing the “Agenda for Change” and attempting to introduce a rigorous and effective method for agreeing pay and conditions at national level, but they also legislated to introduce foundation trusts and the new freedoms that went with them. The Liberal Democrats opposed that legislation at the time.

Andy Burnham rose

Andrew George: I was going to go on to talk about employment law, but I am happy to give way to the right hon. Gentleman.

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Andy Burnham: This subject has featured a lot in today’s debate. I would encourage the hon. Gentleman to go back to the speeches made by Ministers when that legislation was being introduced. They were clearly saying that there could be occasions when flexibility would be needed at the margins to deal with a particular short-term pressure or problem. Such an arrangement was used once, in respect of Southend, to put pay up. It is important to understand that there was no suggestion that pay could be reduced across the board in a co-ordinated, orchestrated move to undercut the national pay system that was being brought in at the same time. That argument has been put today, but it simply does not hold water.

Andrew George: That might have been the stated intention, but the effect is being seen through the cartel’s actions. What is happening is not the result of any coalition Government legislation; it is the result of an opportunity having been made available under employment law. This is not within the parameters of “Agenda for Change”. It is a result of the freedom given to foundation trusts to step outside those agreements and to use employment law to seize the opportunity of certain flexibilities, to the detriment of the employees in their pay. That might not have been the intention behind the legislation, but it has been the effect of it, whether the previous Government appreciated that or not.

If the right hon. Gentleman is really so concerned about this, and given the fact that he can now see the effects of his legislation being played out by the cartel in the south-west, perhaps the shadow Minister, the hon. Member for Copeland (Mr Reed), will acknowledge, in summing up the debate, that that was not the intention behind the legislation. Will he, having noted what is now going on as a result of that legislation, commit to rescinding that element of it if Labour were to come to power, to put right the weaknesses of it? If so, we would know that Labour Members were genuine and sincere in their intent, and that they acknowledged that weakness, which they had not anticipated at the time but which is now being exploited.

I strongly support my hon. Friend the Member for Southport (John Pugh) and congratulate him on his characteristic breathtakingly brilliant contribution to the debate. He was most entertaining, and there was disappointment across the whole House when he resumed his seat without having used all the time available to him. He made many insightful comments about the situation we are in today, and the weaknesses of it.

I also thank my hon. Friend the Member for North Cornwall (Dan Rogerson) for pointing out the significant weaknesses in the legislation and the impact they are likely to have on NHS staff. I am pleased to see my hon. Friend the Member for St Austell and Newquay (Stephen Gilbert) in the Chamber today. We are all aware that the Royal Cornwall Hospitals Trust’s involvement in the cartel is creating deep concern across Cornwall. The hon. Member for Truro and Falmouth (Sarah Newton) made a telling intervention earlier when she said that Cornwall has some of the highest costs of living in the country, while perpetually being at the bottom of the earnings league table, pretty much since records began.

One of the drivers behind the problem is the cherry-picking in the NHS. The private sector is already offering the easiest procedures. A private provider in Cornwall

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carries out the easiest procedures for the fittest patients with low anaesthetic risk and those who are the least likely to suffer complications following orthopaedic procedures. It is now extending its services into areas such as cardiology, hernias, haemorrhoids and endoscopy. If any complications occur, it will simply pass the patient across to the Royal Cornwall Hospitals Trust to deal with any difficulties or emergencies. It therefore has no need to invest in all the facilities necessary to provide the kind of wrap-around service that we want the NHS to provide. The fact that such private sector companies are able to vary wages, terms and conditions for their staff is undermining the NHS. The foundation trusts are having to compete with those companies, and that is one of the pressures that is driving their agenda. All parties need to recognise that fact, and Ministers need to acknowledge that this continued cherry-picking by the private sector is fundamentally undermining the capacity and ability of the NHS to respond adequately.

We must also ask why we are in this situation in the south-west. In regard to resource allocation, only two years ago Cornwall was getting £56 million a year less than the Government said that it needed to provide the necessary services. If there is a significant gap between the funding actually provided for the local health community and the amount that the Government say is the target funding, it is no wonder that local trusts find themselves having to make extremely challenging decisions.

