NHS pay review body: twenty-sixth report 2012 - Official Documents

3.88 The Chief Secretary to the Treasury’s letter only covered these four factors and we
therefore now turn to the relevant remaining factors in our standing terms of reference
not covered by the specific remit. A significant influencing factor within our deliberations
is the current position of recruitment and retention of AfC staff. We note that nonmedical
workforce numbers are reducing slightly, that generally supply and demand
for non-medical staff is broadly in balance, and that turnover among AfC staff is low.
Although there were concerns in the evidence about the pressures on NHS staff, there
was no evidence presented by the parties on whether these are feeding through to
any major recruitment and retention difficulties. We have commented throughout this
report on how the absence of vacancy data in England has constrained our assessment.
However, from the available evidence we continue to conclude that overall for AfC staff
recruitment is healthy and retention remains stable.
3.89 NHS recruitment and retention must be seen in the light of prevailing economic
circumstances. Economic expectations have been downgraded for 2012. While there has
been some growth in private sector employment, reductions have been experienced in
public sector employment. We note that further spending cuts have increased the OBR’s
estimates that public sector employment will reduce by 710,000 between 2011 and
2017. It should also be noted that unemployment, after being stable between mid-2009
and mid-2011, has risen significantly to 8.3% – the highest level since August 1994.
3.90 Also in relation to NHS recruitment and retention, we assess the position of AfC staff
earnings in the UK against employees across the economy. We observe that, in 2011,
AfC staff had higher median earnings than the private sector but slightly lower median
earnings than the wider public sector. Growth in the median earnings of AfC staff
between 2010 and 2011 was higher than the private sector and the wider public
sector. However, pay settlements in 2011 for AfC staff were substantially lower than the
economy-wide average but in line with the wider public sector. More generally looking
at average weekly earnings, the private sector had seen modest growth at 2.0% for the
three months to November 2011 with public sector earnings growth (excluding the
nationalised banks) at 1.4% over the same period. We note that median pay settlements
were around 2.5% throughout 2011.
3.91 We have commented before that we have sympathy with the Staff Side’s argument on
the impact of the recent period of high inflation rates, particularly on the lower paid, and
that staff have had a reduction in real wages. However, this concern is not unique to NHS
staff. We would also point out that our recommendations are not linked to inflation as it
is only one of a range of our considerations. In this respect, we note that CPI inflation had
fallen to 4.2% by December 2011 and RPI inflation to 4.8% with forecasts suggesting
further falls in both measures over the course of 2012. These inflation rates do, however,
remain in excess of those forecast at the time the UK Government announced its public
sector pay policy in June 2010 which only aimed to protect those public sector workers
earning £21,000 or less.
3.92 Finally, we comment in more depth on staff morale and motivation in relation to the
whole remit group in Chapter 5. We note the Staff Side’s concerns over a range of
influences on morale and motivation including budget reductions, job security, impacts
on workloads from vacancy freezes or delayed recruitment, service reconfigurations
and workforce restructuring, pension changes and the NHS reforms in England. In this
context, the Staff Side told us that their surveys were beginning to show evidence of
declining morale. We will continue to monitor in future pay rounds.
3.93 Judged against all the required factors, our overall assessment is that there is no case to
justify any increase above a flat rate £250 for those AfC staff earning £21,000 or less.
Our deliberations must be seen in the light of constraints from the four Governments’
public sector pay policies, affordability concerns within the NHS, healthy recruitment and
stable retention for AfC staff, public and private sector settlements, comparisons of AfC
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