Written statement: NHS Very Senior Managers Pay Framework - May 15

Health Minister (Karin Smith): I am pleased to announce today the publication of the NHS Very Senior Managers (VSM) Pay Framework.

This Government's 10-year plan to reform the NHS will focus on three big shifts; from analogue to digital, hospital to community, and sickness to prevention. To do this, this Government believes that providers and Integrated Care Boards (ICBs) should be given greater freedom and flexibility to meet the needs of their patients and communities. We want to move to a system where freedom is the norm and central grip is the exception to challenge poor performance.

First class leadership will be essential in achieving this and we will need to recruit and retain the very best to realise our ambitions. Accordingly, it is vital that we ensure the way we reward our very senior managers (VSMs) reflects the challenges they face and the responsibilities they carry while ensuring that we act where performance falls below our expectations.

This new pay framework will support the changes that we need to see in the NHS through the government's Plan for Change, so we can deliver on the public's priorities to cut waiting lists for patients and drive-up standards across the NHS. It will bring together arrangements for trusts and ICBs, further driving consistency in the approach to pay across NHS organisations. In doing so, it removes the differentiation between different types of trusts and introduces pay benchmarks that account for organisational size and turnover more appropriately.

We need our very best managers to work in the most challenged NHS organisations to make the necessary improvements and turn them around. The new pay framework enables employers to apply a temporary increase to pay as a means of encouraging top talent to come and work in poorly performing organisations.

Across all ICBs and providers, employers will be able to reward the highest performing leaders with a bonus of up to 10% where they have demonstrated exceptional performance in, for example, cutting waiting times, managing finances or improving services for patients.

However, as the Secretary of State has made clear, there will be no more reward for failure in the NHS. Going forward, those very senior managers who are leading the poorest performing organisations will have their annual pay award withheld, with an exemption for those who have been newly appointed to turn things around.

The new pay framework will use the segmentation derived from the NHS Performance Assessment Framework (NPAF). The NPAF segments providers and ICBs ranging from segment 1 to 5 with 1 being the best performing, based on their performance against published metrics. From this year those VSMs in organisations in segment 5, the lowest performing, will not be eligible for pay uplifts unless an exemption applies.

By introducing a greater focus on performance, this new framework will ensure that pay is closely aligned with the delivery of outcomes and will incentivise improvements where these are needed most.

This government wants to see trusts and ICBs deliver more efficiency, ensuring patients get more for taxpayers' money being invested. NHS organisations will be accountable to the public on very senior managers' salaries, as we will be requiring them to explain their pay decisions in annual accounts and also submit an annual pay report to NHS England. The new framework will drive consistency of pay and ensure greater transparency.

The new VSM framework is part of a broader package of reforms to ensure we support and invest in NHS managers. This includes our commitments to introduce professional standards for, and regulating, NHS managers, and establishing a College of Executive and Clinical Leadership to help train and develop excellent NHS leaders.

We are determined to get the NHS back on its feet, and this framework aims to boost the efficiency and productivity of providers and ICBs so that they can focus on delivering the care that people need. I look forward to seeing the leadership of the NHS rise to the challenge, as we take the NHS from the worst crisis in its history and make it fit for the future.