I urge the Under-Secretary of State for Health, my hon. Friend the Member for Central Suffolk and North Ipswich (Dr Poulter), when he winds up the debate, to acknowledge that resource allocation still needs to be addressed. Members of Parliament from across the south-west and I have arranged to hold a meeting with him on this matter, and I hope that it will take place soon so that we can have an opportunity properly to address the issues.

3.19 pm

Alex Cunningham (Stockton North) (Lab): It is impossible to underestimate the importance of this afternoon’s debate. It is of enormous national significance, but also, of course, of acute interest to my constituents. The idea of regional pay is very simple at its core—that an NHS worker in my Stockton North constituency should get significantly lower pay than an NHS worker in another part of the country for doing exactly the same job. The same applies to fire fighters such as my constituent Tony Dorling, whom I met a few minutes ago. He is worried about the cuts to his service and the impact of regional pay on his work, too.

With that in mind, I am surprised that this Government would see regional pay as a viable policy. In my view, that is the heart of the matter. Try as they may, I cannot believe that the Government could ever claim that it would be fair, and it seems that few people, if any, think it would be anything other than unfair, divisive and counter-productive.

How can we really expect a skilled NHS worker, hit by a pay cut, to continue to work in a busy hospital or clinic in a deprived area when a quieter health centre in a more affluent area offers a much better paid position 30 miles away? The reality of regional pay in the NHS is a brain drain away from the areas that need quality and

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dedicated staff most towards areas with better health outcomes, with the inevitable knock-on effect on health equalities.

Several colleagues have referred to the north-east and Teesside. Because of the impact it is having on my community and on our hard-working staff, it particularly distresses me that this Government have forced the North Tees and Hartlepool NHS Foundation Trust to slash another £40 million off its budget over the next two or three years. I am also distressed that that has led to a move to vary terms and conditions for its workers’ sick pay and even to a threat to sack them and re-employ them on different terms and conditions if the changes are rejected.

I am a former member of the board of the North Tees and Hartlepool trust. A couple of weeks ago, my hon. Friend the Member for Hartlepool (Mr Wright) and I met the chairman and the chief executive to find out exactly what was going on. Both gentlemen assured us that they did not support regional pay, but wanted to make a change in national terms and conditions, which they claimed had the support of staff—something very much disputed by the Royal College of Nursing. I saw why they chose that particular change, but I pleaded with them to think again and stick to nationally agreed terms and conditions to ensure that our needy area did not lose its staff to other areas. The people at North Tees and Hartlepool want a national agreement, and I would like to see health employers get back to the table with the trade unions to negotiate on that particular issue. We should totally avoid policies that widen health inequalities—coming from an area such as mine, I know about them—but this policy falls into that category.

Implementation is another issue. If we were to move towards a system of localised pay, negotiations would take place locally and those would take up a greater amount of the time of both managers and union representatives in different places all over the country. The NHS in its current form is not equipped to manage local pay negotiations and, frankly, lacks the skills to do that. This is just another disruptive set of changes that the NHS could do without, particularly during the implementation period of the Health and Social Care Act 2012. According to the RCN, the proposed policy, ostensibly designed to save money, will actually see the cost to the public purse increase.

I am proud to be a member of Unison, a campaigning union on behalf of employees and patients. Its head of health, Christina McAnea, sums up regional pay perfectly when she says:

“Regional pay would be a massively expensive, bureaucratic nightmare, designed to cause huge disruption and conflict.”

The British Medical Association is also opposed to any moves away from national terms and conditions, saying that such a move would have

“a significant negative impact on the NHS, staff and patients.”

The Government have yet to make a convincing case as to why a regional system of pay is preferable to the current national one. The current “Agenda for Change” works by setting a basic pay floor, which no health authority can go below with regard to pay. The BMA has said:

“A national approach to contract negotiations for NHS staff is both efficient and fair.”

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Where a sufficient case can be made, the system allows for minor variations through high-cost area supplements and recruitment and retention premiums. Those provisions make sense for areas that are particularly high cost, such as inner London, but what the Government are proposing would explode the system of sensible divergence through levelling-up, and replace it with one that relentlessly levels down to the detriment of health workers in the areas with the highest need and demand.

