Committee of Public Accounts Press Notice

PAY MODERNISATION: A NEW CONTRACT FOR NHS CONSULTANTS IN ENGLAND

Publication of 59th Report 2006-07

Edward Leigh MP, Chairman of the Committee of Public Accounts, today said:

“Anyone who is puzzled how large quantities of money can be poured into the NHS to so little effect should examine the example of the new contract for consultants. The plain fact is that the Department of Health greatly increased consultants’ salaries (on average by over a quarter) without securing any extra productivity from them. Worse than that: their productivity has actually decreased, with consultants spending less time working for the NHS and each one carrying out less activity.

“The basic aims of the new pay deal were commendable: to make NHS work more attractive to consultants and private practice less so; and to give NHS managers more control over the consultants’  working week - and to increase the amount of time they spend on directly caring for patients. In the event, the introduction of the deal was rushed, with NHS managers left in the dark by the Department of Health over what it wanted from the contract.

“The Department pushed to get the contract in place at all costs and many managers agreed hours of work with their consultants which the trusts could not afford. The point was lost that the deal was to deliver improved and new services for patients and not entrench existing ways of working.

“NHS consultants must now justify their big jump in pay: by giving more support to the redesign of services, and by changing their working culture. In so doing they can perhaps deliver that increase in productivity which was the point of the whole exercise. But with the extra cash now in their pockets, the incentive for changing how they work has disappeared.”

Mr Leigh was speaking as the Committee published its 59th report of this Session which, on the basis of evidence from Department of Health and the NHS, examined the contract negotiation; the cost implications; the effectiveness of the implementation process; and the extent to which the expected benefits for patients and the NHS had been realised.

In October 2003, the Department of Health agreed a new national contract for NHS medical consultants in England. This was the first major revision of the consultant contract for over fifty years. The need for a new contract was outlined in the NHS Plan 2000, as part of a wider pay modernisation agenda aimed at obtaining more, better paid staff, working differently. There was also a general consensus between employers, consultants and the Government that a new contract was needed. However, it took three years of negotiations between representatives of the UK Health Departments, the NHS Confederation and the British Medical Association before the terms and conditions were agreed. 

The Department intended that the new contract would benefit consultants through better pay and increased recognition of their NHS work. At the same time, employers would get greater control and management of their consultants’ workload, and patients would benefit from a more flexible and responsive service. The Department hoped to reward those consultants who made the biggest contribution to NHS work and reduce the average number of hours worked per consultant, in exchange for increased productivity. These benefits were dependent on the introduction of a mandatory and rigorous process of workload planning for individual consultants (job planning).

The implementation of the contract was rushed and the NHS has yet to see many of the intended benefits. Over the first three years, the Department allocated an additional £715 million to NHS trusts which was £150 million more than originally estimated as necessary to fund the contract. NHS trusts still believe, however, that the contract has been under-funded. Although consultants’ pay has, on average, increased by 27% (from £86,746 to £109,974) and their working hours have decreased, there are, as yet, no measurable improvements in productivity.

The Department has succeeded in increasing the number of consultants working in the NHS, from 28,750 in October 2003 to 31,990 by September 2005, although there was an increasing trend before the introduction of the contract. The number of hours consultants work in private practice has neither increased nor significantly decreased. Other intended benefits have not been realised: for example the proportion of time consultants spend on direct clinical care is less than intended, and the contract has not been used to extend and develop new services for patients.