Sick pay: Massive rise in GPs' salaries worsens NHS cash crisis

Family doctors are lining their pockets in an unprecedented bonanza as they take an increasing share of the NHS's extra billions while wards close and services are cut back.

GPs' average earnings for last year (2005-06) rose to £118,000, according to estimates by the Association of Specialist Medical Accountants, a 63 per cent increase in three years. The average family doctor now earns, including private income, more than the Lord Chancellor, ministers of state, senior civil servants and circuit judges.

The soaring salary levels of doctors are worsening the NHS cash crisis. Two-thirds of NHS trusts are in deficit and have cancelled operations and extended waiting times. Primary care trusts, including those in Yorkshire, Sheffield, Norfolk and Surrey, have ordered GPs to delay referrals to save money.

Leaked documents published last week show the Department of Health is planning to shed 37,000 posts this year in an effort to balance the books.

Ministers have accused GPs of helping themselves to a bigger slice of the NHS cake under their contract introduced in 2004. Figures show the amount they pocket has increased from 40 per cent of the gross sum they are paid to run their practices to 45 per cent, leaving less for patients.

They are not passing on the full NHS funding increase to patients, at the same time as their workload has been reduced, ministers say. Until 2004, GPs took responsibility for their patients 24 hours a day, seven days a week. Their out-of-hours duties have since been reduced and they are contracted to be responsible for patients from 8am to 6.30pm on weekdays.

The shadow Health Secretary, Andrew Lansley, said yesterday: "The Government underestimated the cost of the GP contract to the tune of £200m in the last year alone. This has punched a black hole in primary care trust finances at a time when financial pressures through ministerial incompetence have hit an all-time high."

The Government defended the contract and blamed GPs for taking more than their due. A spokesman for the Department of Health said: "We invested extra funding in GP services in good faith to improve services and reward GPs. The money was not intended just to boost GPs' profits. We expect a higher level of these profits to be invested back into their businesses to bring about further improvements in services such as longer opening hours."

David Clough, chairman of the Association of Specialist Medical Accountants, said the pay bonanza was triggered when GPs scored twice what was expected on quality targets set under their new contract, such as the proportion of patients whose blood pressure was monitored. "That was wholly unexpected so primary care trusts were left struggling to pay", he said.

A member of the association, who did not wish to be named, said some GPs were earning twice the average income. The accountant said: "At the top end I have come across a few in the £200,000 bracket. The most profitable are the dispensing practices. If you have a dispensing practice you are running two businesses - a GP's surgery and a pharmacy. That really is a licence to print money."

GPs' rising salaries are part of a dramatic increase in spending on NHS pay. Last year, 47 per cent of all the extra spending on the NHS (£5.5bn) went on higher pay - for doctors, nurses and other staff. Hospital consultants earned £109,974 on average, up 27 per cent in three years. Nurses averaged £27,868, a 12 per cent rise over the same period.

Yesterday, James Johnson, chairman of the British Medical Association, defended doctors' pay rises as he warned the Government had "one more year" to save the NHS. Speaking at a press conference held at BMA House, Mr Johnson said doctors had worked harder than the Government expected and would fight any attempt to claw back their pay rise.

"One thing we will not tolerate is having these contracts whittled away. We will take an extremely strong line on a below-inflation rise for next year and we will not accept it."

Surveys show most patients are satisfied with the care they get from their GP but complaints are continuing about access. Difficulty getting appointments at convenient times is a problem. A survey by the Healthcare Commission found more than half of patients said they had difficulty getting through to their practice on the telephone.

The BMA defended GPs' pay rises. It said the Association of Independent Medical Accountants dealt with "blue-chip" GPs who had higher earnings than average. Hamish Meldrum, chairman of the BMA's GPs committee, said: "GPs are earning more but I still believe they represent very good value for money. The country gets good value out of its primary care services."

How doctors came into the money

* GPs have been enriching themselves by increasing the proportion of their budget they pay themselves and decreasing that spent on practices. They are paid a gross sum to run practices - hiring staff and buying equipment. What is left after paying these expenses is their "profit".

* In 2003-04, GPs earned a"profit" of £82,019 - 40 per cent of their gross earnings of £203,613. But in 2004-05, the first year of their new contract, this grew to 45 per cent.

* Between 1998-99 and 2004-05 the amount they spent on their practices declined from 62 per cent of their gross earnings to 55 per cent while the amount they took as income for themselves increased from 38 per cent to 45 per cent, figures from the NHS Information Centre show.

* Private earnings - fees for medical examinations, travel vaccinations, etc - amounting to a few thousand pounds per head, are included in these figures.

* NHS Employers, the body that negotiated the contract, admitted it was "disappointed" that the contract had "resulted in such significant increases in individual GP incomes".

* Changes in the way employers' superannuation payments (pension contributions) were made reduced the real rise for GPs by 5-6 per cent in 2004-05, and the proportion of their earnings taken as income by 1.2-1.5 per cent, the NHS Information Centre said.

* Gross earnings for 2005-06 are not yet available but average income for GPs is expected to be £116,000-£118,000, a 44 per cent increase in two years, according to the Association of Independent Medical Accountants, which provides financial services to 7,000 GPs.

* In 2002-03, average income was £72,324, according to the NHS Information Centre. The increase to £118,000 in 2005-06 is a rise of 63 per cent in three years.