The argument that cutting pay in the public sector will help to stimulate growth in the private sector is undermined by the group of 60 regional economic specialists who wrote to The Times to say that they could find

“no convincing evidence within these reports to support the Chancellor’s inference that such regionally or locally determined pay could boost the economic performance of regional economies. On the contrary, such a policy could reduce spending power, undermine many small and medium-sized businesses in areas of low pay, and aggravate geographical economic and social inequalities”—

even more inequalities. They go on to say:

“Moreover, for government, the medium and long-term economic and social costs could increase.”

If the NHS wants to continue to attract a work force of similar quality in different parts of the country, we need to continue with a national system for pay and reward within the current provisions of “Agenda for Change.” I would urge the NHS pay review body to reject outright any moves towards regional pay.

I am also concerned about the impact that moving towards a system of localised and regionalised pay would have on local economies. One of the things that has held us back in combating our stagnant and shrinking economy is low private sector pay. The Governor of the Bank of England has observed, in relation to growth, a clear link between a real fall in wages and consumer spending.

The TUC has argued that reducing public sector wages by 1% would hit local economies by at least £1.7 billion a year. I am not sure, even if regional pay were a good idea, that such a loss to the economy would be a price worth paying, and I am not convinced that the private sector in areas such as mine would welcome a local decline in disposable income.

Regional pay in the NHS would cost, rather than save money. It would widen health inequalities. It would disadvantage deprived areas, create a bureaucratic mess and damage the economy. I have tried, during my short speech, to express what is wrong with regional pay, but I cannot put the case any better than my fellow north-east MP, the hon. Member for Hexham (Guy Opperman), a Conservative, who said:

“I…believe that regional pay is divisive and manifestly unfair.”—[Official Report, 20 June 2012; Vol. 456, c. 960.]

The Government would do well to listen to him.

3.27 pm

Mr David Anderson (Blaydon) (Lab): I know it is unusual in this place to listen to anyone who has experience of the real world, but I will try yet again. I worked in the coal industry for many years—in fact for decades. In 1966, a national agreement was reached to bring parity to the system. It took six years for that to be applied across the industry. The main reason why that was done

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was that people thought it unfair that people who worked in some of the worst conditions in coalfields were historically disadvantaged because they did not produce as much coal as people who worked in coalfields where it was easier to get the coal out. It was the right thing to do. It was based on the principle that applies to this debate—that people should be paid for what they do, not for where they do it. That is the principle that should guide us today.

I had the privilege of presiding over the Unison national conference that agreed “Agenda for Change”. Unison was the last and most reluctant union to sign up to it because it saw some of the problems that it would bring in. We are now seeing those problems. People are exploiting “Agenda for Change.” They are exploiting some of the freedoms intended for families and trusts. Some employers will exploit almost anything. Seeing where we are today and some of what is going on across the country makes me believe that some of the concerns expressed were right.

Today’s debate cannot be separated from what is going on in the rest of the country. We are seeing an anti-worker attack, which is being driven to some extent by this Department but mainly by No. 11 Downing street. Let us look at what is going on. Let us reflect on the background: 750,000 jobs are to be lost in the public sector, while people are having to pay more for their pensions, work for longer and get less pension when they retire. Then there is the pay freeze.

A point was made from the Government Benches about getting the pay burden down, but health service staff will see a reduction of at least 10% in their living standards during the period of this Government. If that is not an example of the workers doing their bit—all being in this together—I do not know what is. Incremental freezes are being introduced, health and safety legislation is being watered down, job security is being weakened, and employment rights and access to industrial tribunals are being changed. There are changes to benefit rules that, officially, are about making work pay, but really mean that people have to go to work for as little pay as employers can get away with. We are back to the future—back to the low-pay, low-skill economy of the 1980s, when people were frightened to stand up for themselves because of the problems they were facing; when compulsory competitive tendering destroyed the conditions of manual workers whose roles were intrinsic to the safety of the national health service.

