A new contract has increased NHS hospital consultants' pay by 24%-28% but failed to halt a continued decline in productivity, providing poor value for money to the taxpayer, say MPs. 

In a new report, the Committee of Public Accounts (PAC) is highly critical of the new contract introduced for consultants working in the NHS, who currently number around 40,000, accounting for 4% of all Service staff. In 2011-12, their total employment cost was £5.6 billion, or 13% of all NHS employment costs.

In October 2003, the Department introduced a new contract aimed at improving the management of NHS consultants. By 2012, 97% of all consultants were estimated to be covered by it, and it had increased their pay 24%-28%.

But, say the MPs, the new contract was a missed opportunity to deliver a step-change in consultant performance and has provided poor value for taxpayers’ money. While many of the expected benefits of the contract have been realised, in full or part, this is because the targets set by the Department of Health were "absurdly unambitious," they say. 

Consultants' productivity has continued to decline, and the contract also does not facilitate around-the-clock care, allowing consultants to refuse to work during evenings and weekends. This has contributed to some NHS hospital trusts having to pay consultants up to £200 per hour for additional work, says the PAC.

As a result of the contract, "hospitals struggle to provide the appropriate level of consultant-led care for patients," said PAC chair Margaret Hodge. Also, "the use and quality of annual appraisals in trusts are patchy - 17% of consultants have not had an appraisal in the last year. It is also startling to hear that nearly half of trusts do not assess whether consultants have met the objectives in their job plans," added Lady Hodge, who is Labour MP for Barking.

The MPs' report also finds that pay progression of consultants is linked to years in the job rather than how well they are performing, and that Clinical Excellence Awards, which cost £500 million a year and are aimed at rewarding consultants whose performance is over and above what is normally expected, are held by 60% of consultants, making such awards the norm rather than the exception.

"This nonsense highlights how badly consultants' performance is being managed," said Lady Hodge, and she called for a "proper" culture of performance management for consultants and other NHS staff to be implements if incidents of poor performance are to be avoided.

Despite the increases in their pay, consultants are still in short supply in some parts of the country, in hospitals in deprived areas and in some specialties such as geriatric medicine. This makes some hospital trusts reliant on locum consultants, who provide less continuity of care for patients as well as being more expensive for the NHS, the report notes.

And while the MPs welcome the Department's plan to publish the performance of individual consultants in 10 specialty areas, they state that performance information remains "poor and is not transparent."

Improved performance management is essential if incidents of poor performance, such as those witnessed at Mid-Staffs, are to be avooided, the report urges. "Most organisations rely on performance management procedures to get the most out of their staff. We consider the failure by the NHS to implement a proper culture of performance management as a crucial factor in the poor standards of care recently witnessed,” it states.