Annual report and accounts 2022/23

This section provides details of the remuneration (including any non-cash remuneration) and pension interests of Board members, independent members, the Chief Executive and the Executive team. The content of the tables and fair pay disclosures are subject to audit.

Remuneration report

Remuneration of the Chair and non-executive Board members

Remuneration for non-executive Board members is determined by the Department of Health and Social Care based on a commitment of 2 to 3 days a month.

There are no provisions in place to compensate for the early termination or the payment of a bonus in respect of non-executive Board members.

The Chairman and non-executive Board members are also reimbursed for expenses incurred in fulfilling their commitments to CQC. Expenses are grossed up to account for the tax and national insurance due, in accordance with HMRC rules.

Non-executive Board members are not eligible for pension contributions or performance-related pay as a result of their employment with CQC.

Figure 17: Emoluments for the Chairman and non-executive Board members (subject to audit)

Notes:

¹ Benefits in kind (taxable) relate to taxable expenses incurred by members in the fulfilment of their commitments to CQC.

² Ian Dilks OBE was appointed as CQC’s new chair on 1 April 2022, full-year equivalent salary £60-65k.

³ Sir Robert Francis QC retired on 15 November 2022, full-year equivalent salary £30-35k.

⁴ Stephen Marston chose not to receive remuneration for his role.

⁵ Mark Saxton resign on 28 February 2023, full-year equivalent salary £5-10k.

⁶ Sally Cheshire CBE resign on 31 December 2022, full-year equivalent salary £10-15k.

⁷ Peter Wyman CBE DL’s appointment expired on 31 March 2022, full-year equivalent salary £60-65k.

⁸ Belinda Black was appointed on 1 May 2021, full-year equivalent salary £5-10k.

⁹ Dr. Ali Hasan role was as an Associate non-Executive Director during the period.

Payments to independent members of ARAC (subject to audit)

Independent members of the Audit and Risk Assurance Committee (ARAC) are paid fees on a per meeting basis and are reimbursed for expenses incurred in fulfilling their commitments to CQC.

Figure 18

Notes:

¹ Benefits in kind (taxable) relate to taxable expenses incurred by members in the fulfilment of their commitments to CQC.

Remuneration and pension benefits of the Executive team

Remuneration

The Chief Executive and members of the Executive team (ET) are employed on CQC’s terms and conditions under permanent employment contracts.

The remuneration of the Chief Executive and the ET members was set by the remuneration committee and is reviewed annually within the scope of the national pay and grading scale applicable to arm’s length bodies (ALBs).

For the Chief Executive and ET, early termination, other than for gross misconduct (in which no termination payments are made), is covered by their contractual entitlement under CQC’s redundancy policy. Contracts of ET members include  six months’ notice and termination payments are only made in appropriate circumstances. They may also be able to access the NHS pension scheme arrangements for early retirement, depending on age and scheme membership. Any amounts disclosed as compensation for loss of office are also included in our people report.

Salary includes gross salary, overtime, recruitment and retention allowances and any other allowance to the extent that it is subject to UK taxation. It does not include employer pension contributions and the cash equivalent transfer value of pensions.

No performance pay, bonus or compensation for loss of office were paid to any member of the ET, or former members, during 2022/23.

The monetary value of benefits in kind covers any payments or other benefits provided by CQC, which are treated by HM Revenue and Customs (HMRC) as a taxable emolument. CQC operates several non-subsidised salary sacrifice schemes, including lease cars and home electronic vouchers, that are open to all permanent CQC staff, including members of the ET. The benefit-in-kind arising from these arrangements are included in this table, but it should be noted that the costs of the scheme are paid for by the employee.

Figure 19: Remuneration of the Executive team (subject to audit)

Pension benefits

Pension benefits were provided through the NHS pension scheme for members who chose to contribute. Pension benefits at 31 March 2023 may include amounts transferred from previous employment, while the real increase reflects only the proportion of the time in post if the employee was not employed by CQC for the whole year.

Figure 20: Pension benefits of the Chief Executive and ET (subject to audit)

Fair pay (subject to audit)

Reporting bodies are required to disclose the relationship between the remuneration of the highest paid director in their organisation and the 25th percentile, median and 75th percentile remuneration of the organisation’s employees. Total remuneration of the employee at the 25th percentile, median and 75th percentile is further broken down to disclose the salary component.

The annualised banded remuneration of the highest paid director in CQC during 2022/23 was £200 to £205k (2021/22: £195 to £200k). The relationship of the highest paid director to the remuneration of the organisation’s workforce is disclosed in figure 21 as a pay ratio:

Figure 21

The ratios have remained consistent with 2021/22 following a pay increase made to all colleagues in line with HM Treasury guidance. Colleagues in post on 1 September 2022 received a pay increase of between 2.75% and 3% across salaries, a 3% increase to allowances plus a one-off payment of at least £100.

The percentage change in total remuneration of the highest paid director compared to 2021/22 was an increase 2.75% and for CQC colleagues as a whole was an average increase of 1.9%.