No one should be surprised to find out that some will be exempt from the regional pay proposals. Who are they? According to the Department of Health submission to the pay review body, the only exemption will be for highly paid managers working in the new bodies established by the Health and Social Care Act 2012. While the people being employed to privatise the health service will not be subject to the regional pay proposals, there will be an impact on the lads and lasses on the front line who look after our constituents day in, day out. That is the unfairness of the situation, and people will focus on the problems at that level in the current negotiations.

The Secretary of State said that he supported proper negotiations, but is it proper that North Tees and Hartlepool NHS Foundation Trust has served redundancy notices on people? That is no way to have proper negotiations. Is it proper that South Tees Hospitals NHS Foundation

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Trust is thinking about doing the same? City Hospitals Sunderland is trying to freeze increments without consultation or negotiation. Tees, Esk and Wear Valleys NHS Foundation Trust is also freezing increments, while all the trusts in Tyneside, which I represent, have said they will not introduce regional pay. That is one of the problems. Where it is easy to travel from one part of the region to the next, people will travel; people who are not getting a good deal in Hartlepool, Sunderland or Middlesbrough will travel to Gateshead, Durham or Newcastle. National terms and conditions are key, so that people are paid the same no matter where they work. Otherwise, recruitment and retention will become a huge issue.

It is clear that the majority of people who have spoken in the House and outside oppose regional pay. Ten north-east firms have urged the Government not to introduce regional pay, because reducing the spending power of public sector workers in the region will have a hugely detrimental impact on their businesses.

I raised a point with the Secretary of State about trade unions, but let me refer to the BMA, the RCN, the Royal College of Midwives and the Chartered Society of Physiotherapy. None of them is affiliated to or the paymaster of the Labour party, but all of them say, “Don’t do this.” But it is not just them saying it. The hon. and learned Member for Torridge and West Devon (Mr Cox), the hon. Members for Hexham (Guy Opperman), for Brigg and Goole (Andrew Percy), for Stafford (Jeremy Lefroy) and for Carlisle (John Stevenson)—all Conservative Members—are all against the proposal. A raft of Liberal Democrats—the hon. Members for North Cornwall (Dan Rogerson), for St Austell and Newquay (Stephen Gilbert), for Torbay (Mr Sanders), for Manchester, Withington (Mr Leech), for Southport (John Pugh), and for St Ives (Andrew George), and even the Secretary of State for Business, Innovation and Skills—are opposed to it. The Deputy Prime Minister is also opposed to regional pay, as was his party conference. How on earth can the Conservative party try to force it though?

Mr Bradshaw: My hon. Friend says that the Liberal Democrats have said they are opposed to it. Will not the test be how they vote in a few minutes’ time?

Mr Anderson: I have always appreciated my right hon. Friend’s talents, but I ask him please not to steal all my thunder.

Who wants regional pay? The Department of Health, but even more so, the Chancellor of the Exchequer, as it is part and parcel of an attempt to drive down workers’ conditions and undermine the work force for ideological reasons. He is putting the NHS at risk for the sake of party political advantage. It is a disgrace.

How will the Liberal Democrats vote tonight? I have read the amendment—I used to write amendments —and it is the easiest thing in the world to fudge your way around something, but this is a point of principle. Let us make no mistake. The people out there—the nurses, the midwives, the doctors—will read the weasel words of the amendment as exactly what they are. The basic principle is in the motion. We want the Government to tell the employers that there is a national pay bargaining agreement, and they should stick to that.

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Andrew George: If the hon. Gentleman really believes that, and the motion does say that the Government should intervene, is he aware that his Government gave foundation trusts such freedoms that in fact the Government cannot intervene?

Mr Bradshaw: Of course they can.

Andrew George: They cannot.

Mr Anderson: Clearly, there are issues about foundation trusts, but the Government can do what they want—or they can as long as the Liberal Democrats help them. Tonight, however, the Liberal Democrats have a chance of stopping the Government doing what they want, by doing what their party wants, and what the people they represent want—by throwing out the proposal, and voting on the clear principle that national pay bargaining should happen in the national health service, and nothing should be done to undermine it, including supporting the amendment.

