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Lord Peyton of Yeovil: I am in the happy position of being able to agree with every word spoken by my noble friend. Not being restrained by the discipline of being on the Front Bench, I can perhaps be a little freer in the expression of my opinions. I rely entirely on the Explanatory Notes which on such occasions the Government kindly provide. Paragraph 48, with an air of novelty, states:

There is nothing new about that. I believe that generations of Ministers and Governments have aimed at precisely that. No matter how intelligent, or unintelligent, they have been, none of them can ever claim that their profound and continued efforts have resulted in total satisfaction for anybody in the whole of the National Health Service. We have been here before. What is the point of repeating exercises that so far have failed? Or is this to be something totally and fundamentally new?

Before I leave that paragraph and despite what I said about Secretaries of State not being congenital idiots, I go further and congratulate them on the degree of--I almost said courage, but that is the wrong word--daring that they show in promising this. If anyone believes them, I would place a large wager that their hopes will eventually be disappointed.

The next paragraph in the Explanatory Notes gives powers to the health authorities to employ people on such terms as they think fit. The sentence breaks off and this is added:

    "but subject to regulations or directions by the Secretary of State or the National Assembly for Wales".

What on earth is the good of saying, "They can do what they like as long as they agree with me"? That is what the Secretary of State is saying. There is no point in doing that. All of us understand perfectly that neither the primary care trusts nor the NHS trusts could possibly act in the matter of salaries and awards without the consent and agreement of the Secretary of

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State. Why, in the name of conscience, do the Government not say so, instead of giving us all this flannel?

Baroness Cumberlege: Will the Minister elucidate one point for me? In dealing with Clause 6, the Explanatory Notes state:

    "The NHS Plan commits to modernisation of the NHS Pay system to deliver better, fairer awards for staff".

The Minister will remember that during his distinguished career in the NHS we saw the rise of the pay review bodies. They were introduced because staff felt that the awards they were receiving were not fair. They felt that they needed an independent body which would assess their work and make recommendations about their pay and conditions.

Where in these provisions do the pay review bodies appear? Will the Secretary of State take into account their recommendations and will he either overrule them or agree with them?

A great benefit of the pay review bodies is that they take evidence from everyone concerned and it is published. Everyone in the NHS knows what is happening. However, the Explanatory Note states:

    "Before making any such regulations the Secretary of State . . . would be required to consult representative bodies".

Does that mean that he will take evidence in the same way and will that evidence be published? If not, how do we know on what basis the Secretary of State is making the decisions?

Lord Hunt of Kings Heath: We return to the debate which has run through all our discussions in Committee; that is, the balance between national determination in relation to the NHS and local freedom of action for NHS employers.

I was interested in the noble Lord's analysis of efforts made by previous Ministers to deal with pay, staff and recruitment in the NHS. Looking back over 52 years of the NHS, we see that during most of its life a centralised system of pay determination was undertaken through the Whitley councils and latterly through pay review bodies in relation to doctors, nurses, midwives and health visitors. There was little discretion at local level and that became frustrating for local employers.

In response to that, the previous government introduced local pay but in the end that was not successful. First, it is interesting to note that, although most trusts introduced local contracts of employment, the vast majority of those contracts simply mirrored national agreements. Therefore, although the procedure could be defined as local pay determination, in practice it was still local administration of national agreements.

Secondly, a wholesale translation of decisions on pay to local level ignores the fact that the NHS is a national service. Often, as regards the group of staff we are seeking to attract, there is a finite number of people whose sole employment is within the NHS. In those circumstances, it does not make sense to have a free-for-all at local level.

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Thirdly, the failure of local pay determination, as the previous government tried to introduce it, was also due to the fact that those in the NHS never wanted it and never accepted it. There were always problems when not only the workforce but managers were not signed up to the devolvement.

We are trying to get the balance right.

4.15 p.m.

Lord Peyton of Yeovil: We can all recall and remind ourselves of past failures and shortcomings. However, I am asking the Minister to enlighten me on how the Secretary of State will improve on matters with his interventions. What magical balm will he breathe over these awkward problems?

Lord Hunt of Kings Heath: I was just coming to that. We were faced with a local pay system which was not working, disparate employment practices and an inflexible structure at national level. For example, even as regards Whitley contracts which are agreed nationally, there are large variations in payments between different staff groups for, say, working unsocial hours and overtime rates. That makes it difficult at local level to introduce team working and to break down barriers between professions.

In answer to the noble Lord, Lord Peyton, in discussions with staff organisations we are proposing to get the balance right between the national framework for employment, which the clause will help ensure is followed in every NHS trust, and the local flexibility needed by individual employers in the NHS. For instance, if the current negotiations are successfully concluded, we will give NHS trusts local flexibility over defining the skills and knowledge needed to do particular jobs, but a national framework for core skills and knowledge applicable to all staff in similar jobs. Again, we would give trusts the freedom to determine the working patterns which they need to deliver services, but a consistent and simplified framework for rewarding staff whose working patterns are particularly demanding.

Returning to what the noble Lord, Lord Peyton, said, it is not the intention to regulate for everything that must be done at local level. That is why the Bill allows for trusts to retain their existing freedoms to decide whom to employ and to reach local agreement about terms in the areas where regulations and direction have not been made.

Most NHS terms and conditions are already determined nationally for most staff, and have been under successive administrations. In the light of that, many employers have already indicated their desire for an approach to contracts that is somewhere between purely national and purely local by developing what they describe as hybrid contracts. That would include some local elements but also replicate or import many of the terms and conditions in national contracts.

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The clause seeks to develop that intermediate approach further by defining a national framework where that is to the advantage of the NHS nationally, leaving other matters to local employers where there is advantage in so doing. A good example of that is in job evaluation. Under the current national system, jobs are defined centrally and pay is determined centrally. Under the new system currently under negotiation, jobs can be defined locally. If a trust identified the need for someone who combines skills for different occupational areas, it would be able to devise such a job. It would not need to have a central edict telling it how to do it.

I say to the noble Earl, Lord Howe, that in determining pay, a trust would also have the facility to make allowance for labour market shortages. However, the long-run basic pay for the post will need to be determined by a nationally agreed job evaluation system in order to ensure consistency with equal pay principles and thus protect the NHS from subsequent equal pay claims.

I accept that there will always be debates about where the balance between national and local rests, but I do not believe that it detracts from the principle of trying to get local flexibility. However, where national guidance and direction is required, the procedure will enable that to happen.

As regards the points raised by the noble Baroness, Lady Cumberlege, about pay review bodies, the position remains the same. It is the job of the independent pay review bodies to make recommendations. It is then up to the Government whether or not to accept them. I believe that the record of the current Government in accepting the recommendations of pay review bodies is absolutely excellent, in sharp contrast to previous efforts where phasing was introduced in providing awards. That was a very demoralising factor for NHS staff.

In the end, no one can pretend that to devise a pay system which meets everyone's desire is easy. As to that, I accept the strictures of the noble Lord, Lord Peyton. But where we can make progress on agreements with staff organisations at national level, which in the main allow for a national framework that is put in place locally, we need the powers provided in the Bill.

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