Implementing the NHS consultant contract in Scotland

Prepared for the Auditor General for Scotland
March 2006

Auditor General for Scotland
The Auditor General for Scotland is the Parliament's watchdog for ensuring propriety and value for money in the spending of public funds.

He is responsible for investigating whether public spending bodies achieve the best possible value for money and adhere to the highest standards of financial management.

He is independent and not subject to the control of any member of the Scottish Executive or the Parliament.

The Auditor General is responsible for securing the audit of the Scottish Executive and most other public sector bodies except local authorities and fire and police boards.

The following bodies fall within the remit of the Auditor General:

• departments of the Scottish Executive eg, the Health Department

• executive agencies eg, the Prison Service, Historic Scotland

• NHS boards 

• further education colleges

• Scottish Water

• NDPBs and others eg, Scottish Enterprise.

Acknowledgements
This report was produced by Claire Sweeney, Carolyn Smith, Jillian Matthew, Kenny Reilly and  Tricia Meldrum, under the general direction of Barbara Hurst.  

Audit Scotland would like to thank the members of the study advisory group for their input and advice throughout the study (See appendix one for details). We are grateful to the Information and Services Division (ISD) and the SEHD for information provided to us during the study. We are also grateful to the managers and staff within the boards we visited as part of the review and to consultants who took part in the national survey.

Audit Scotland is a statutory body set up in April 2000 under the Public Finance and Accountability (Scotland) Act 2000. It provides services to the Auditor General for Scotland and the Accounts Commission. Together they ensure that the Scottish Executive and public sector bodies in Scotland are held to account for the proper, efficient and effective use of public funds. 

Summary

To date, the consultant contract has cost £235 million. It has the potential to improve patient care, but there is not yet clear evidence of benefits.

1. In April 2004, a new contract was implemented for the 3,513 consultants employed in Scotland as part of a UK-wide move to reform pay across the NHS.1 This contract is the first major change to consultants’ terms and conditions since the 1948 agreement. It provides a framework for managers and consultants to plan work and link it to improving patient care. The aims of the contract are to:

•	allow boards to plan consultants’ work around the needs of patients and the service
•	limit consultants’ working hours in line with the European Working Time Directive (EWTD)2  
•	ensure the NHS has first call on consultants’ work and reduce conflicts around private practice
•	make it easier for the NHS to recruit and retain consultants
•	increase earnings for consultants.
2. Key findings:

•	The new contract represents a change in the way that NHS managers and consultants work together. It offers an opportunity to focus the work of consultants on priority areas, and improve patient care. But, it is not yet being used to its full potential and there is limited evidence of benefits to date.
•	Prior to the introduction of the new contract, the Scottish Executive Health Department (SEHD) set out a number of anticipated benefits for the NHS in Scotland. However, it has not provided timely guidance to ensure these benefits were planned for from the outset.  
•	Although some initial changes to services are evident, at this stage it is difficult to identify the overall impact of the contract on patient care, or on consultants. The SEHD and boards are just beginning to assess the impact of the contract.  
•	Prior to the new contract the annual pay bill for consultants was £257 million. This had risen to £335 million by 2004/05 and is projected to rise to £354 million in 2005/06 which represents a 38 per cent rise over the three years to 2005/06.3 This increases to approximately 44 per cent if we include on-costs and inflation.4  
•	The cumulative additional cost over these three years is £235 million.5  6 This increases to £273 million when 
inflation and on-costs are included.   
•	Planning for the contract should have been more robust and the uncertainty has contributed to cost pressures for boards. The initial national costing model used by the SEHD was inaccurate due to a lack of information on consultant working patterns. This model underestimated the overall financial impact by about £171 million for the first three years.  
3. In this report we reviewed:

•	the background to the new consultant contract
•	how the new contract was planned and implemented (excluding the negotiation process)
•	the cost of the new contract and how boards are monitoring costs
•	the impact of the contract on patient care and on consultants.
About the study

4. In this study we:

•	interviewed medical directors at most NHS boards and the two special health boards that employ consultants (jointly referred to as boards throughout the report) to consider local implementation and any local issues 
•	interviewed a number of managers at a sample of boards
•	reviewed a selection of job plans and documents at a sample of boards
•	collected and analysed data on activity and cost from all boards and the SEHD
•	conducted a national survey of all consultants in Scotland seeking views on the impact of the new contract, which had a 52 per cent response rate.7

1	NHS Workforce Statistics, Information and Statistics Division, as at September 2003.
2	EWTD is a directive from the Council of the European Union to protect the health and safety of workers. It lays down minimum requirements in relation to working hours, rest periods, annual leave and working arrangements for night workers. The directive was enacted in UK law as the Working Time Regulations, which took effect from 1 October 1998.
3	This excludes the cost of superannuation, inflation, employers’ National Insurance (NI), clinical academics and locums. If we include inflation and on-costs, these figures rise to £292 million for 2002/03, £419 million for 2004/05 and a projected £441 million for 2005/06.
4	This 44 per cent includes only a proportion of superannuation. Employers’ superannuation contribution increased from 5.5 to 14 per cent from April 2004 onwards. Some of this increase is not due to the new contract and is excluded from the 44 per cent.
5	Consultant contract data collection, Audit Scotland, September 2005. 
6	This is the cumulative additional cost of the contract on the basic pay bill each year from 2002/03.
7	Of the consultants who replied, 95 per cent had transferred to the new contract.

Part 1. Setting the scene

Key findings

The contract represents a major cultural change within the NHS and has the potential to improve delivery of services through more structured discussions about workload and activity between consultants and managers.

The SEHD, boards and the British Medical Association (BMA) developed the contract in partnership.
  
In Scotland, 98.5 per cent of consultants have opted to transfer to the new contract.

The new consultant contract is part of a wider process of modernising contracts for almost all NHS staff

New contracts are being negotiated for almost all NHS staff
5. In July 2000, the English Department of Health’s (DoH) NHS Plan announced UK-wide pay modernisation schemes affecting most NHS staff and with a significant cost to the NHS.8 This was reaffirmed in Scotland in Our National Health, in December 2000, which stated that NHS staff in Scotland should be rewarded fairly for the contribution they make to patient care.9 In addition a new contract for consultants, the two other major contracts are the new General Medical Services contract for GPs and primary care services, and Agenda for Change which affects nurses, allied health professionals and other staff. There are differences between the contracts, for example, in relation to holidays and enhancements paid to different groups of staff.
 
6. Implementing the consultant contract has been a challenge for the NHS due to the contract’s complexity, cost and changes in the way in which NHS managers and consultants work together. Lessons can be learned for the implementation of other large-scale agreements, such as Agenda for Change.

The consultant contract has introduced new ways of working
7. The new contract represents a change in the way that consultants work within the NHS. The previous contract for NHS consultants remained largely unchanged since it was agreed in 1948. The new contract is based on a job planning process that clearly sets out a consultant’s working week and the amount of time spent on different activities, such as direct patient care. The contract provides a framework for managers and consultants to discuss and agree workload and work areas through job planning. It also offers the potential for consultants’ activities and pay progression to be closely linked with priorities for service delivery and redesign. The new contract is also designed to ensure that private practice work does not conflict with NHS work.

8. There was scope in the previous contract to plan the work of consultants, and since April 2001, consultants’ performance should have been appraised. However, regular detailed job planning for consultants was not common practice in the NHS. Although automatically progressing through the pay scale is currently the norm under the new contract, it does require a regular appraisal process for consultants, focused on an agreed job plan, and progression is expected to be linked to the consultant achieving specified objectives.

