Report looks at NHS pay

• Report: NHS pay modernisation in England: Agenda for Change
• Public Accounts Committee

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

"Agenda for Change, the major programme for modernising and simplifying the pay and conditions of over a million NHS staff, was implemented in only two years, between December 2004 and December 2006. But, since then, the promised new and more effective ways in which staff were going to work have yet to emerge.

"There is also no evidence of the increased productivity and other savings in the NHS that were going to be achieved. The Department of Health actually did not require Trusts to measure productivity improvements and other benefits. What evidence there is, derived from Office of National Statistics figures, suggests, however, that the productivity of the NHS fell by 2.5 per cent a year on average between 2001 and 2005, although, since then, there has been a slight improvement. The substantial growth in the amount of healthcare provided was outstripped by the even faster growth in NHS staffing and resources.

"A central part of Agenda for Change, the Knowledge and Skills Framework, is supposed to generate better and more flexible working by staff, to the benefit of patients. But the Framework has been relaunched twice; and, by autumn 2008, nearly a half of staff had not been given the required annual knowledge and skills review.

"It is not known whether the Agenda for Change programme has generated the predicted £1.3 billion savings. That makes it all the more incumbent on the Department to explain to us how the programme is going to support the £15 billion of efficiency improvements in the NHS planned for the next three years."

Mr Leigh was speaking as the Committee published its 29th report of this Session which, on the basis of evidence from the NHS and the Department of Health (the Department), examined the benefits resulting from Agenda for Change, and the implementation of the Knowledge and Skills Framework across the NHS.

Agenda for Change, the pay modernisation programme for 1.1 million NHS staff in England, representing a pay bill of £28 billion in 2007–08, was implemented between December 2004 and December 2006. It covered all NHS staff, except doctors, dentists and senior managers, who were subject to separate pay modernisation programmes. Agenda for Change introduced a job evaluation scheme and harmonised employment terms and conditions for the multitude of jobs within the NHS. A key part of the programme is a process for encouraging staff development and improving staff performance known as the Knowledge and Skills Framework.

Agenda for Change was expected to bring about new ways of working which would contribute to improved patient care and to more efficient delivery of services. In its business case to the Treasury, the Department predicted that Agenda for Change would bring about total savings of £1.3 billion over the first five years. These were to come from improvements in productivity of 1.1 per cent –1.5 per cent a year, reductions in equal pay claims, reduced use of agency staff and more controllable pay costs.

The Department and NHS Trusts did not establish ways of measuring the effects of Agenda for Change and there is no active benefits realisation plan. The NHS pay bill for the staff employed on Agenda for Change terms and conditions of service has risen by 5.2 per cent a year on average since 2004–05 while productivity fell by 2.5 per cent a year on average between 2001 and 2005. By autumn 2008 (nearly two years after Trusts had completed transferring staff to Agenda for Change terms and conditions and pay rates) only 54 per cent of staff had had a knowledge and skills review.