A Strategic Pay Taskforce comprising representatives from the trade unions, NHS Wales employers and Welsh Government met through 2013 and early 2014 to consider the way forward with NHS Terms and Conditions of Service. The aim being to explore those areas which might be amended so as to support an overall reduction in cost associated with pay in order to reduce some of the significant financial pressure facing the NHS in Wales. Following consultation changes were ratified by the Welsh Partnership Forum on 1st May 2014 and following further discussion, regarding points of associated detail, were agreed to apply from 1st January 2015 to the 31st December 2017.
The partnership agreement stated that “partnership discussions will commence in the autumn of 2016 to consider the prevailing financial climate and operational requirements in NHS Wales at that time, so as to consider the requirement for the continuation or otherwise of the agreement or elements of it”. At the Welsh Partnership Forum held on 8th December 2016 it was formally agreed that a partnership Pay and Terms and Conditions sub group of the WPF would be convened to discuss the arrangements following the end of the three year agreement.
This paper sets out the culmination of six partnership sub group meetings held between March and September 2017. The discussions were conducted in a genuine spirit of partnership with the aim of reaching an agreement which respectfully acknowledged and recognised the individual positions of all parties in working collaboratively to develop solutions to the prevailing financial climate and operational requirements of NHS Wales. Through the discussions a number of additional areas were costed and considered and subsequently withdrawn following a feasibility assessment by both parties.
This document represents the agreed position of all parties. In reaching this agreement, the role which partnership working and collaboration makes to achieving and delivering appropriate workforce efficiencies was recognised and acknowledged.
2. Context and Financial Position
During the sub group discussions the “prevailing financial climate” was discussed. It was noted that the finance remains a significant challenge, if not more so than at the time the original agreement was reached. The Health Foundation’s report “The path to sustainability: Funding projections for the NHS in Wales to 2019/20 and 2030/31” noted that the “funding for the Welsh NHS is likely to fall as a share of GDP up to 2019/20 as the UK government’s priority is to reduce the national fiscal deficit. If the budget rises in line with plans for the English NHS (an average of 0.7% a year) there would be a funding gap of up to £700m by 2019/20. Closing this will require a combination of managing the national pay policy and additional efficiency growth of 1.5% a year, higher than the trend rate of 1% a year.”
The report added that “the Welsh NHS is still likely to be facing a funding gap of around £150m in 2019/20, assuming the budget does not rise faster than is planned for England. Living within its budget, while protecting the range and quality of services for patients, will therefore require the NHS to achieve additional efficiency growth.”
It is in this context that the service is seeking to increase efficiency growth to 1.5% a year, this is without the impact, in excess of £10 million per year, which has already been achieved through the previously agreed terms and conditions changes as well as £1.1 million savings from changes to Medical and Dental terms and conditions of service. If these changes weren’t to continue the service would need to look to recover the £10 million plus savings being generated by the terms and conditions changes on top of the need to deliver further significant efficiency savings.
It is in this context that the WPF sub group has taken forward its work.
3. Continued investment in the workforce
At the same time as savings from the three year agreement, noted above, have been delivered there has been and there continues to be investment in the workforce.
The Living Wage, introduced in 2015, has continued to be supported in each of the subsequent pay rounds with an investment of £2.9m in 2015/16 and £5.6m in 2016/17. The continued support for the Living Wage has resulted in a further investment of £4.1m in the 2017/18 financial year. This has brought an additional 654 staff onto the living wage which now stands at £8.45 per hour. In total the net effect is a recurrent £12.56 million per year in excess of the pay award increases.
Discussions have concluded with the Welsh Ambulance Services NHS Trust on the re-banding of the paramedic workforce from Band 5 to Band 6. This has now been formally agreed and approved by the Cabinet Secretary for Health, Social Service and Sport and has resulted in a required investment in the Paramedic workforce of circa £1.5m each year over the next 6 years (including 2017/18) and is profiled to be a full recurring investment of circa £9.5m per year by 2022/23, over and above the current cost base (at 2016/17 prices). On top of this a further £1.5m investment is required non-recurrently over this period for the implementation costs.
