Public Sector Management: Putting your trust in local pay-bargaining schemes: Paul Gosling reports on the devolution of wages and conditions in the health service

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News that the Government is apparently considering a 1.5 to 2 per cent pay limit for the 1994/5 year, to follow that of 1.5 per cent for this coming financial year, has been met with anger by the health service unions. Cohse said its members would be unlikely to accept a further year of below-inflation pay settlements, warning that industrial action would be likely.

The Government is caught in a double bind as it wants to restrict public sector pay settlements, yet is keen to promote devolved management, such as in NHS trust hospitals. Many trusts say that it is time to break away from the national collective bargaining structures of the Whitley council and pay-review bodies. By April, around 70 per cent of hospitals will have trust status, which is expected to rise to 95 per cent by the year after.

As yet, only a minority of hospitals has developed local terms and conditions, but the number is expected to grow rapidly. David Knowles, chairman of the Institute of Health Service Management, said: 'We welcome the notion of flexibility and it is a necessary consequence of trusts and the internal market. Once trusts that have adopted it are seen to have an advantage, others will follow.'

Lucille Campey, chief executive of the NHS Trust Federation, is certain that despite the slow start a momentum will develop. 'The real benefit - the cost benefit - of the reforms, is to allow trusts to make the best use of their staff, and to introduce sensible working practices.' Giving trusts operating flexibility is the key to achieving increased productivity on existing resources, she believes.

Those trusts that have moved towards local agreements have differing approaches to the unions. Northumbria Ambulance trust has withdrawn its recognition of Cohse and Nupe, which previously represented 90 per cent of staff, and instead imposed a single-union deal with the Association of Professional Ambulance Personnel.

Guy's, Lewisham and Homewood trusts, however, have reached agreements with unions which benefit their lowest-paid employees.

Roy Lilley, Chairman of Homewood, said: 'We have our own pay and reward strategy, and our own staff side and management forum. We went to the forum saying we wanted to pay low-paid staff pounds 10 a week more, and asked the staff side how we should do it. They said we could achieve it by banning overtime, which we did, and paid the low-paid an extra pounds 12 a week.'

Homewood decided not to employ management consultants to draw up their remuneration system. Mr Lilley explained: 'We developed our own systems, and we'll show any trusts how to do it if they pay us. The NHS has wasted more money on consultants than on computing, and that's saying something.'

One of the two leading consultancies advising several of the trusts is KPMG Peat Marwick. They have developed a new job-evaluation package that places all staff on a single spinal system.

Alan Gibbons, a partner, said: 'A number of trusts have engaged us to look at senior management first, and then to cascade down. Some like performance-related pay, but Institute of Personnel Management research suggests there is little evidence that it works.'

KPMG claims that its computerised system has the co-operation of the unions and properly values caring skills, but Nupe disputes this. National officer Malcolm Wing complained: 'Job evaluation schemes are not neutral, they are designed to produce a particular outcome . . . Our concern is that caring skills are not being properly recognised.'

Nupe's concern in the shorter term is the move towards short-term contracts and the de-skilling of some jobs. Mr Wing explained: 'The only real push at the moment is with health care assistants as support workers to nurses. The pay levels generally are not worse, but the conditions are. They are less likely to get extra pay for weekends, extra shifts, evenings. We are also concerned about the casualisation agenda. More staff are placed on short-term contracts because of the volatility of the internal market.'

Staff who have transferred to a trust from a regional health authority have their conditions of employment protected, unless they volunteer to enter into new agreements. The exception to this is workers not covered by employment protection legislation, who can legitimately be required to accept new contracts.

The Department of Health appears to have given encouragement to trusts to take advantage of local labour market conditions in a 1990 circular. Referring to health care assistants, it recognised that support staff were 'often . . . paid on inappropriate grades' and 'there is, therefore, a clear case for local determination of pay and conditions to suit work done and to reflect the local labour market'.

A report by Professor Roger Dyson of Keele University, which has also been circulated by the Department of Health, has argued strongly for de- skilling many jobs, extending competitive tendering for non-caring responsibilities such as portering and transport, transferring large numbers of staff onto self-employed status and replacing collective bargaining with personal contracts.

It is this longer-term agenda that played a strong part in the views taken by the House of Commons' Health Committee's report on NHS Trusts, published last November. It recognised the potential problems in the dismantling of a national framework for fixing pay and conditions, and intends regularly to review the effect of the new arrangements.

(Photograph omitted)