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by Tony Brown
6 October 2023

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Compounding the problem for the GP contract

Former practice manager Tony Brown ponders the maths behind the recent hike in the Global Sum

Earlier this year, the prime minister said he wanted to ensure everyone had access to education to understand mathematics. In April, Rishi Sunak said: ‘My campaign to transform our national approach to maths is not some “nice to have”. It’s about changing how we value maths in this country.’

Astonishingly, this basic understanding doesn’t seem to filter down to his team in charge of primary healthcare budgets.

I congratulate the decision to again increase minimum wage from next April, as a die-hard socialist I want that to continue – but at what cost to frontline healthcare for patients? Not only are most practice staff on just above minimum wage, it’s important to also increase the hourly rate for those with more experience or more technical roles to promote personal development and career progression.

The public doesn’t understand how GP practices are funded (it’s hard enough for us who work in it), but quite rightly demand more and more from their local services. Perhaps ministers don’t understand either, but awareness of the issue needs to be raised.

I’m 53 (and a half) and so was one of the last of the O-Level generation, and I was good at maths. I’ve heard friends over the years say they didn’t know why they had to learn things about numbers that would never help them. I’ve always thought things I learned would come in handy and considering recent announcements I wanted to share my recollection of compound interest.

Don’t raise your eyes, there isn’t a test at the end!

Compounding interest rises basically involves taking the base amount (let’s say £100) and then calculating annual growth by basing it on the original sum plus any accumulated increase from a previous period. So, if £100 earns 5% interest in year one, the total becomes £105. If it earns another 5% interest in year two, the pot rises to £105 plus 5% which is £110.25. And so on it goes…

I hope you are still with me as I want to point out the disparity in the GP contract over the last three years and the minimum wage increases.

Under the 2019-2023 (or five-year) GP contract framework, the BMA agreed to have a guaranteed 2.1% annual uplift to the staff expenses portion of the Global Sum.  Let’s call this pot of money INCOME 100. Compounding that from 2020 to 2023 gives INCOME 100 a new value of 108.7 – meaning it has risen by 8.7% overall over four years.

However, during the same period, minimum wage has risen three times by at least 6% and last year by over 9%. The same calculations as applied above makes our minimum wage costs – let’s call these COSTS 100 – rise to a value of 129.8.

So, income has risen by 8.7% while costs have increased by 29.8%.

This week’s announcement of an extra 3.9% increase [on the staff expenses portion of the Global Sum) will contribute to bridging the gap but will still leave practices with a large deficit as the whole GMS contract isn’t uplifted by the same amount.

Having said all of this, for those long in the tooth and who have been around a bit, we used to pay only 30% of all staffing costs including on costs such as employers National Insurance and employer pension contributions, with 70% directly reimbursed from the then Health Authorities.

This was scrapped and the funding rolled into the Global Sum, but at that time employers’ pension was only 5% rather than the current 14.38% and based on staffing costs way lower than practices face today.

It’s important to remember that there were no salaried GPs back then, nor the mix of staff we have now. And practices cannot access funds to cover sick pay and maternity pay for anyone other than GPs. In other words,  the workforce has completely changed, but the funding hasn’t followed

The statement released this week by the BMA identifies that 44% of the Global Sum paid to general practice is for staffing costs. I don’t believe there will be any surgery in England running staffing costs at 44% of income.

It’s time someone else did the maths, rather than the man who promotes it.

Tony Brown is a former practice manager and now Chief Operating Officer at North Shields PCN Collaboration. His views are personal and not representative of any organisation in which he works.