The investment in non-medical education and training for 2017/18 has been confirmed as increasing from £85m to £95m which includes the retention of the provision of the Bursary in 2017/18 for students studying in Wales. Coupled with support for students is the requirement to work in NHS Wales for 2 years following graduation. This is a positive message to students and supports their transition from study into employment. This is an investment in both the future and current workforce which also includes additional resource of £0.5m being invested in extended skills, advance practice and post-graduate programmes.
It is acknowledged that there have been further changes to policies agreed since 2014, resulting in savings and efficiencies for the service. In particular the agreement on the new Organisational Change Policy which included significant changes to the levels of pay protection and the establishment of an all Wales redeployment policy.
4. Actions to address high levels of locum and agency usage
Trade Unions expressed their concern regarding the high costs of agency and locums being used across NHS Wales. In noting these concerns, employers and Welsh Government were able to report that there had been significant developments in this area with the following measures having been or shortly to be introduced:
NHS Wales spent £77m on medical and dental agency locums in 2016/17. Whilst this figure includes cover for substantive vacancies there are opportunities to deliver significant reductions in expenditure in this area.
A control framework designed to support Health Boards and Trusts to reduce medical and dental agency and locum deployment and spend is to be introduced from 1st November 2017. Each Health Boards and Trust will be expected to make a reduction of 35% of their external agency spend over their costs in the previous financial year.
In addition, during November 2017 controls are to be introduced to ensure a consistent approach to internal locum ad hoc hours payments.
Capped rates and controls on “off contract” nursing agencies have been introduced during 2017 and costs in this area are expected to see a reduction in over £6million during this financial year.
Work on developing consistency and effectiveness of the operation of Bank Nurse arrangements across NHS Wales.
5. Agreed changes
In consideration of the above context the Pay and Terms and Conditions sub group of the WPF have agreed the following elements to support the challenging financial climate and operational requirements of NHS Wales and to underpin and strengthen partnership working.
Policy development and partnership working
It is recognised that there has been considerable progress in the development of workforce policies and procedures through the Welsh Partnership Forum but that there is always room for improvement, particularly if the approach to partnership working is strengthened. The WPF sub group have identified a number of areas where a focussed partnership approach could be utilised to ensure we are working together to secure optimal and effective use of resources. It was noted that these areas are focussed on efficiencies rather than cash releasing savings but that effectiveness in these areas would lead to overall qualitative improvements and support for staff.
It has been agreed that a structured programme of task and finish groups with clear outcomes will be established to address:
the operation of the Disciplinary Procedure to ensure that the processes and guidance in place when considering suspension are broadened to support re-deployment rather than suspension;
the support for internal investigation processes e.g. for Disciplinary and Dignity at Work matters, so as to ensure such investigations are progressed in a timescale which is sensitive to the individuals concerned and which supports all parties to move through the process without delay;
the development of a Retire and Return policy for NHS Wales, which facilitates the retention of skills;
the provision of support for the use of secondments and opportunities for career development where practicable and where possible utilising NHS Wales staff rather than external consultants/interims; and;
the wider inclusion of partnership representation and working on the approach being taken to Retention and the Staff Survey outcomes, to use the exit interviews/questionnaires as a learning process for NHS Wales.
The above will be managed through a number of task and finish groups which will be accountable to the Welsh Partnership Forum with agreed terms of reference, outcomes and timescales.
Pay during Sickness Absence
The sub-group considered the impact and implications of the changes to the pay during sickness absence and in particular the implications for staff on long term sickness absence. Employers acknowledged the TU position in relation to the ongoing dialogue regarding the “unintended consequences” of the changes to sickness absence arrangements and offered, to support the payment of unsocial hours for staff in receipt of half pay. This element of the previous agreement was explored further and it has been agreed extend this provision further and to vary the current agreement on the following basis:
Long term sickness absence – where an individual is on a continuous period of long term sickness absence in excess of 3 months, any allowances or payments linked to working patterns or additional work commitments will be paid for the remainder of the sickness absence episode.
