NHS employers warn George Osborne against imposing local pay rates

NHS employers warn George Osborne against imposing local pay rates:

Health managers say reforms could lead to staff shortages, low morale and worse patient care
The government faces another bruising dispute with the NHS if it pushes ahead with full-blown local pay bargaining for millions of public sector workers, after health employers warned it could lead to staff shortages, low morale and worse patient care.
Chancellor George Osborne confirmed in his budget statement on Wednesday that he wants to see public sector pay "more responsive to local pay rates", to help the private sector recruit and expand.
Unions have also criticised the proposals, but criticism from the biggest public sector employer group will be harder to brush aside.
In its submission to the official consultation on the scheme, the NHS Employers group, which represents more than 2,500 hospitals and other health service bodies employing more than 1 million NHS workers who would be affected by the changes, said that it did not support localised pay rates, but would like more flexibility to help recruit and retain staff in areas with higher costs of living, for example.
Among the problems highlighted by NHS Employers were difficulties hiring or keeping staff who could earn more in nearby areas. It said the changes could also lead to the NHS paying much more for staff in some areas, so increasing the total wage bill, and would add greatly to bureaucracy and administration, with hundreds if not thousands of different wage negotiations.
"Getting rewards wrong could have a significant impact on the quality of patient care and safety," the group said.
Instead, the organisation said that existing flexible terms, such as premiums for recruitment and retention in difficult areas and London weighting payments to compensate for higher housing costs in the capital, should be extended.
The National Union of Teachers, the country's largest teaching union, also warned that the plans would lead to "real teacher shortages" in areas where pay is dragged down.
The chancellor sent evidence to pay review bodies on Wednesday to make the case for moving to local pay rates. The document suggests a pay "premium" of about 8% currently exists for those working in the public sector compared with similar jobs in the private sector, and that the public sector "pays more than is necessary" to recruit, retain and motivate staff.
It goes on to say: "The evidence suggests that the quality of public services would directly benefit if public sector pay became more responsive to local labour markets. In places where private sector firms have to compete for workers with public sector employers offering a large pay premium, the introduction of more local, market facing pay could help private businesses, particularly in some sectors become more competitive and expand."
The Local Government Association, whose members represent another major segment of public sector employers, abandoned national pay bargaining 15 years ago.
The move was taken because some councils in south-east England were finding it hard to recruit staff in areas with relatively high costs of living. However it is understood that before the recession some councils had the opposite problem, of hiring or keeping hard-to-recruit groups like social workers in areas with lower pay scales. The Guardian