The new consultant contract has various components
9. Before the new contract was introduced, consultants received a basic salary for their work and their contract identified nominal working hours. The old contract allowed employers to agree local terms and conditions, such as how much to pay for waiting time activity. The new contract standardises the national approach to most elements of pay, specifying pay for contracted hours and defining clear categories of work.

10. Full-time consultants receive a basic salary for working 40 hours per week during normal working hours (8am to 8pm, Monday to Friday).  Boards can contract separately with consultants for work over and above this. However, consultants should no longer be working more than 48 hours per week, in line with the EWTD, unless they sign a EWTD waiver.10 Exhibit 1 (overleaf) summarises the main components of the new contract and compares it to the previous contract.

Contract negotiations started six years ago

11. The contract took a long time to agree. Discussions started in 2000, and the four UK health departments produced a draft framework in June 2002. Later that year, consultants and specialist registrars voted in 
favour of the new contract in Scotland but not in England, Wales or Northern Ireland. An amended contract 
was then agreed by the DoH and the SEHD in 2003.

12. Because of the UK-wide basis to the contract, there were certain aspects which, once agreed by England, had to 
be agreed in Scotland to ensure similar terms and conditions for all consultants. An increase in the pay bill for 
consultants in Scotland was inevitable, even before any discussions about local implementation began, because pay scales were increased, more hours were paid for and new payments were introduced, such as recognition of out-of-hours work.  

13. In June 2003, the four UK departments of health were finally in a position to negotiate individual national contracts, although most aspects of the contract were agreed across the UK, based on the revised framework agreed in England. 

14. Four UK contracts are now in place, each with common underlying principles: the focus on how time is spent; clear payments for different types of activity; and structures to agree and review objectives. There are minor differences between the four contracts, for example, Scotland has defined core hours as 8am to 8pm Monday to Friday, while England has 7am to 7pm Monday to Friday.
 
15. The SEHD, BMA and boards carried out Scotland-wide negotiations in partnership, and developed the detail 
of the contract.11 Boards negotiated some elements of the contract locally. The contract was implemented 
in 2004 but pay was backdated to the original agreement date of April 2003. As at 31 March 2005, 98.5 per cent of consultants in Scotland had signed up to the new contract.12  

8	The NHS Plan: a plan for investment, a plan for reform, DoH, 2000.
9	Our National Health: A plan for action, a plan for change, Scottish Executive, 2000.
10	 Council Directive 93/104/EC, 23 November 1993, concerning certain aspects of the organisation of working time, Official Journal L 307, 13/12/1993 P. 0018 - 0024.
11	The BMA is an independent trade union and voluntary professional association for doctors and represents doctors from all branches of medicine throughout the UK.
12 	Pay modernisation team letter (2005) 24, Evaluation of the consultant contract, 20 September 2005.

Part 2. Planning for the new contract

Key findings

The SEHD, boards, and the BMA have worked in partnership to implement the contract. But the SEHD should have taken a more active role in providing timely guidance and direction to help boards plan for and implement 
the contract.

The initial SEHD national costing model was inaccurate and underestimated the overall financial 
impact by about £171 million for the first three years.  

National guidance issued up to July 2005, focused on advising boards on how to transfer consultants to the new contract rather than on how to achieve benefits. Most boards did not plan how they would achieve benefits through the contract until after implementation.

In most boards, planning for the contract before implementation was minimal. However, some developed more accurate initial cost estimates than others.

Financial planning for the contract could have been better

16. The SEHD, boards and the BMA have worked in partnership to develop and implement the contract in Scotland. This has included issuing joint guidance to boards on some parts of the contract and helping boards to implement it. However, some aspects of planning for the contract could have been improved; there is evidence that the cost of the contract was not properly estimated or planned for. 

17. Although the SEHD carried out preliminary work before March 2003 on the cost of the contract, three main 
cost estimates have been produced in Scotland, and boards have also been working on costs at a local level:

•	The first cost estimate, in March 2003, was a Scotland-wide estimate, not at board level, and covered three years from 2003/04 to 2005/06.
•	The second cost estimate, in March 2004, was at board level, and covered two years from 2003/04 to 2004/05.
•	The third cost estimate and statement of costs incurred, in November 2004, was at board level and covered two years from 2003/04 to 2004/05.
18. These estimates did not include inflation or on-costs, such as National Insurance (NI) contributions. Therefore we have excluded these costs from the cumulative additional costs set out in this part of this report.14 

19. In this section, we discuss each of these estimates and show how they compare to the reported cumulative additional cost of the contract.

The SEHD originally underestimated the cost of the contract for the first three years by £171 million 
20. The SEHD developed an initial national cost estimate for the contract in March 2003, for three years up to 2005/06, showing the additional cost over the previous contract costs. It was based on the DoH’s UK-wide costing model, adjusted to reflect the limited known differences in Scotland, such as 13 per cent fewer consultants on maximum part-time contracts.15  16 The costing model did not take account of all differences in Scottish consultant 
working patterns, as there were no Scotland-wide consultant activity data before the new contract. The new contract started a process of recording what work is done by consultants. The SEHD did not produce board level estimates at this stage.
  
21. At this time, the SEHD estimated that, in 2003/04, the additional cost of the contract would be £15 million 
(8.6 per cent increase on the previous years’ pay bill), a further £6 million in 2004/05 (5.3 per cent increase) and 
a further £7 million in 2005/06 (5.4 per cent increase). The cumulative additional cost for the first three years was estimated as £64 million.

22. Our fieldwork during 2005 shows the cumulative additional cost of the contract to be an estimated £235 million for the first three years, so the SEHD initially underestimated the additional cost by £171 million for this period.

23. Boards that had more detailed consultant activity data then tested the model and found the SEHD cost estimates were inaccurate.17 They reported that consultant activity was higher and more frequent on-call work would be required. At this time it became clear that the initial national cost estimate was likely to be significantly understated.  In November 2003, the SEHD made a costing toolkit available to boards to help them cost the contract.

The second cost estimate for the initial two years underestimated the cost by almost £32 million
24. In March 2004, the SEHD asked boards to produce local estimates of the additional cost of the contract, this time for the initial two years up to 2004/05 rather than for three years as with the previous estimate. 18
 
25. The second cost estimate showed the additional cost of the contract for two years as £103 million, 
although the reported additional cost for these two years was £135 million. This shows that the cost was underestimated by approximately £32 million (24 per cent of the reported cost) just before the contract 
was about to be implemented. This March 2004 estimate was not based on complete data as four boards did not provide estimates at this time; for comparison, we therefore excluded their reported costs.

26. Some boards had more accurate financial plans before the contract was in place, in particular, NHS Fife and NHS Forth Valley. Others were less accurate with their estimates, particularly NHS Greater Glasgow, NHS Highland and NHS Lothian, which underestimated the cost of the contract. These differences are due to a number of reasons, including how much information boards had on consultant working levels and the percentage of consultants who had transferred to the new contract. Five boards overestimated the cost of the contract for the initial two years.19 Reasons for these overestimates varied, but as an example, managers at NHS Borders were aware that their consultants were working on average, 55 to 60 hours, and based their cost assumptions on this. When extra programmed activities (EPAs) were capped at two nationally, it led to an overestimate of costs. 

