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Leading workforce thinking 2010

Budget 2010 and the NHS workforce 

28/06/2010 
The two-year pay freeze and reviews into how to limit the pay and pensions budgets for the public sector, announced in the Budget on 22 June, will have implications for the NHS workforce.

Pound coinsIn its emergency Budget, the Government announced a two-year pay freeze for public sector workers and reviews into how to limit the pay and pensions budgets for the public sector.

The commitment to ensure the NHS receives real terms increases in its funding remains, however, the scale of efficiencies required coupled with rising demand for health services means fundamental changes are needed to the way the NHS works. This will inevitably have repercussions on the workforce.

NHS Employers has produced a set of FAQs to help NHS trusts answer questions from staff. As the situation develops we will be keeping NHS organisations us to date through this website and our weekly NHS Workforce bulletin.

Does the public sector pay freeze apply to the NHS?

The two-year public sector pay freeze affects staff on Agenda for Change, doctors, dentists, GPs and those on senior salaries. There is, however, a proposed increase for those earning under £21,000 per annum. The pay freeze will take effect from 1 April 2011.

What does this mean for incremental annual step increases under Agenda for Change?

The Chancellor’s statement does not affect entitlement to increments as part of Agenda for Change for staff who successfully develop their skills and experience. 

What about staff who earn below £21,000 per annum?

The Chancellor has said these staff will receive a flat rate increase of at least £250 in each year of the pay freeze. How this will be awarded is not yet clear but we will update organisations as soon as we can.

Will NHS Employers still be consulting with trusts on pay and submitting evidence to the pay review bodies?

It is currently unclear what the role of the pay review bodies will be. However, we will continue to consult widely with NHS organisations on pay-related issues during the summer and keep them informed as changes are announced. We will be feeding employers’ views into any reviews and consultations on pay where they will be affected.

What does this mean for Clinical Excellence Awards?

There is already a freeze in place on the cash amounts of Clinical Excellence Awards for 2010/11, which was recommended by the Doctors’ and Dentists’ Pay Review Body earlier this year. That freeze will continue for 2011/12 and 2012/13. The Government will consider new awards, in the light of its wider approach to public sector pay. NHS Employers will update when further information is available.

Will the plan to increase the state pension age affect people on NHS pensions?

The state pension age is the age at which an individual can draw their state pension. The NHS Pension Scheme is completely separate from the state pension arrangements. This means that as well as their NHS pension, NHS Pension Scheme members will normally get a separate basic state pension. The Government is currently reviewing when it will raise the state pension age to 66. Find out more on the proposed changes.

How will phasing out the Default Retirement Age affect employers?

The Government is reviewing the default retirement age of 65 – the age at which employers can legally insist employees retire from their work – and is set to consult on it shortly. Our consultation with employers on the default retirement age earlier this year revealed that opinion was divided on whether the default retirement age should be phased out. Some employers consider it outdated but others consider it a helpful marker in planning their workforce. NHS Employers will work with NHS organisations and feed in their views to the new consultation.

Will the NHS Pension Scheme be included in the pension review?

Lord John Hutton will be chairing the Independent Public Services Pensions Commission which will undertake a fundamental structural review of public service pension provision. This review will look at the NHS Pension Scheme alongside other public service pension schemes. The Commission will produce an interim report in September 2010 considering the case for short-term savings within the comprehensive spending review period. Find out more  the pension review.

How will this affect the NHS Pension Choice exercise and the current review process?

Your NHS Pension Choice is an exercise to give all eligible members of the NHS Pension Scheme a one-off option to transfer all of their membership from the 1995 Section of the scheme into the 2008 Section if they wish. We do not expect the commission’s work to impact on the NHS Pension Choice exercise, which is set to be completed in March 2012. Find out more about the NHS Pension Choice exercise.

At the same time, the NHS Pension Scheme is undergoing its four-yearly review, any changes from which would impact on the scheme from 2012. We are working closely with the Department of Health to better understand the situation and will update employers as soon as we can. 

When will we find out more about the Government’s plans?

The Government is expected to publish a white paper in July, which will set out substantial changes for the NHS. The Comprehensive Spending Review is scheduled for Wednesday 20 October and this will contain more detail on departmental spending. Keep an eye on our latest news page for details as they emerge.

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