In 2022/23, 4 individuals were all engaged as temporary specialist contractors to support our change programme and had annualised equivalent remuneration in excess of the highest paid director (compared with 4 in 2021/22). The calculation is based on the full-time equivalent employees of the reporting entity at the reporting period end date, on an annualised basis. Remuneration ranged from £20-25k to £220-225k (compared with £20-25k to £205-210k in 2021/22).

Total remuneration includes salary, non-consolidated performance-related pay, benefits in kind but not severance payments. It does not include employer pension contributions and the cash equivalent transfer value of pensions.

People report

1. Employee costs and numbers (subject to audit)

1.1 Employee costs

Figure 22: Employee costs

Figure 23: Other employee costs

1.2 Average number of employees

Figure 24: Average number of whole-time equivalent employees in 2022/23

‘Other’ includes agency staff and inward secondments from other organisations. It does not include bank inspectors, specialist advisors, commissioners or second opinion appointed doctors that are paid per session.

The actual number of directly employed whole-time equivalents as at 31 March 2023 was 2,906 (2,982 at 31 March 2022).

Staff turnover during 2022/23 was 15.6% (10.4% in 2021/22).Turnover has increased as we have carried out management of change restructures in our Intelligence and Operations directorates to support the implementation of our new strategy and operating model. Staff turnover is not subject to audit.

1.3 Pension information

The principal pension scheme for CQC employees is the NHS Pension Scheme and is used for automatic enrolment. Those not eligible to join the NHS Pension Scheme are enrolled with the National Employment Savings Trust (NEST). Due to legacy arrangements CQC also has active members in 13 local government pension schemes (LGPS).

Automatic enrolment applies to all employees under a standard contract of employment with CQC as well as Mental Health Act Reviewers, second opinion appointed doctors (SOADs) and all employees on casual or zero-hour contracts. All employees retain the option to opt out at any time.

NHS Pension Scheme

Past and present employees are covered by the provisions of the 2 NHS Pension Schemes. Details of the benefits payable and rules of the schemes are on the NHS Pensions website at www.nhsbsa.nhs.uk/pensions. Both are unfunded defined benefit schemes that cover NHS employers, GP practices and other bodies, allowed under the direction of the Secretary of State for Health and Social Care in England and Wales. They are not designed to be run in a way that would enable NHS bodies to identify their share of the underlying scheme assets and liabilities. Therefore, each scheme is accounted for as if it were a defined contribution scheme: the cost to the NHS body of participating in each scheme is taken as equal to the contributions payable to that scheme for the accounting period.

To avoid the defined benefit obligations recognised in the financial statements differing materially from those that would be determined at the reporting date by a formal actuarial valuation, the FReM requires that “the period between formal valuations shall be four years, with approximate assessments in intervening years”. An outline of these follows:

a) Accounting valuation

A valuation of scheme liability is carried out annually by the scheme actuary (currently the Government Actuary’s Department) as at the end of the reporting period. This uses an actuarial assessment for the previous accounting period in conjunction with updated membership and financial data for the current reporting period and is accepted as providing suitably robust figures for financial reporting purposes. The valuation of the scheme liability as at 31 March 2023, is based on valuation data as 31 March 2022, updated to 31 March 2023 with summary global member and accounting data. In undertaking this actuarial assessment, the methodology prescribed in IAS 19, relevant FReM interpretations, and the discount rate prescribed by HM Treasury have also been used.

The latest assessment of the liabilities of the scheme is contained in the report of the scheme actuary, which forms part of the annual NHS Pension Scheme Accounts. These accounts can be viewed on the NHS Pensions website and are published annually. Copies can also be obtained from The Stationery Office.

b) Full actuarial (funding) valuation

The purpose of this valuation is to assess the level of liability in respect of the benefits due under the schemes (taking into account recent demographic experience), and to recommend contribution rates payable by employees and employers.

The latest actuarial valuation undertaken for the NHS Pension Scheme was completed as at 31 March 2016. The results of this valuation set the employer contribution rate payable from April 2019 to 20.6% of pensionable pay.

The actuarial valuation as at 31 March 2020 is currently underway and will set the new employer contribution rate due to be implemented from April 2024.

Employer contributions for employees in the NHS Pension Scheme was 20.68% of each active member’s pensionable pay during 2022/23 (20.68% in 2021/22). This rate includes an amount charged to cover the cost of scheme administration equating to 0.08% of pensionable pay.

For early retirements, other than those due to ill health, the additional pension liabilities are not funded by the scheme. The full amount of the liability for the additional costs charged to expenditure was £nil (£nil in 2021/22).

Local government pension schemes (LGPS)

LGPS are primarily open to employees in local government, but also to those who work in associated organisations. The scheme is managed locally and invests pension funds within the framework of regulations provided by government. Details of the benefits payable and rules of the schemes are on the LGPS website at www.lgpsmember.org.

CQC inherited active membership in 17 local government schemes as part of legacy arrangements of predecessor organisations on formation. CQC membership in 4 of the original schemes has now ceased and at 31 March 2023, active membership was held in 13 schemes.