Mr Deputy Speaker (Mr Nigel Evans): I call Sir Nick Harvey, who should resume his seat no later than 3.40.

3.36 pm

Sir Nick Harvey (North Devon) (LD): My right hon. Friend the Secretary of State was right to make the point that the legal right and freedom of manoeuvre that enables the south-west trusts to do what they are doing is derived from legislation that was passed by the previous Government. In my view, however, he was wrong to depict what they are doing merely as offering premiums to assist with recruitment and retention. If that is all they were doing, frankly, we would not have spent this afternoon discussing the issue, and our postbags would not be filled with hundreds of letters from concerned constituents.

My hon. Friend the Member for Kingswood (Chris Skidmore) suggested that the whole thing had been scaremongered up by the unions and the Opposition, but I do not believe that is fair. If we look at the letters from trusts who are members of the consortium to hon. Members who have expressed concerns, they spell out that, far from offering a premium to “Agenda for Change”, they want to alter the terms in “Agenda for Change”, revisit sick pay rates and holiday pay rates, the amount of holiday entitlement, and the bonus for working unsociable hours. Understandably, that fills the work force with horror, and we should rightly oppose it. If we look at the leaked document from the consortium in its early days, we see that it knew it would run into a political and publicity storm. If it can get away with this, it will want to come back to the issue of regional pay.

My hon. and learned Friend—and neighbour—the Member for Torridge and West Devon (Mr Cox) seemed to be under the impression that all this was happening because no national negotiations were taking place. That is simply incorrect: national negotiations are taking place, and I have talked to representatives of the trade unions that are part of the process. It is clear to me that they are showing flexibility, that they understand that there must be some change, and that they are willing to explore the possibility of change in some of the arrangements.

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I appeal again to the trusts that make up the south-west consortium to await the conclusion of an orderly process that is perfectly capable of addressing some of their concerns. The alternative is seeing regional pay coming in by the back door and the breaking up of the national framework of our national health service.

My constituency is very similar to Torridge and West Devon. It has very low wages, some of the lowest in the country, but very high house prices. We will not continue to attract health professionals to our hospital—and we are already finding it difficult—if they know that coming to work in north Devon will mean worse conditions than they experience elsewhere. We will struggle to retain some of our best people if they know that going elsewhere will enable them to enjoy better pay and conditions and lower housing costs.

When the report from the pay review body is in the public domain, we must debate it again, but the message must go to my colleagues in Departments throughout Whitehall that there is no majority support for regional pay in the House, and that the idea must be given a decent burial.

3.40 pm

Mr Jamie Reed (Copeland) (Lab): NHS staff are among the most valued and respected members of any work force, public or private. Like so many public sector workers—the police, firefighters, teachers, social workers, and many more—they make a crucial and often critical difference every day to the real lives of ordinary people in communities throughout our country, wherever they may be and whatever their wealth. In so many ways, these universal services and the values that they both represent and live by are our national values. They support us, they strengthen us, and they bind us as one nation.

The values of the national health service were celebrated as an article of faith in what it means to be British by Danny Boyle during the opening ceremony of the Olympics. When the eyes of the world were upon us, we showed the world that the NHS and the values that underpin it are part of what makes us British—not Cornish, not Cumbrian, not Lancastrian, but British. It is little wonder that the new Secretary of State tried to have that tribute removed from the ceremony. He knew what it meant then, he knows what it means now, and his support for regional pay in the NHS—revealed at the Dispatch Box today—shows that he is determined to fragment the service.

Since the Government came to power, NHS staff have been marginalised, trivialised and ignored. Reorganisation was imposed upon them with no mandate, no support and no warning. Since then more than 6,000 nursing posts have been lost, and billions of pounds have been taken away from the NHS front line to pay for redundancies and a reorganisation that nobody wanted—a reorganisation that was hidden from the electorate before the election.

Despite all that, these people still achieve remarkable results in the most trying of circumstances every single day. They continue to succeed, despite the incompetence of the Prime Minister and his Health Ministers. NHS workers can surely be forgiven for having had enough of the Government being on their backs; but, not content with being on their backs, the Government now want to be in their pockets as well.

