Very senior NHS managers will receive a 3 per cent pay increase after the government accepted the recommendations of the senior salaries review board, which found “well-founded concerns about possible loss of leadership capacity”.
The government had not budgeted for an increase in VSM pay during 2022-23 for the second year in a row.
However, after undertaking an in-depth review, the SSRB concluded “that another pay pause this year or an unduly low settlement would be inappropriate”.
The SSRB recommendations, which the government has accepted, include “a general pay increase of 3 per cent” for VSMs and those executive senior managers (ESMs) working in the Department of Health and Social Care, NHS England and other arm’s length bodies.
A further 0.5 per cent will be awarded “to ameliorate the erosion of the differential with the top of Agenda for Change (AfC) band 9 (which was exacerbated yet further last year because of the zero pay increase for senior leaders)”.
The pay awards are to be back dated to 1 April.
The unbudgeted rises will have to be paid from existing NHS resources, as is the case with much of the increases given to other staff.
The SSRB said “the importance of effective senior leadership has been reinforced” by both the pandemic and the challenges of moving to system working brought in by the integrated care system reforms.
It commented: “The senior cadre needs to be increasingly adept at managing complex, large-scale change, often across organisational boundaries, to deliver programmes of improvements in population health and reduce health inequity.”
The stress of taking on these challenges and leading the service through the pandemic has taken its toll, suggested the SSRB.
“The results of the [NHS] staff survey published in March 2022 indicate a significant deterioration in morale across the NHS and ALBs. While not an identifiable group within the survey, we think it likely that this deterioration affects senior leaders too. Indeed, this was evident in the discussions we held with the members of our remit group [of VSMs].”
Pensions were also a significant concern, the SSRB found.
“In our discussion groups, we heard strongly felt discontent about pension taxation. Exposure to very large annual and lifetime allowance tax bills, particularly on promotion to ESM or VSM, means that, despite the excellent NHS pension scheme, pensions can be a source of resentment for many health leaders. Fewer than half of the highest-paid VSMs are members of the NHS pension scheme.”
The SSRB continued: “Corrective action is needed. This should include ensuring that thorough, accurate and timely advice is available to health leaders, particularly when considering promotion opportunities.”
All of the above led the SSRB to conclude “there are well-founded concerns about possible loss of leadership capacity. In its evidence, NHSE identified a risk that the extraordinary demands of the last two years may prompt a loss of many senior managers.”
Government’s change of heart
In its submission to the SSRB, published in February, DHSC said it wanted to hold down pay for VSMs in 2022-23, adding there was “extremely limited room for any further investment in pay and therefore… financial restraint on pay is needed”.
It continued: “Any pay recommendation for this [senior] workforce [would] need to be absorbed within existing budgets. To put this into context, each additional 1 per cent of pay for the [very senior] workforce costs around £6m per year, allowing for the full system costs.”
However, in a parliamentary written statement on Tuesday, new health and social care secretary Steve Barclay said: “In written and oral evidence to the pay review bodies, the government set out what was affordable within the NHS’s Spending Review settlement. The pay review bodies have recommended pay awards above this level.
“This government is committed to living within its means and delivering value for the taxpayer, and therefore we are reprioritising within existing departmental funding whilst minimising the impact on frontline services.”
There are approximately 2,500 VSMs and ESMs working across the health service.
The SSRB’s review revealed the estimated total pay bill for VSMs (excluding employer national insurance and pension contributions) is about £286m. The ESM pay bill is estimated at almost £56m.
It found the average basic pay for an ESM in 2021-22 was £125,285 (down 0.1 per cent on 2020-21) and the average total pay was £126,390 (down 0.4 per cent). This indicates that variable pay and allowances account for around 1 per cent of the overall package. None of the ESMs was subject to earn-back.
Average VSM basic pay was £135,868 per person or £140,531 full-time equivalent in June 2021. Additional payments added 6.1 per cent to VSM basic pay. The SSRB said “these were most likely to be payments for additional activity and medical awards (both paid to medical directors) or ‘local payments’.”