All remaining schemes are closed to new CQC employees. Under the projected unit method, the current service cost will increase as the members of the scheme approach retirement.

Employer contributions for 2022/23, based on a percentage of payroll costs only, were £2,287k (£2,496k in 2021/22), at rates ranging between 0% and 49.2% (0% and 49.2% in 2021/22). Employer contributions relating to the largest scheme, Teesside Pension Fund, were £2,035k (£2,239k in 2021/22) at a rate of 17.9% (17.9% in 2021/22).

During 2022/23, indexed cash sums were levied in addition to a percentage of payroll costs as part of a strategy to reduce fund deficits. In total, £1,002k (£994k in 2021/22) was paid to 7 of the 13 remaining pension funds, with amounts ranging from £14k to £515k (£14k to £515k in 2021/22). No additional sums were paid in respect of the largest scheme, Teesside Pension Fund.

National Employment Savings Trust (NEST)

The National Employment Savings Trust is a qualifying pension scheme established by law to support automatic enrolment.

Employer contributions based on a percentage of payroll costs totalled £84k for 2022/23 (£75k in 2021/22) at a rate of 3% (3% in 2021/22).

2. Exit packages (subject to audit)

To support the implementation of our new strategy and operating model, we have carried out management of change restructures in our Intelligence and Operations directorates. Management of change is an established process allowing individual colleagues to evaluate their skill sets against future organisational needs and, if appropriate, to take voluntary redundancy. The process also allows for a skills audit and includes opportunities for retraining and support in the new organisation structure. These restructures have led to further exit packages being recognised in 2022/23 and have been subject to approval by the Department of Health and Social Care’s Governance and Assurance Committee (GAC). This includes a higher number of colleagues opting to take voluntary redundancy and early retirements, an analysis of which is included in the analysis of other departures table (figure 26).

Redundancy and other departure costs are paid in accordance with CQC’s terms and conditions approved by the GAC. Where early retirements have been agreed, the additional costs are met by CQC and not by the individual pension scheme. Ill-health retirement costs are met by the pension scheme and are not included in the exit packages table below.

Figure 25 shows the total cost of exit packages agreed and accounted for in 2022/23 (2021/22 comparative figures are also presented) and are inclusive of employers national insurance contributions. Exit costs of £4,191k were paid in 2022/23, the year of departure (2021/22: £575k).

Figure 25

Figure 26 – Analysis of other departures

No non-contractual payments (£nil) were made to individuals where the payment value was more than 12 months of their annual salary.

3. Off-payroll engagements

As part of the Review of the tax arrangements of public sector appointees we are required to publish (through the Department of Health and Social Care) information about the number of off-payroll engagements that are in place where individual costs exceed £245 per day.

Figure 27

Number of existing engagements as of 31 March 2023: 66

Of which, the number that have existed, at the time of reporting:

• for less than 1 year: 56
• for between 1 and 2 years: 10
• for between 2 and 3 years: -
• for between 3 and 4 years: -
• for 4 or more years: -

Figure 28 shows all off-payroll appointments engaged at any point between 1 April 2022 and 31 March 2023 that were for more than £245 per day:

Figure 28

Number of temporary off-payroll workers engaged between 1 April 2022 and 31 March 2023: 75

Of which:

• number not subject to off-payroll legislation: 33
• number subject to off-payroll legislation and determined as in-scope of IR35: 42

Of the temporary off-payroll workers engaged between 1 April 2022 and 31 March 2023:

• number engaged directly (via a Personal Service Company contracted to CQC) and are on our payroll: -
• number of engagements reassessed for consistency or assurance purposes during the year: -
• number of engagements that saw a change to IR35 status following the consistency review: -

During the year, 16 individuals were Board members and senior officials with significant financial responsibilities, none of who were engaged off-payroll.

We are committed to building in-house capacity, but we recognise that, with a significant element of our activity being project based, with peaks and troughs in requirements, making the best use of the temporary labour market is essential. Many of the workstreams within our change programme require specialist input on a temporary basis, and it is not always cost-effective to permanently recruit such skills. In the year we have seen an increase in our off-payroll engagements, which have enabled us to drive forward our transformation programme.

All existing engagements at 31 March 2023 have received approval from the Department of Health and Social Care. We continue to improve our assurance processes so that we categorise all engagements in line with best practice and to ensure that we remain compliant with HMRC’s off-payroll working rules.

4. People plan

Our transformation will adapt how we do things to remain relevant, protect people and support providers to improve in a changing world. Our People Plan 2022 to 2025 has been developed to ensure that our people develop the skills and competence required to deliver individual, team and organisational success, where they feel valued in knowing that their contribution makes a difference. The aims of the plan are that our workforce works collaboratively and effectively, and colleagues are trusted to deliver on our new ways of working as a confident, highly capable, motivated, and diverse workforce who exemplify the values and cultural expectations that we have all bought into.

Our priorities have been identified as the 3 components that will drive our people workforce strategy, deliver our transformation programme, and enable everyone to perform at their best.

Areas of priority are.

• Diversity and inclusion
• Employee engagement and insights
• