The Factory

“I work for a charity” is one of those phrases that brings with it a whole range of ideas and associations. Some are likely to believe that the individual concerned is motivated by a desire to do good and improve the world in which we live and often you’d be right. A lot of people working in the voluntary sector do remarkable work, they often earn less than they might if they were working for a business or a statutory organisation and they are quite simply, good people doing good work.

But the idea that everybody working in the voluntary sector does so out of some form of altruism is a myth. Standing next to the people who are trying to make the world a better place, are other kinds of people; some of whom are working for organisations that see the voluntary sector as a different kind of business opportunity. For them the voluntary sector isn’t so much a chance to do the right thing, it’s just another business and it seems to me that St Andrews Hospital is a case in point.

The Behavioural Services Business

The provision of services within what is euphemistically referred to as the behavioural services sector generates significant cash revenues for independent providers operating in sector. In 2017 the largest independent business operating in the sector, Priory Group UK 1 (formerly Partnerships in Care), turned over £796,579,000 providing a wide range of services from special education, to addiction services and inpatient hospitals. If we exclude the NHS, the three next largest organisations operating in the sector are Cygnet, St Andrews and Elysium. These three specialise in the provision on inpatient hospital services of one form or another, with Cygnet turning over £330 million St Andrews £202million and Elysium £176 million. The graph below includes two NHS Foundation Trusts to give some idea of the relative size of the respective types of organisation. The Norfolk and Norwich Foundation Trust is a relatively large acute trust providing a broad range of services in the area, whereas the Sussex Partnership NHS Foundation Trust is a Mental Health and Learning Disability Trust providing specialist services across Sussex and increasingly other parts of the South East.

Graph of Turnover

The relative size of these organisations is also reflected in the number of people that they employ. Again Partnerships in Care/ Priory has the largest number of employees, with almost 21k. Followed in the inpatient sector by Cygnet who employ almost 6.3 k. St Andrews employs over 4000 people and for comparison with NHS organisations the Norfolk and Norwich Trust employs 7,300 and the Sussex Partnership employs 3520.

staff employed

Taken together this data on turnover/income and staff gives some idea of the relative size of the different types of organisation and we would hope, some indication of the scale of the renumeration that we would expect their leadership teams to get. According to data provided through their respective end of year accounts - up to December 31st 2017 in the case of Priory, Cygnet, Elysium and St Andrews, and April 2018 for the two NHS organisations - the amount that each organisation spends on Directors is surprising. Whilst we might expect the for-profit businesses operating in the sector to spend the most on Directors the graph below indicates that this is not actually the case.

amount spent on directors

Despite being smaller than Cygnet and only a little larger than Elysium, St Andrews significantly outspends all of the other organisations in terms of the amount that it spends on its Directors. I should point out however, that the figure for the Priory Group of Companies may be distorted by the tendency to allocate different directors pay to different organisations within the group, so that particular figure should probably be treated with a degree of caution. However, the direct comparisons with the other organisations are reasonable and the scale at which it outspends the other organisations on Director’s emoluments gives some indication of the organisation’s generosity to it’s senior employees.

The generosity of some organisations working in the field is also reflected in the sums that these organisations pay their highest paid Directors. The for-profit businesses operating in the sector pay their highest paid executives the most and it is reassuring to know that the amount paid to the chief execs of the two NHS trust that we have shared is significantly less.

graph of highest paid director

What is less reassuring is the amount paid to the highest paid director at St Andrews whose pay rate is more directly comparable to the CEO of a private sector business than that of a large NHS Foundation Trust. Despite, the fact that according to its end of year accounts NHS England commissions most St Andrews turnover and is by far it’s single largest customer. The comparison of pay at St Andrews with pay rates within the NHS warrants closer examination. When you look at the number of employees at St Andrews who are earning over £60k per annum. You can see that in 2017

highest paid staff

158 members of staff at St Andrews were paid over £60,000 a year. If we compare this to the NHS, this would be the equivalent of somebody at band 8c on the NHS pay scale. Band 8c is a senior grade that would be appropriate for somebody who is leading a directorate or a department. Whilst it is fair that staff are paid according to their responsibilities it would seem that St Andrews has a pretty generous view of what it is that constitutes a department. As you progress up the St Andrews pay scale. Of the highest paid staff, 87 earn 90k or more, which is the equivalent to somebody at band 9 within the NHS. This would include somebody who may be a consultant, a chief finance manager or a Director of Estates. It is difficult to understand how an organisation can be structured to require this number of very senior staff. It would be interesting to know how the staff working in the wards feel about this kind of top level generosity, especially when they are short staffed.

At the very top of the St Andrews pay scale are the 22 people who are paid more than £150,000 a year excluding pension contributions. The comparison has been made before, but in other words, there are 22 people at St Andrews who are paid more than our Prime Minister. Which, by the way, means that the leadership team at St Andrews Hospital gets paid more than all the Ministers in the Cabinet. It is evident that St Andrews' leadership has gorged itself on the funds that have been made available to it. It is also evident that its leadership has lost track of the fact that most of its funding comes from the NHS and that it exists to serve the community. And for St Andrews Hospital that community is Bethany and Matthew and the thousands of others who have passed through its doors and who have collectively enabled it to become the organisation that it is today, an organisation with net assets of £237 million and the soul of a factory.

Which begs the question given that NHS England is its principal commissioner, why have they allowed this to happen and when are they going to put an end to it?