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Regional pay is demotivating, demoralising and wrong. It will harm the NHS in the parts of our country that are most in need, not only in the NHS and not only in local NHS services, but in the local economies where those NHS services are located. The LondonEvening Standard’s city editor, Russell Lynch, wrote last week that the regions

“still account for more than three-quarters of the economy. And if I were in Middlesbrough, Manchester or Leeds right now, I’d be more worried about the mugging that’s on the way from the Chancellor over regional pay in the public sector.”

Of course he was right, and the fear is palpable. That is why this is so important. That is why the Government must intervene, stop regional pay taking hold, and uphold the principle of national pay agreements within the NHS.

As we have heard, 60 academics recently wrote to The Times damning the Government’s regional pay proposals. Let us examine why. The public sector wage bill last year was £162.5 billion for the employment of approximately 6 million people. The aim of the Prime Minister, the Chancellor and, I assume, the Health Secretary is to remove what they claim is an 8% disparity between the wages in the public and private sectors. As usual, that is a heavily disputed figure with no real basis, but let us assume that it is correct. If the Government succeed in removing the difference that they imagine exists, 6 million people will have a cumulative £13 billion less to spend. That is almost 1% of our total economy.

In an age of austerity, when the parts of our country that already rely heavily on public spending are feeling the cuts most acutely, what madness it is to take even more money away from those economies, those homes and those families. Talk about killing demand in the regions! This will not just hurt the public sector and damage local economies; it will bludgeon local private enterprise—those who work in partnership with the public sector, who have contracts with the public sector, who trade with the public sector, and who sell their products to local people paid by and working in the public sector. The insidious desire to divide and rule ignores the fact that one nation has one economy.

Let us consider what regional pay in the NHS could mean for the future of NHS services. The Government have encouraged privatisation to run amok in the NHS, deliberately and ideologically. Whereas we used the private sector in a targeted, limited and structured manner, the Conservatives want to let it run riot like the Bullingdon Club in a china shop. It is no wonder that private health care provides so many funds for the Conservative party.

One of the more flimsy Treasury claims about regional pay is that it would stop private firms being crowded out by the public sector, but how is this applicable to the NHS? Is the real purpose of the NHS regional pay proposals to allow the Government to facilitate faster privatisation of NHS services by hollowing out NHS terms and conditions? Unless the Government intervene —as they should—to halt this development, it will appear that part of the agenda underpinning regional pay is, indeed, to enable the easier privatisation of NHS services. Instead of seeing NHS staff for what they are—the best partners any Government committed to improving the NHS could ever have—this Government see them as surplus to requirements in too many parts

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of the country, with terms and conditions that the Government see as acting as a roadblock to further privatisation.

Sarah Newton: Will the hon. Gentleman give way?

Mr Reed: I am afraid I do not have enough time.

Let us concentrate on the impact of regional pay proposals in the south-west. Because the Government have given their clear approval through their submission to the NHS Pay Review Body, 20 trusts across the south-west have already each committed £10,000 to form a consortium—a cartel—designed to reduce staff pay and to break away from the established NHS terms and conditions. That is money that should be spent on patient care. Is the Secretary of State satisfied with that state of affairs? Some £200,000 is being spent in an effort to reduce the pay and conditions of NHS staff in the south-west—one of the lowest paid areas in England—against the backdrop of almost 1,000 nursing posts being lost in the south-west since this Government came to office.

It is barely credible that this Government should use the south-west as a laboratory in which to experiment with regional pay. It is a Liberal Democrat stronghold. The Liberal Democrat leader has said that regional pay will not happen, yet it is happening. It may call itself a coalition, but this is a Conservative Government in all but name, and with NHS regional pay they are treating south-west England in the same way that the last Tory Government treated Scotland with the poll tax. I know Members from the south-west see that, and I hope that they will vote with us to stop this gruesome experiment in its tracks.

Regional NHS pay is not being introduced only in the south-west, however. It is also being proposed by a series of trusts across the north-east, which is another region that cannot afford to let this Government pick its pocket. NHS trusts in Oxford, Birmingham, Cheshire and Manchester are also threatening to break away from the national pay agreements established under “Agenda for Change”.

This Government have lost financial control of the NHS, unless it is to cut it. They are now refusing even to try to control the demoralisation of NHS staff as their terms and conditions are denigrated. That is shameful. Why is this happening?

All roads lead back to the Government’s hated Health and Social Care Act 2012, with a £3 billion reorganisation at a time of an already unprecedented financial savings challenge. As trusts are plunged into financial turmoil, they are forced to look at opting out of national pay structures. And that is not all. The Treasury’s own figures show that real-terms NHS spending has been reduced under this Prime Minister year on year, as broken promise follows broken promise.

Regional pay in the NHS is opposed by the Royal College of Nursing, the Royal College of Midwives, NHS Employers, the British Medical Association and more. More importantly—[Interruption.] All Members would do well to listen to this point. Surveys show that 2 in 3 voters across the political spectrum believe that regional pay should be dropped: over 70% of Labour and Liberal Democrat voters and just over 50% of Conservative voters believe that.

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That opposition is mirrored across this House. The Deputy Prime Minister claims to be against it—we will see—but Liberal Democrat MPs for Manchester, Withington, for Southport, for Torbay, for St Austell and Newquay, for St Ives and for North Cornwall are against it, and Conservative MPs for areas such as Torridge and West Devon, Hexham, and Brigg and Goole have also spoken out against these ruinous proposals. I commend the argument put forward by the hon. Member for Hexham (Guy Opperman). He has said:

“Our current pay system, which sets a base pay rate, already allows for adjustments in high cost areas like London”,


“I do not believe reducing public sector pay will help stimulate private economic growth.”

He added:

“I am very concerned that regional pay would lead to a reduction in the pay packets of some public sector workers in the North East.”

I share that view entirely, and the same can be said for communities across England.

Let none of us forget the disproportionate effects of regional pay on women, because this is also a gender issue. Not for the first time, working women around the country will be asking themselves just what this Prime Minister has against them. Do they all have to lend him a horse before he offers them some protection? Women make up 65% of the public sector work force and they account for more than 80% of NHS staff covered by “Agenda for Change”. Regional pay will hit women disproportionately. That is not right or fair. It is being done knowingly, and the Prime Minister will pay a heavy price if these proposals are not stopped.

We again find ourselves in the midst of a slow-moving disaster that the NHS can do without. We find ourselves having to deal with a Government who command no trust on the NHS, whether from the public or from health professionals. It is a disaster of the Government’s own making. As usual, the areas that can least afford to, and, most importantly, NHS patients, will end up paying the price for this ineptitude. The Secretary of State knows that regional pay will damage the NHS, he knows that the country is opposed to it, and he knows that he should intervene to stop it. A refusal to do so will demonstrate a failure to understand the values, principles and purpose of a truly national health service, and will illustrate his desire to undermine those very values. I commend the motion to the House.

3.50 pm

The Parliamentary Under-Secretary of State for Health (Dr Daniel Poulter): It is a great pleasure to respond to today’s debate. I am pleased to start on a consensual note, in that we have heard some genuine concerns expressed by Members on both sides of the House on behalf of our NHS staff. All hon. Members very much value the dedication and hard work of all staff who work in the NHS on a daily basis. They often go above and beyond the call of duty to look after patients, and I would like to echo the comments made in that regard.

We have heard good contributions from the hon. Members for Blaydon (Mr Anderson), for South Down (Ms Ritchie), for Bristol East (Kerry McCarthy),

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for Hartlepool (Mr Wright), for Plymouth, Moor View (Alison Seabeck), for York Central (Hugh Bayley), for Worsley and Eccles South (Barbara Keeley) and for Stockton North (Alex Cunningham); my hon. Friends the Members for Kingswood (Chris Skidmore), for Southport (John Pugh), for Aberconwy (Guto Bebb) and for North Cornwall (Dan Rogerson); my hon. and learned Friend the Member for Torridge and West Devon (Mr Cox); and my hon. Friends the Members for North Devon (Sir Nick Harvey) and for St Ives (Andrew George). The contributions from the hon. Member for York Central and my hon. and learned Friend the Member for Torridge and West Devon were particularly thoughtful, putting on the record their genuine concerns for the NHS staff who work in their constituencies. Those contributions encapsulated the support that all Members of this House wish to show for the hard work that NHS staff do every day.

However, I was disappointed by the intervention from the right hon. Member for Exeter (Mr Bradshaw). I have looked at the Hansard record, and it is worth picking up on this. I have here the details of the exchange involving the hon. Member for Bristol East (Kerry McCarthy), and I want to set the record straight for the House now. She asked:

“When did the Department of Health first find out about the formation of the consortium?”

The Under-Secretary of State for Health, my hon. Friend the Member for Broxtowe (Anna Soubry), replied that she was not aware—the Department was not aware—but that she would

“make further inquiries of …officials…and write to the hon. Lady”

to clarify that. It is clear that my hon. Friend has been misrepresented in this debate. That is in Hansard, it is on the record clearly, and I hope that hon. Members will accept the correction and withdraw their remarks. I wish to make it very clear, for the record, that we were made aware of the south-west consortium’s plans when its project document was leaked. That is when the Department became aware of the plans. We did not encourage the consortium in any way and it has the freedoms in respect of its own employment conditions that were given to it by the previous Government under their legislation.

It is worth stressing that Opposition Members, particularly those on the Front Bench, have made many attempts to rewrite history. The speech made by the hon. Member for Copeland (Mr Reed) bore little resemblance to reality when he talked about the involvement of the private sector. The right hon. Member for Leigh (Andy Burnham) said that breaking national pay frameworks is the first step towards the marketisation of the NHS. Yet, as one of his colleagues said later, it was the previous Labour Government who introduced the private sector into the NHS in the first place, who paid the private sector more than NHS providers for providing the same services, and who allowed those private sector providers to cherry-pick the best services from the NHS, to the detriment of NHS patients. Through the Health and Social Care Act 2012, this Government will be stopping that by having more of an emphasis on joined-up and integrated care for all health care providers.

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It was the Labour Government who introduced the pay structure about which Opposition Members are so concerned into the NHS. It was the Labour Government who introduced regional pay into the NHS through incentives and London weighting. It was the previous Labour Government who endorsed the flexibility of local employers to set their own terms and conditions. It was the Labour Government—the Government of the right hon. Member for Leigh—who gave greater freedoms to employers to set their own terms and conditions when they created foundation trusts.

Let me set the record straight and make things perfectly clear. We cannot rewrite history. The right hon. Member for Leigh wants a change of direction, but does he mean a change of direction from the pay flexibility that he and his Government gave to the NHS when they were in power? The Government recognise that in some parts of the country it is important to have pay flexibility in the NHS. We believe that it is right to reward London workers with a £6,000 London weighting because the cost of living is much higher. Does he want to withdraw that flexibility?

Andy Burnham: On our watch, no trust opted out of the national pay agreement in the NHS, but on the Government’s watch, 32 trusts are trying to undercut it. The hon. Gentleman is in the Government—what is he going to do about it?

Dr Poulter: The right hon. Gentleman cannot rewrite history. He cannot stand at the Dispatch Box and say that he no longer agrees with the pay flexibilities he gave local NHS employers or with the “Agenda for Change” document that his Government put in place. That document recognises that in parts of this country premiums of up to 30% need to be paid to employees. It also recognises that the cost of living in London is much higher and gives a £6,000 premium to NHS workers who work in the centre of London.

In our amendment, the Government are pleased to support the comments made to the GMB by my right hon. Friend the Chief Secretary to the Treasury. That highlights the Government’s support for NHS and public sector staff and recognises implicitly that in some parts of the country—as the previous Government’s “Agenda for Change” makes clear—we need pay flexibility to recognise when the cost of living is greater.

Importantly, the Government have also made clear our intention to retain national pay frameworks and national collective bargaining while they remain fit for purpose. That is why we are encouraging NHS employers and the trade unions to come together at the NHS Staff Council to negotiate a settlement that remains fit for purpose so that we can continue to endorse national pay frameworks. That is the stated position of the Government and it is a shame that the Opposition are attempting to politicise an issue of their own making.