Where an individual receives a diagnosis that they have a time specified terminal illness, any allowances or payments linked to working patterns or additional work commitments will be paid/backdated to the first day of sickness absence. This also supports NHS Wales’ commitment to the TUC “Dying to Work” campaign which all NHS Wales Health Boards and NHS Trusts have already agreed to sign up to.
For those staff whose absence is due to work-related injury or disease any allowances or payments linked to working patterns or additional work commitments will continue to be paid, subject to an authorisation and approval process. It has been recognised that these processes have often been slow to respond and to make decisions and Health Boards and NHS Trusts have agreed to work with TU partners both nationally and locally to ensure that these processes take place without delay and reach decisions in as short a time as is practicably possible.
For all other sickness absence, pay will continue to be paid at basic salary level, and will not include any allowances or payments linked to working patterns or additional work commitments. This does not apply however to staff on spine points 1 – 8 (i.e. up to £17,954) of the Agenda for Change pay structure.
If these changes are approved, Sections 2 (a) Maintaining Round the Clock Services and 14 Sickness Absence of the Handbook, will be amended to reflect these changes from 1st January 2018.
Pay Structure and Career Progression
The revised sections of the Handbook on Career and Pay Progression will remain in place. The main features of these sections are:
Progression through all incremental pay points in all pay bands will continue to be conditional on individuals demonstrating that they meet agreed performance requirements in line with the revised sections of the Handbook.
Staff will progress through their pay bands on an annual basis “provided their performance is satisfactory and they demonstrate the agreed knowledge and skills appropriate to that part of the pay band”.
For staff in bands 8C, 8D and 9, pay progression into the last two points in a band became annually earned, and only retained where the appropriate local level of performance is reached in a given year.
Annex X - Guidance on the Principles to be followed regarding Workforce Re-profiling will continue to apply in NHS Wales. This includes the need to follow the processes set out in the NHS Job Evaluation Handbook and the application of the Organisational Change Policy to protect staff in cases of redeployment into lower banded posts. This Annex emphasises the importance of local engagement, and in particular the need to follow the principles and procedures set out in the Job Evaluation handbook.
The arrangements for reimbursement of travel expenses in line with the HM Revenue and Customs (HMRC) Approved Mileage Allowance Payments (AMAP rates) will continue to apply. The AMAP rate is the rate which the tax office allows employers to reimburse their staff without incurring a tax or National Insurance liability. This set the business mileage rate at a specific level (currently 45 pence per mile (up to the first 10,000 miles)) and is a “local” all Wales agreement which replaced the business mileage rate and amended aspects of Section 17 of the handbook.
6. Further work
In reaching this agreement, it was noted the trade union partners had acknowledged that the ongoing discussions, in respect of what was described as the “unintended consequences” of the changes to sickness absence payments, would be considered as part of the final agreement. In recognition of this, employers offered to address this aspect of the changes and cover the associated costs of £0.6 million. The further changes which have been agreed have established an additional shortfall of £1.2 million for which there is no ongoing resource. It is noted that there are opportunities for efficiency savings within the “Policy development and partnership working” at section 4 i) above, however, whilst operational efficiencies will accrue from these changes, they won’t significantly close the financial gap. In acknowledging this, the TU partners have agreed to commit to continuing to work with employers and Welsh Government to explore further areas to release savings and to offset future expenditure.
In progressing this, Trade Union partners indicated that they would be prepared to consider and work with employers regarding any detailed options/areas put forward by employers to address the shortfall in savings.
All parties recognise the challenges being faced by public services and that the development of jointly agreed solutions and changes is the appropriate way to move forward.
The context of this new agreement has been set within the requirement to continue achieve significant savings within NHS Wales which has built on the learning from the changes applied from 1st January 2015 and in so doing has established a new agreement.
This agreement will be monitored on an ongoing basis by the Welsh Partnership Forum to ensure that its elements are applied and progressed in partnership