The third estimate underestimated the additional cost for the first two years by almost £11 million
27. In November 2004, after the contract was implemented, the SEHD asked all boards to return a monitoring form. This collected up-to-date figures on costs incurred for the first year (2003/04) and a forecast of costs for the second year for consultants who had already signed up. Boards were also asked to include an estimate of costs for the initial two years for those consultants who had still not signed up to the new contract.
  
28. More boards completed this third return than completed the second return, increasing the costs included, and giving a more complete picture.  The estimated additional cost for the two years at this time increased to £125.6 million, but was still less than the reported additional cost of £136.3 million – an underestimation of almost £11 million (eight per cent of the reported cost) after the contract had been introduced.20
   
29. There were still differences between the estimated and reported costs for some boards even at this stage, in particular, for NHS Ayrshire & Arran, NHS Highland, NHS Lanarkshire, NHS Lothian, NHS National Services Scotland (NSS) and NHS Orkney.

30. The differences in costs for 2003/04 are largely due to delays in sign-up and some terms of the contract not being finalised at a local level, such as resident on-call payments.21 These delays meant that full costs were still uncertain, even for consultants who had signed up to their new contract. The cost of waiting time initiative payments and other ad hoc work was also still unknown and underestimated by most boards at this time. 
 
31. Cost estimates have improved since the introduction of the contract, as boards worked through implementation and had a clearer view of the costs. However, reported costs for the first two years of the contract were almost four times higher than first estimated.

32. The initial national costing model for the contract was inaccurate, but there was information available through the framework document which the SEHD issued to boards in 2002. This gave boards an opportunity to begin costing the contract locally, although there was no central requirement to do so. But the approach of boards to the contract has been largely reactive. Planning should have started earlier. 

A lot of detailed guidance has been issued to boards since the contract was implemented 

33. The SEHD approach to implementing the contract was to work in partnership with the BMA and employers. The new contract is complicated and a number of groups were set up to help implement it.

34. In November 2003 the Pan-Scotland NHS Employers’ Reference Group (PSERG) was established. The aim of the group was to assist with a coordinated and consistent approach to the implementation of the contract, and to disseminate good practice. PSERG included representatives from boards and the SEHD. The group issued guidance to boards but did not have the power to instruct boards to implement it.23   

35. In January 2004 a National Partnership Steering Group (NPSG) was established. The aim of this group was to oversee delivery of the new contract. This group included representatives from the SEHD, boards, the universities and BMA, and was able to issue instruction to boards.

36. The Consultant Contract Team at the SEHD, part of the overall Pay Modernisation Team, was set up three months before implementation started. Once in place, in January 2004, the consultant contract team provided advice to boards on implementing the new contract. 

37. The SEHD Consultant Contract Team, PSERG and NPSG considered issues of concern raised by boards and issued advice or guidance. The BMA and SEHD issued separate guidance in November 2003, but following this the various groups involved issued joint guidance. 

38. While the SEHD provided boards with the contract document and associated guidance on how to implement the contract in advance of the date it came into effect, a lot of guidance on how to deal with specific elements of the contract was issued after implementation. The contract document did not set out all areas of the contract clearly, for example it did not provide clear definitions on how to handle fee paying work. This was unhelpful to boards. There have been four updates to the main contract document since the original version in September 2003, and there may be other updates as the contract develops.

39. The SEHD believes that because of the complexities of the contract and lack of information on consultant working patterns, it was not possible to anticipate all issues that boards would face in implementing it. They feel that their approach allowed them to respond to problems as they arose. Our view is that earlier planning would have reduced the volume of guidance required after the contract was implemented and reduced uncertainty for boards.  Boards have also reported that they found advice from the Consultant Contract Team of use but that they would have benefited from receiving this help earlier in the process, when they were planning to implement 
the contract.
 
Boards agreed some elements of the contract locally

40. Most of the contract terms and conditions were negotiated by the SEHD and the BMA. These were issued to boards in September 2003 for implementation from 1 April 2004. There were some areas of the contract where the SEHD and the BMA were unable to reach agreement, and these were passed on for local negotiation. 
 
41. As a result, boards negotiated separately with local BMA representatives on certain areas. This led to some variations in implementation, such as handling of fee-paying work and the associated differences in cost. Although these areas do not account for major costs under the new contract, they have often been difficult to agree locally, involved a lot of management time and have delayed implementation.  

Initially most boards focused on signing up consultants to the contract rather than on the potential to improve services

42. Boards have been successful in getting most consultants wanting to transfer to the new contract moved over to their new terms and conditions. This has been a challenge, given the workload involved in recalculating payments due, managing a new system of job planning and processing payments and paperwork, largely within existing resources. In the first year, this may have limited boards’ abilities to plan for the potential benefits of the contract and achieve value for money.

43. Few of the boards we sampled were able to provide evidence of having integrated implementation of the contract with local priorities for services and changing the way services are delivered. Only NHS Borders and NHS Tayside had detailed project plans in place. These were supported by a comprehensive risk assessment, which led to a more thorough process linked to changing the way in which services are delivered. 

44. A significant gap at many boards was not including Strategic Planning or Organisational Development departments during the planning and implementing of the contract. As the contract influences all aspects of 
the delivery of services, planning departments should have been involved as early as possible. However, 
we found that planning departments were just becoming involved once implementation was complete and 
boards were starting to look at achieving benefits from the contract. Several directors of planning, or equivalent, said they should have been involved in the process earlier, so that planning for benefits and incorporating changes to the way in which services are provided could have started sooner. NHS Borders was the exception – the Director of Integrated Care led the implementation of the contract, and provided regular reports to the executive team.

Boards took different approaches to implementing the contract, focusing on either maintaining activity levels or minimising costs

45. Boards reported different approaches to agreeing the contract. Boards facing serious financial constraints were more focused on containing the cost of the contract, accepting that there may be risks to activity levels. Boards under less financial pressure were able to accept higher costs to avoid the risk of reducing activity levels.
 
46. Consultants who responded to our survey raised the issue of inconsistency:

“There has not been applied consistency across Scotland...This reflects differences in management attitude not in what people are doing.” 
A consultant response from Audit Scotland national survey of consultants, September 2005

47. This difference in approach affects consultant job plans and risks inequity and inconsistency in how the contract is applied across Scotland. By providing timely guidance, clearer direction and taking a central decision on some areas that were not well defined within the contract documentation, the SEHD could have reduced the potential for differences in approach among boards. 
 
In Scotland, 98.5 per cent of consultants have signed up to the new contract

48. The majority of consultants in each board have signed up to the new contract although some boards still have a number of consultants waiting to transfer on to the new contract.24 In some cases this delay is due to consultants going through mediation or appeals processes. In six of the 17 boards employing consultants, all consultants have opted for the new contract.25 In the other boards, sign-up levels are over 90 per cent.

49. There is a high sign-up rate to the contract across all specialties, with the highest in Accident and Emergency, and in Community Dentistry where all consultants have transferred to the new contract.  Community Medical Specialties show the lowest at 71 per cent.

Recommendations

The SEHD should:
 
• 	ensure that national cost models are based on accurate data relating to Scotland and work with boards to accurately assess the cost of major developments before implementation
• 	provide timely and effective guidance when implementing major new schemes, provide national support, identifying actions that boards are required to take and monitoring whether this happens.
Boards should:

• 	ensure that robust planning and monitoring takes place as early as possible, to allow them to prepare for the impact of new initiatives with significant costs.
14	Cumulative costs are built up over more than one year.
15		The DoH’s cost assumptions derived from the results of a survey they carried out of consultants in England to understand their working patterns eg, levels of out-of-hours work, frequency of on-call, etc.  
16	 	A consultant’s contract of employment, attracting 10/11ths of the consultant’s salary scale, but essentially classed as whole-time. This allows the consultant to engage in unlimited private practice, provided the consultant devotes, substantially, the whole of their professional time to NHS duties. This contract is not offered as part of the new contract arrangements, and procedures for transferring consultants on maximum part-time contracts to full-time contracts are specified in the contract documentation.
17	 	Including NHS Ayrshire & Arran, NHS Greater Glasgow and NHS Borders.
18		Reported to us by boards as part of this audit as at September 2005.
19 	NHS Borders, NHS Dumfries & Galloway, NHS Grampian, NHS Lanarkshire and NHS Forth Valley. 
20		The State Hospital and NHS Western Isles did not provide local estimates at this time, therefore we excluded their reported costs.
21		Resident on-call, where the consultant resides in the hospital overnight, is only to be used in exceptional circumstances. Payment is at a locally agreed rate. 
22		Reported costs shown in September 2005 are for all 15 NHS boards and two special health boards. However, the second and third estimates are not entirely complete as a small number of boards did not provide estimates at this time. The second estimate was not provided by NHS NSS, NHS Orkney, NHS Shetland or the State Hospital. The third estimate was not provided by the State Hospital and NHS Western Isles.
23		Terms of reference, PSERG.
24		NHS Fife, NHS Forth Valley, NHS Lanarkshire and NHS Ayrshire & Arran each have over six per cent of consultants who have opted for the new contract 	but yet to sign up to it.
25		NHS Borders, NHS Dumfries & Galloway, NHS Orkney, NHS Shetland, the State Hospital and NHS Western Isles.

Part 3. Cost and financial management

Key findings

The new consultant contract has cost approximately £235 million over the first three years, and has increased the consultant pay bill by 38 per cent. If inflation and on-costs are included, the costs rise to £273 million, an increase 
of 44 per cent.
 
Some boards have found it difficult to provide detailed costings, and are not monitoring all elements of contract costs. This will make it difficult for them to identify areas for improvement or savings.

In 2004/05, the SEHD provided additional non-recurring funding of £70 million, to contribute to cost pressures arising from pay modernisation and other financial pressures, and, in 2003/04 and 2004/05, increased boards’ 
allocations by around seven per cent.

Due to delays in negotiating and implementing the contract, a UK-wide agreement gave consultants a one-off back payment. The total cost of back pay in Scotland was £76 million.

The SEHD expected waiting time payments to consultants to decrease under the new contract, but between 2002/03 and 2004/05, they increased by 34 per cent  to £3.4 million.

Some specific contract terms were negotiated locally, which has led to small variation in costs and a risk that consultants may be treated inconsistently across Scotland. Although this does not relate to a lot of money, there have been local difficulties in addressing this work.

Over the initial three years, the estimated additional cost of the contract is £235 million, with the consultant pay bill increasing by almost 38 per cent 

50. The new consultant contract was implemented in April 2004 but was effective from April 2003.26 The total additional cost of the contract was £60 million in 2003/04, £78 million in 2004/05 and is estimated to be £97 million in 2005/06. This gives a total additional cost for the new contract of approximately £235 million for the first three years.27
 
51. This total estimated cost does not include costs for employers’ superannuation, National Insurance contributions or inflation to keep it consistent with the initial costing model used by the SEHD. These amount to approximately £38 million from 2003/04 to 2005/06. If we include these costs, the total additional cost of the contract increases to £273 million for the initial three years.28  29
 
52. We collected detailed costings from all boards. But identifying the exact additional cost of the new contract for 
the three years since implementation is complex. Boards have found it difficult to provide detailed contract costings, 
and many have identified the complexity of the contract itself as a problem.  

53. The contract has increased the salary scale for consultants from a range of £57,370-£74,658 under the old pay scale to a range of £69,298-£93,768.30 Existing consultants were transferred to a point on the new salary scale. This is one component of the total pay of consultants.

54. Many cost elements contribute to the overall pay bill – some are entirely new costs but some would have been at least partly incurred under the old contract, such as basic salary costs, fees and waiting time payments. Some local terms have not been finalised and therefore the actual cost to boards may still be subject to minor changes. 

55. The exhibit also shows the total additional cost over the first three years and the percentage increase to the pay bill. Most back pay was accrued in year 2003/04. Some boards had back pay costs in 2004/05 due to late sign-up, and expect further costs in 2005/06. We have excluded costs for superannuation, inflation, clinical academics, locums, agency staff and the increased costs for service level agreements between boards for work provided by consultants.
  
56. Some boards had a higher percentage increase due to the contract than others. Increases to the pay bill are particularly high at NHS Orkney, NHS NSS, and NHS Shetland. Island boards show higher percentage increases to their pay bill, mainly because they have more onerous on-call requirements and higher levels of EPAs, given their lower staff numbers.

The SEHD allocated some funding to meet the cost of the contract

57. The cost of the contract has significantly increased the financial pressure for most boards. In June 2004, the SEHD made a one-off payment of £70 million to the NHS in Scotland to help it meet financial pressures, including pay modernisation.31 Boards also received an average increase in their allocations of approximately seven per cent in 2003/04 and 2004/05 to help with cost pressures.32

Back pay was agreed across the UK, with a cost to Scotland of £76 million

58. The contract was intended to be in place by April 2003, but was delayed until 2004. It was agreed across the UK to provide a backdated payment because of the delay. This payment was the difference between what consultants were actually paid under the old contract in 2003/04 and what they would have received if the new contract had been implemented in April 2003.

59. The approximate total cost of back pay is estimated to be £76 million. The actual cost is not yet known because a small number (3.5 per cent) of consultants are still in mediation or appeal and the outcome of these 
could affect the amount they receive, but this will make only a small difference to the overall cost of back pay.

60. Back pay represents 32 per cent of the cumulative cost of the contract over the initial three years. Back pay was a significant one-off cost of the contract. It was part of the overall pay settlement and was not intended to bring immediate benefits in patient care.
 
Extra programmed activities have cost £129 million in the first three years, and boards face a major challenge in reducing this cost

61. EPAs are contracted for separately and are intended to be used on a temporary basis where it is necessary 
for consultants to work additional hours to sustain or improve patient care. 
 
62. Specialties without any EPAs tend to be Community Medical Specialities, Hospital Dental Specialties, and Community Dental Specialties.   

63. The SEHD expected the number of EPAs to decrease year-on-year, through a combination of changes in the way services are delivered and an increase in the number of consultants. Data returns from boards show that average EPAs are not yet decreasing in most areas. EPAs cost £42.4 million in both 2003/04 and 2004/05, and are projected to increase to £44.2 million in 2005/06. This gives a total cost of £129 million for the first three years of the contract.35 In addition, many consultants who responded to our survey report working in excess of their contract, which will limit the scope for boards to reduce EPAs.36
 
64. Only 25 per cent of survey respondents who had transferred to the new contract reported that they were keen to reduce their EPAs. There are some examples, however, where boards have renegotiated job plans to reduce EPAs and recruit additional staff.

