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National Audit Office Press Notice

Pay Modernisation: A new contract for NHS consultants in England

THIS STATEMENT IS NOT FOR PUBLICATION OR BROADCAST BEFORE 0001 HOURS ON THURSDAY 19 APRIL 2007

Report by the Comptroller and Auditor General
HC 335 2006-2007
19 April 2007
ISBN: 9780102944549
Price: £13.50

Under the new NHS consultants’ contract, consultants in England are earning on average 25 per cent more than three years ago but are working the same number of hours or less. Whilst the contract has the potential to improve management of consultant time it has yet to deliver the full value for money to the NHS and the public that the Department expected.

The Department initially provided £565 million to the NHS to fund the new consultant contract in the first three years. The Department acknowledged in 2005 that it had underestimated the cost of the new contract by £150 million and increased its allocation to NHS trusts accordingly.

The new NHS consultants’ contract, implemented in 2003, aims to improve the working lives of consultants while giving the NHS more control over its medical professionals. The ultimate goal is to improve the quality and ease of access to care for patients.

Today’s report looked at the development, implementation and outcomes of the new contract. It also examined whether the public and the NHS are receiving the expected benefits of the contract. The report concluded that the contract is not yet delivering the value for money to the NHS and patients that was expected from it.

There was a compelling need for the new contract, the potential benefits of which are highlighted in today’s report. Since the introduction of the contract, the number of consultants working in the NHS has continued to increase. There is greater transparency about the hours that consultants work in the NHS and the duties they undertake and an increased recognition about the amount of work carried out by consultants. On average the amount of private practice carried out by consultants has reduced slightly.

Consultants’ pay has increased significantly as a result of the new contract. In 2005 - 06 the average annual pay of consultants was £110,000, an increase of over a quarter in three years. But the average number of hours that consultants reported they worked for the NHS had decreased by 1.4 hours a week, from 51.6 to 50.2 hours.

Consultants also reported that they were providing less direct clinical care than before the new contract. And although the number of consultants working in the NHS increased by 11.3 per cent in the two years following contract agreement, the amount of consultant-led activity had increased by only four per cent.

Today’s report found that, in negotiating the contract, the Department did not collect sufficiently robust evidence on the actual numbers of hours worked by consultants in the NHS. As a result workloads were underestimated, undermining the Department’s ability to cost the new contract accurately.

In addition, most trusts did not set cost boundaries when negotiating consultant job plans under the new contract. Therefore they agreed more hours than they had budgeted for, leading to cost-overruns. In the NAO’s survey 84 per cent of trust chief executives believed that the contract was not fully funded.

Among the NAO’s recommendations are that any new policies from the Department should be based on accurate assessment of the current situation, all possible scenarios should be fully financially modelled before they are implemented, and their purpose and detail communicated to the NHS in a timely manner. And NHS trusts should carry out a full local assessment of what is needed from consultants, in terms of levels of activity and patient outcomes, bounded by a ‘cost envelope’.

Sir John Bourn, head of the NAO, said today:

“Consultants are central to the work of our national health service and deserve to be paid properly for the work that they do. However, the new contract was introduced to benefit not only consultants, but patients and the health service in general. Although a new contract was needed it is regrettable that the costs are higher than expected and that we are not yet seeing any clear evidence of improvements in productivity or services for patients.
“It is important that trusts are clearer about what they need from their consultants and plan within their resources”
 

Notes for Editors:

  1. Press notices and reports are available from the date of publication on the NAO website, which is at www.nao.org.uk. Hard copies can be obtained from The Stationery Office on 0845 702 3474.
     
  2. The Comptroller and Auditor General, Sir John Bourn, is the head of the National Audit Office which employs some 850 staff. He and the NAO are totally independent of Government. He certifies the accounts of all Government departments and a wide range of other public sector bodies; and he has statutory authority to report to Parliament on the economy, efficiency and effectiveness with which departments and other bodies have used their resources.
     

Press Notice 23/07
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