NHS chief executive pay has jumped by 4.5%

The basic pay of NHS chief executives has jumped by 4.5%, with median earnings now more than £150,000, research revealed today.

A study of boardroom pay in the health service by pay analysts Incomes Data Services also found a widening wage gap between foundation and non-foundation bosses.

Around one in eight non-medical chiefs and seven out of 10 medical directors in England earned more than £150,000 last year, according to IDS, which studied accounts for the year to March 2010.

The basic salary of non-medical chief executives in the NHS increased by an average of 4.5%, three times higher than the Department of health's pay guidance rise of 1.5%.

Steve Tatton of IDS said: "For those wanting to see NHS directors' pay curbed, our latest pay findings may come as a disappointment.

"The Government has stressed the importance of senior staff in the public sector showing leadership in the exercise of pay restraint in the current economic climate.

"With salary rises running at these levels, such restraint so far does not seem to have been a feature of boardroom pay deliberations, especially in foundation trusts.

"The Government wants to bear down on senior executive pay in the public sector, yet it also wants to see decisions made locally without interference from central authorities. The issue for NHS organisations is will they be free to pay their senior executives what they decide is necessary or will they have to follow externally imposed pay restraints?"

Median total earnings of chief executives in foundation trusts was £164,500 compared to £152,500 for those in non-foundation trusts, the report said.

Foundation trusts have considerably more independence over the level of remuneration awarded to their executives, whereas others such as primary care and ambulance trusts are governed by prescribed guidelines determined by the Department of Health, IDS said.

The study also found that turnover in non-foundation trust boardrooms increased from 17% to 24% in the year to March 2010 and from 14% to 21% for foundation trusts.

A Health Department spokesman said: "Quality is at the heart of everything the NHS does, and this will only happen with the best possible leadership.

"Leadership has been vital to the NHS's strong performance in recent years and there is continuing need for high quality leaders and administrators across the NHS. Very senior managers play vital roles in the success of the NHS, and generally provide very good value for money.

"NHS senior managers whose pay falls within the national framework received no uplift to basic pay for the 2010/11 financial year, and pay levels will be frozen for a further two years from April 2011."

David Stout, the NHS Confederation's deputy chief executive, said: "NHS organisations are large and complex in nature and require the right managerial skills to be led effectively. A large city hospital could have a budget of between £500 million and £1 billion and employ as many as 10,000 staff - comparable to many FTSE 250 companies.

"Because of the challenging nature of a chief executive's role, NHS boards must consider a range of factors, including pay, to encourage the best candidates in to these positions.

"The NHS is looking to involve more clinical staff in top management positions. Given that a number of hospital doctors will be paid more than NHS chief executives, this factor must be taken into consideration when making a decision on pay.

"On the issue of board level change, most NHS organisations will have a regular turnover of board members and this year's rise may be as a result of a greater number of directors' tenure coming to an end.

"The NHS has to make £15-20 billion of savings over the next five years while also going through large scale system reform. This cannot be achieved without high-quality management.

"Despite this, all NHS organisations' remuneration committees have a responsibility to taxpayers to ensure that any decisions taken about senior management pay are wholly transparent and publicly justifiable."

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