65. In the short term, it is more expensive for boards to recruit new consultants than to add to the work of existing consultants through EPAs.37 As consultants progress through the pay scale, however, it could be more 
cost-effective to review work patterns and identify different approaches. For example, there is scope to review some consultant workload. In our survey we asked consultants if they currently undertake work that could be delegated to more junior staff – 55 per cent said they did.

The SEHD expected waiting time initiative payments to decrease, but instead, they are rising

66. Boards receive additional funding from the SEHD to deliver against national targets. Based on their initial estimates of cost, the SEHD anticipated savings from waiting time initiative payments to consultants of around £2 million annually. These were expected as a result of the new contract through:

•	an extended working day
•	scope for additional EPAs
•	the ability to change the way in which services are delivered.38
67. There are examples of EPAs being used for waiting times activity.

68. But, overall, the cost of waiting time initiative payments to consultants has risen since the contract was implemented. In 2002/03, £2.24 million was paid to consultants for waiting time work under the old contract. This has risen to £2.95 million in 2003/04 and £3.41 million in 2004/05 under the new contract.

69. Under the old contract, boards were able to set a locally agreed fee for waiting time work that could be more than three times a consultant’s hourly rate. However, only one board reported making use of this option.39 Some boards were paying consultants at a lower rate before the new contract came into effect.40 
 
70. Under the new contract, payments for waiting time activity were agreed nationally. Waiting time initiative payments to consultants are paid at three times the hourly rate, or at one or two times the hourly rate with corresponding time off in lieu. The overall costs of these payments are increasing.

71. All boards are now using only the higher payments, except NHS Lothian which is continuing to use a mix of the lower and higher payments and time off in lieu. Using the higher rates has contributed to increased costs within the overall pay bill for consultants, and is an expensive way to deliver consultant waiting times activity.

Out-of-hours work is now recognised and paid for under the new contract 

72. Under the previous contract, out-of-hours (OOH) work by consultants – work done outside of core working hours – was not usually recognised.41 This is now included in the new contract, and consultants are paid for OOH work.
  
73. Boards have three options available to recognise and pay for the OOH work by consultants. Boards can either: make a premium payment for hours worked; include OOH work in EPAs; or treat three hours of OOH work as four hours, equivalent to one PA. Although it is more cost-effective to include the work within the main contract as PAs, consultants may not have sufficient available hours, and an additional payment is incurred. These arrangements must be agreed locally and NHS boards are taking different approaches.  

74. The approximate total cost of OOH payments to consultants was £1.18 million in 2002/03 under the old 
contract, increasing to £1.67 million in 2003/04 and £1.77 million in 2004/05 under the new contract.42   

Progression through the salary scales cost over £12 million in 2004/05, which was more than expected by boards

75. Pay progression – moving up the salary scale – has cost approximately £12.7 million since the contract began.43  44 Only 11 boards were able to provide details of pay progression costs so the total cost shown is likely to be understated.

76. Under the new contract, consultants should only move up the salary scale if they take part in an appraisal process, meet their agreed objectives and comply with the Code of Conduct for Private Practice. Almost all boards in our sample told us they had underestimated the cost of pay progression, partly due to complexities in how consultants who have transferred to the new contract move up the pay scale and poor information systems to manage this.45 This adds to the financial pressures of the larger boards, such as NHS Lothian and NHS Greater Glasgow, where pay progression cost £4.6 million and £6.4 million respectively in 2004/05.
  
77. In 2004/05, pay progression payments were made automatically because boards had not completed job plan reviews on time. Boards have told us that they plan to have systems in place to award pay progression in future only where the consultant meets their agreed objectives.

Most boards are starting to make savings on fees but there are still problems 

78. Although costs to the NHS for fee-paying work are small in comparison to the cost of the contract, there have been significant difficulties for boards in addressing such work. Examples of fee-paying work are family planning work, undertaking domiciliary visits, or non-NHS work such as court work. The new contract offers an opportunity 
to include NHS-related, fee-paying work under core duties, making management of this work clearer, preventing double payments to consultants and reducing costs. Some boards have made savings where they have included some or all work they had previously paid for by fees in consultants’ job plans. These boards include NHS Ayrshire & Arran, NHS Argyll & Clyde, NHS Borders, NHS Fife, NHS Tayside and NHS Forth Valley. In December 2005 the contract was amended to include all family planning work within the core contract.

79. Central guidance on handling fees as part of back pay was issued to boards. However, boards interpreted 
this guidance differently – for NHS-related work some reclaimed fees paid from the consultant but others did not. This has led to mediation at some boards and an appeal by consultants at one board.

80. Some fees can be paid for by boards and some by other agencies such as the courts. During our fieldwork, we reviewed the cost of NHS fee-paying work to boards, but were unable to establish accurate costs. This is because there has been limited monitoring of fees work and costs at boards, both before and since the new contract was introduced.

81. In addition, there is no central monitoring data shared among the Scottish Executive departments and agencies involved, such as between the Scottish Courts Service and the SEHD. This means it is difficult to monitor what work is being done by whom. A lack of data at national and local level makes it difficult for boards to ensure that consultants are not being paid twice for the same work. We understand that work is now being taken forward by the SEHD and boards with other Scottish Executive departments to explore more effective ways of paying for such work.

82. We estimate that fee payments cost approximately £1.9 million in 2002/03, £3.4 million in 2003/04 and £0.9 million in 2004/05. Costs for fees appear low in 2002/03 as many boards were unable to provide figures for these payments.46   Although it appears that fee payments initially increased, they decreased between 2003/04 and 2004/05 as these payments became part of core contracts or were included within EPAs. This has made activity more transparent.

Boards are not monitoring the various individual cost elements of the consultant pay bill 

83. In Part 2 we looked at estimates and reported costs of the contract. Here we quantify the various 
categories of consultant pay, including some areas which are not affected by the new contract, such as discretionary 
points and distinction awards.
 
84. Some cost elements within the consultants’ pay bill are set, such as the basic salary. Boards agree other costs, such as EPAs, fees and waiting time payments, separately with consultants for a specific period, or as they arise, to allow flexibility for boards to deliver the services they need in the short term. 

85. Exhibit 9 in the main report, shows an estimate of the costs for all the individual categories of consultants’ pay in 2004/05. Adding these elements together gives a total cost of £338 million. This rises to £419 million when we include inflation and on-costs. 

86. In addition to asking boards to provide costs for these individual payment categories, we asked them for their total pay bill costs for consultants in 2004/05.  The total pay bill was £335 million, a difference of just over £3 million.  This difference is relatively small and is due to a combination of factors, not least that boards are not routinely monitoring all elements of consultant cost and had to provide estimates for some of the categories of payment.

87. During our interviews, we were only able to identify one board (NHS Borders) that initially estimated and monitored individual cost elements before and during the first year of implementation, while the total cost was still uncertain. It feels that the costs have stabilised, and there is no need to continue to monitor individual cost elements.  

Recommendations

The SEHD should:

• 	ensure that future national contracts are clearly defined from the outset, with guidance issued in a timely manner, to avoid the risk of inconsistencies in local agreements
• 	work with other agencies to develop and share data about 
fee-paying work by consultants, including payments and activity.
Boards should:

• 	develop systems for monitoring the individual cost elements of the contract, to enable them to manage and reduce costs over time
• 	aim to reduce waiting 
time payments through more effective service and job planning
• 	ensure that pay progression is linked to achieving objectives. 
26		Costs are shown from 2003/04 as boards made provision in their accounts for the costs relating to each year.
27		Consultant contract data collection, Audit Scotland, September 2005 (based on a detailed breakdown of costs from all boards).
28		The £38 million is made up as follows: inflation £7.58 million (3.225%); employers’ National Insurance contribution £21.85 million (9%); superannuation costs relating to the contract of £8.83 million. This excludes superannuation changes from 5.5% to 14% from April 2004.  
29		There have been small changes to the numbers of consultants employed in each year, but the effect on the overall national costs has been minimal.
30		Review Body on Doctors’ and Dentists’ Remuneration, 34th Report, 2005 (based on 2005/06 rates).
31		SEHD letter 15 June 2004, Deputy Director of Finance, to all chief executives of NHS boards.
32		Audit Committee 5th Report, 2005. Overview of financial performance of the NHS in Scotland 2003/04, Scottish Parliament, June 2005.
33		The number of consultants employed at Western Isles reduced by almost 40 per cent from 13 consultants in 2002/03 to eight in 2003/04 and 	then increased to nine in 2004/05. Its pay bill would have increased by an estimated 90 per cent if the 13 consultants had been employed 	throughout the initial three years of the new contract. This is then comparable with the picture at other island boards.
34		No information on EPAs was provided by NHS Western Isles.
35		The cost of EPAs in 2003/04 was paid as part of back pay, and is therefore not an additional cost.
36		Survey of consultants, Audit Scotland, September 2005.
37		When employing a new consultant, 25 per cent of their time is non-clinical, whereas purely clinical time can be contracted from an existing consultant through EPAs.
38		SEHD costing paper October 2003 and DoH costing model, June 2002.
39		NHS Ayrshire & Arran.
40		NHS Forth Valley, NHS Lothian, NHS Greater Glasgow, NHS Lanarkshire (except for anaesthetists who were paid at three times the hourly rate).
41		NHS Greater Glasgow, NHS Highland and NHS Orkney made OOH payments before the new contract.
42		Consultant contract data collection, Audit Scotland, September 2005.
43		Five NHS Boards (NHS Argyll & Clyde, NHS Ayrshire & Arran, NHS Grampian, NHS Highland and NHS Orkney) were unable to provide information onthe cost of pay progression for 2002/03, the year before the contract was implemented. However, for those boards that are able to provide this information, it is evident that pay progression under the new contract is costing more.  
44		NHS Lanarkshire, NHS Grampian, NHS Shetland, NHS Western Isles, the State Hospital and NHS NSS did not provide pay progression costs for 2004/05. Therefore the £12.67 million represents costs for the remaining 11 boards.
45		Transitional arrangements for consultants moving up the pay scale exist under the new contract. 
46		NHS Ayrshire & Arran, NHS Argyll & Clyde, NHS Lanarkshire and NHS Grampian could not provide cost of fees for 2002/03. 

Part 4. Impact of the contract

Key findings

The new contract offers the opportunity to improve services, but it is not yet being used to its full potential. Well-defined and robust job plans are needed to ensure the contract delivers improvements in patient care.

There is little evidence to assess whether the contract has improved patient care. However, only seven per cent of consultants who responded to our survey agreed that patient care had improved since the new contract was implemented. 

The contract aimed to tackle excessive working hours by consultants. The effect of the contract on the work of consultants is not clear, but many consultants report working over their contracted hours.

This part of the report examines:

•	the expected benefits of the new contract, for both patients and consultants
•	whether these benefits are being achieved
•	the extent to which job planning is being used to improve services.
The contract gives the opportunity to improve patient care, but it is not yet being used to its full potential

88. One of the main potential benefits offered by the new contract is the ability to plan and manage the workload of consultants in line with local NHS priorities. But boards are at the early stages of using the consultant contract in this way.  

89. The negotiation of the contract took a considerable time (Part 1). The NHS then had to negotiate job plans with each consultant and attempt to tie consultant work into service priorities. Some boards did not have sufficiently detailed plans outlining the priorities for different services, so these had to be drawn up and agreed first between the specialty and the board.  

90. The NHS has focused on the practical task of implementing the contract, and is only now beginning to explore its potential for improving services. The impact on the NHS of pay modernisation will only be fully realised if job planning and monitoring are thorough and linked to service improvement. It will take time for the 
job planning process to develop and bed in with other major developments such as changes in training doctors.47 

The aims of the new contract have not yet been achieved but some initial benefits are evident

91. In July 2002, the SEHD issued a letter setting out the anticipated benefits of the new consultant contract for patients, the NHS and consultants. Appendix 5 sets out the full SEHD statement of intended benefits. This initial SEHD letter did not set out specific performance indicators or monitoring systems to help boards plan for the benefits.

92. The SEHD issued a further letter in July 2005 asking boards to show how they are using pay modernisation schemes to deliver national priorities and improvements in patient care.48 The SEHD asked boards to submit action plans based on NHS priorities by September 2005 and provide progress reports by 31 March 2006.

93. We reviewed these plans and although they give an indication of service initiatives and some changes linked to workforce, they are not comparable across board areas and most do not demonstrate proactive developments based on the consultant contract. These plans do not yet provide evidence of clear benefits to the NHS and to patients as a result of the new contract, and they do not act as a coherent monitoring tool to establish benchmarks. The SEHD and boards will need to identify and collect monitoring data that underpin the action plans. The SEHD is continuing to work with each board individually to develop these. Revised plans are expected in spring 2006.

94. In 2005, the Scottish Association of Medical Directors (SAMD) set up a service-led, short-term working group to consider how to monitor the impact of the contract. In September 2005, the group issued a report  which recommended collection of data on:

•	productivity and efficiency
•	patient experience
•	quality of care
•	workforce planning.49   
95. Boards need to ensure they monitor the effect of the contract on services. This will take time, given the pace of change across the NHS. The Modernising Medical Careers (MMC) initiative to restructure junior doctors’ training will have an impact on consultants’ work. This will add further pressure on more senior doctors, as they will be required to provide more training and supervision of junior doctors, and junior doctors will be spending less time on clinical care. MMC came into effect in August 2005, and the SEHD is currently developing a model to help boards plan for its impact.

96. All sampled boards expressed concern about the impact of MMC, and noted the potential MMC gives 
for additional pressure on medical staff time. At the time of our fieldwork, most boards were unable to accurately assess the impact that MMC will have on working patterns and service delivery.

It is difficult to assess the impact of the contract on patient care

97. The new contract has not been introduced in isolation. The NHS is undergoing other major restructuring and reforms, such as the wider modernisation of pay, which affect all areas of the health service. It is therefore impossible to isolate the effects of one particular contract, especially if there are no consistently applied performance indicators. Boards need to identify performance measures that can be used to promote improvements and monitor impact. As there is no central guidance on specific indicators, the approach of boards will vary.

98. Consultants themselves do not currently see the new contract as improving patient care. Only seven per cent of consultants on the new contract who responded to our survey agreed that patient care had improved since the new contract was implemented. 

99. Boards feel that it is too early to see comprehensive changes as a result of the consultant contract. There are some examples of direct benefits, although these appear to be isolated examples at this stage.

100. The time that consultants spend carrying out direct clinical care may be under pressure with the new contract. There is evidence that consultants previously did some emergency work and professional development work outside of their contract.50 This work was traditionally hidden, but has now been pulled into core-contracted time. The inclusion of emergency work in the contract is seen as a positive development by 47 per cent of respondents to our survey who had transferred to the new contract.

101. Due to increases in spend and boards’ ability to work with consultants to manage their time better, it is reasonable to expect to see an increase in productivity and more appropriate use of consultants’ time. Analysis of activity data on emergency admissions, day cases and elective admissions shows no evidence of an increase in activity since the introduction of the contract in April 2004. Outpatient activity data shows a mixed picture, with variation since the implementation of the contract. 

102. These figures, however, do not include any measurement of increases in non-clinical work, such as providing training and supervision, and are not sensitive to any moves to make more appropriate use of consultants’ time. The impact on activity levels and appropriate use of consultants’ specialist skills should be monitored and reviewed as part of effective management systems.

Some job plans are not sufficiently detailed

103. Accurate and detailed job planning is central to the new contract to ensure that changes to consultant work are linked to service priorities. Job planning had been undertaken previously, but the new consultant contract requires that robust job plans are put in place and negotiated at least annually. The job plan should include service and personal objectives and define all NHS work undertaken by the consultant. Establishing new systems and processes to support accurate and timely appraisal and job planning for consultants has been a challenge for boards.

104. Guidance issued with the contract included a template for carrying out a diary exercise, which asked consultants to gather data on workload and type of work over a few weeks.51 This could then be used to establish baseline workload and provide information for job planning.  This self-reporting approach is symptomatic of the lack of data about consultant work before the new contract on which to base job plan negotiations. There are indications, from our work at boards and feedback from the consultant survey, that workload was reported as high.

105. An aim of the new contract was to have clear objectives for consultants. In year one, job plans were not as robust as they could have been. Our survey showed that only one in three consultants on the new contract felt they had a clear job plan linked to improving services.   But boards aim to improve the quality of job planning in subsequent years, specifically by linking objectives to service needs. 

106. Most boards used the template for job planning provided by the SEHD. As part of this review, we looked at a sample of job plans, and found wide variation in the quality of job plans both among and within boards.  

107. There is also evidence from interviews and survey responses that the work done by consultants since the introduction of the new contract has continued much as before. If consultants have signed off job plans that do not reflect their work, there is a risk that they will remain dissatisfied with the process.

“The surgical consultants agreed to continue 'service as usual' for two EPAs.”
A consultant response from Audit Scotland national survey of consultants, September 2005

108. Job plans were, in part, designed to clarify what resources consultants require to meet their objectives, such as additional secretarial support. Our review of job plans shows that this is often not the case, and 15 per cent of consultants who replied to our survey and were on the new contract felt that where they had identified a resource requirement it had been met. 

109. However, 46 per cent said that they found the job planning process useful and 47 per cent said they have positive relationships with managers.

110. Boards have invested considerable time and money to implement the contract, particularly in the job planning process. This was especially resource-intensive for clinical directors who generally carried out individual job planning with each consultant within their specialty. This has changed the role of the clinical director. Managers and consultants require new skills to negotiate the job plans and use the new contract in line with service plans. Training and guidance is necessary in this area, and this is not yet evident at all boards.  

111. The SEHD issued a training pack in March 2005 which was used by some boards. However, only 19 per cent 
of survey respondents on the new contract said their board has provided training in job planning. This is a central 
area for development given that the quality of job planning underpins the success of the contract.

112. The SAMD benefits group recommended that a national process for job plan reviews be put in place in 2006/07.  This should help provide a degree of consistency across Scotland. The group also recommended that common objectives would be useful across staff groups, which boards should address in future job planning rounds.52 

Consultants are working over and above their contracted hours

113. A central aim of the contract was to address excessive working hours and have less tired doctors, which would lead to safer and improved patient treatment.53 From both our interviews at boards and responses to the consultant survey, there is evidence that consultants are working more than their contracted hours. Over half of consultants who responded to our survey said they work over 48 hours per week, which is above the EWTD limits, while 51 per cent of consultants on the new contract felt their job plan did not reflect their working hours. This was particularly the case for those consultants who have been in post between five and 15 years.

114. Almost two-thirds of consultants feel that the contract has not reduced their working hours. Some consultants, however, are happy to maintain previous service levels because of the improved payment under the new contract:

“Most of the consultants I know still work in excess of the hours they are contracted for and do SPA work in their own time, but do this more happily now that at least the new contract has recognised some of their considerable commitment to the NHS.”
A consultant response from Audit Scotland national survey of consultants, September 2005

115. A cap of a 48-hour working week was put in place by the PSERG in line with EWTD limits. In theory, consultants are able to work over and above this only in exceptional circumstances, but half of respondents 
to our survey report working over 48 hours. There are indications that boards are not monitoring this work effectively; of those consultants working over 48 hours per week, 93 per cent said they had not signed an EWTD waiver.

“The arbitrary limit of 48 hours irrespective of the hours that consultants were actually working represented a major barrier to consultants and managers attempting to implement the new contract.”
A consultant response from Audit Scotland national survey of consultants, September 2005

116. Most boards have not introduced systems to have consultants sign an EWTD waiver when they work over 48 hours, and some boards report difficulties where consultants are working over 48 hours but are not reporting such levels.

117. The introduction of a contract that specifies working hours has benefits, for example, an ability to monitor time spent on various activities and the potential to put in place systems to reduce excessive hours. However, through both interviews with boards and responses to our survey, a time-based contract is not looked on favourably by many managers or consultants. Some boards questioned how appropriate a time-based contract is for such senior medical staff. Consultants raised similar issues.

“I am rewarded for time not productivity!”
“It is the first step to de-professionalising medicine.”
Responses from Audit Scotland national survey of consultants, September 2005

There are risks to activity levels if the contract is not well managed

118. One of the intended benefits of the contract was to improve consultant productivity, however, there is a potential risk to the NHS if work over contracted hours is withdrawn. Although consultants have a professional duty to the patient, this new contract aims to manage their workload, citing reasons of safety. Most consultants are keen to see this develop quickly. 

119. The SEHD has published an efficiency target for consultant productivity through the Efficient Government initiative.54 This target specifies that boards should demonstrate an increase in consultant productivity of one per cent, per year, over the next three years. The SEHD anticipates that this will achieve time-releasing savings of £22 million in 2005/06, £46.5 million in 2006/07 and £73.9 million in 2007/08.55 It is not clear how this will be achieved, given that indications are that many consultants are currently working over their contracted hours.

“In general surgery and academic activity the workload still exceeds the PA/EPAs awarded; if we stuck to job plans the system would collapse.”
A consultant response from Audit Scotland national survey of consultants, September 2005

120. Boards, however, report that they do not have the money or staff available to absorb work delivered by consultants over and above their contracted hours. There is a risk that the system does not have the capacity 
to deliver this change in the short to medium term, rather that this is a longer-term aim which will require 
clear and detailed planning. A further complication is that planned expansion in consultant numbers is happening more slowly than expected.56  

121. Boards are responding to this issue in different ways: some are recording work over contracted hours separately from the consultant job plan; some are including the additional work in the job plan, but not paying a contract to match the work delivered; other boards have no record of this goodwill work delivered by their consultants.

122. There is scope for boards to improve flexibility in the way care is delivered under the new contract, but this flexibility is limited and any work outside of core hours is expensive. We asked consultants if they feel they now have a more flexible approach to work since under the new contract, and only 19 per cent of respondents to our survey said they did.
   
123. Travel time is counted as working time under the new contract, and this may reduce available clinical time and provide a disincentive to deliver services either at other sites or in the community. Rural NHS boards raised this as a particular concern. However, it can improve conditions for consultants who have not previously had travelling time recognised as part of their working week.

Pressure on non-clinical time
124. There are pressures on non-clinical time, which have become clearer under the new contract. This
 includes time for education and development, and work with Royal Colleges and other national bodies.

125. As part of the new contract, consultants would usually have ten hours per week for supporting professional activities (SPAs) which include teaching, monitoring and developing skills. Respondents to our survey indicate there is pressure around this work – 12 per cent said they have no dedicated time in their contract for SPA work. 
Sixty-one per cent of respondents on the new contract reported that they do SPA work in their own time. There is a potential loss to the NHS if pressure on consultants’ time means learning and development activities are squeezed out of the schedule. There is likely to be more pressure on consultants’ non-clinical time in the future, with extra supervision and clinical work required as a result of the MMC initiative.

126. The BMA has expressed concern that the new contract is also putting pressure on external work delivered by consultants, such as representation on national groups and examining for Royal Colleges.  Over two-thirds of respondents to our survey indicated that they undertake external duties, but only a quarter of consultants on the new contract have external duties recognised in their job plans. Again, this is evidence of work happening outwith the contract. 

127. Over time, managers and consultants should develop a more accurate shared view of the job plans and the work that is required. This will enable discussions about work that does not fit within the hours available, and work delivered over contracted hours.
   
There is scope to improve monitoring of private work
128. One of the aims for the new contract across the UK was to clarify the distinction between private and 
NHS work, and increase the time available to the NHS from consultants who carry out private work.  

129. As this is not rigorously monitored, it is difficult to quantify. Just over a third of consultants who responded to our survey indicated that they carry out some private practice. 

130. Consultants must abide by the Code of Conduct for Private Practice. Under the new contract, consultants must report their private work to their employer, but most boards do not have a system for checking activity levels, although there are some examples of good practice.
 
131. Lack of monitoring of private practice makes it difficult for boards to be clear about potential conflict and minimise intrusion into NHS work as specified under the new contract. It is also difficult for the board, as the employer, to be assured that consultants are working within the EWTD limit of 48 hours if part of the consultants’ work is unknown by the board.  

It is too early to see the impact of the contract on recruitment

132. The contract was intended to have a positive impact on vacancies and recruitment targets. At this stage however, there is little evidence that this has happened. It will take time to see the impact of the contract on 
vacancy rates and recruitment of consultants, as the contract becomes established and other related schemes develop, such as MMC.
 
133. A recruitment and retention premium can be paid to attract new consultants. It is used in England but Scottish employers have decided not to pay this premium. 
 
134. Foundation trusts in England appear to be creating new contracts outwith the terms of the new consultant contract, so the potential for the premium to compete with English terms and conditions may be limited. 
 
135. Workforce planning should be used to identify significant regional difficulties and boards should only consider using the premium as part of regional and national workforce planning. But it may be helpful if the premium is used in exceptional circumstances where there is a clear case to be made.

Recommendations

The SEHD should:

•	identify performance measures and baseline information against which benefits for patients and the NHS can be clearly measured before implementing national schemes
•	provide a clear statement of expected benefits for patients and the NHS, and agree with all stakeholders robust plans for implementation before agreement of national schemes.
Boards should ensure that:
•	where consultants are working over their contracted hours this activity is recorded and action plans are in place to reduce such work
•	consultants opting to work over 48 hours sign an EWTD waiver
•	job planning is sufficiently accurate and detailed to provide an effective management tool that will deliver the expected benefits to patients and the NHS.
47	Modernising Medical Careers (MMC) initiative to restructure the training of junior doctors.
48		Delivering the benefits of pay modernisation in NHS Scotland, HDL (2005) 28, SEHD, July 2005. 
49		Report on benefits realisation, SAMD, September 2005.
50		Survey of consultants, Audit Scotland, September 2005, and interviews with a sample of NHS boards.
51		New consultant contract, PCS (DD) 2004/02, SEHD, March 2004.
52		Report on benefits realisation, SAMD, September 2005.
53		SEHD Pay modernisation website: www.paymodernisation.scot.nhs.uk
54		Efficient government: Achievement of time-releasing savings targets, SEHD, November 2005.
55		Time-releasing savings are efficiency savings that do not release cash but which improve how services are provided, allowing staff to deliver more or better services with the same money.  
56		Overview of the performance of the NHS in Scotland 2004/05, Audit Scotland, December 2005.

Part 5. Summary of recommendations

Part 2. Planning for the new contract

The SEHD should:

• 	ensure that national cost models are based on accurate data relating to Scotland and work with boards to accurately assess the cost of major developments before implementation
• 	provide timely and effective guidance when implementing major new schemes, provide national support, identifying actions that boards are required to take and monitoring whether this happens.
Boards should:

• 	ensure that robust planning and monitoring takes place as early as possible to allow them to prepare for the impact of new initiatives with significant costs.
Part 3. Cost and financial management

The SEHD should:

• 	ensure that future national contracts are clearly defined 
from the outset, with guidance issued in a timely manner, to avoid the risk of inconsistencies in local agreements
• 	work with other agencies to develop and share data about fee-paying work by consultants, including payments and activity.
Boards should:

• 	develop systems for monitoring the individual cost elements of the contract, to enable them 
to manage and reduce costs over time
• 	aim to reduce waiting time payments through more effective service and job planning
• 	ensure that pay progression is linked to achieving objectives. 
Part 4.  Impact of the contract

The SEHD should:

•	identify performance measures and baseline information against which benefits for patients and the 
NHS can be clearly measured before implementing national schemes
• 	provide a clear outline of expected benefits for patients and the NHS, and agree with all stakeholders robust plans for implementation before agreement of national schemes.
Boards should ensure that:

• 	where consultants are working over their contracted hours, this activity is recorded and action plans 
are in place to reduce such work
• 	consultants opting to work over 48 hours sign an EWTD waiver
• 	job planning is sufficiently accurate and detailed to provide an effective management tool that will deliver the expected benefits to patients and the NHS.

Appendix 1. Advisory group members

Dr Adam Bryson OBE		
Medical Director, NHS National Services Scotland

Julie Burgess					
Formerly: Director of Pay Modernisation, Scottish Executive Health Department
Currently: Chief Executive, Birmingham Women’s Health NHS Trust

Dr Ross Cameron			
Medical Director, NHS Borders

Dr Alan A Connacher	
\Consultant Physician, NHS Tayside, Royal College of Physicians nomination

Tim Davison			
Chief Executive, NHS Lanarkshire

Dr Fiona Gardner	
Clinical Director, NHS Lanarkshire

Steven Haddow		
Consultant Contract Coordinator, NHS Tayside

John Matheson		
Director of Finance, NHS Lothian

Dr Lewis Morrison	
Consultant in Geriatric Medicine, NHS Lothian, BMA nomination

Mike Palmer			
Formerly: Assistant Director of Human Resources (Workforce and Pay Policy), 
Scottish Executive Health Department
	
Currently: Head of Social Inclusion and Voluntary Issues Division, 
Scottish Executive Development Department
	
Rona Webster		
Human Resources Director, NHS Fife

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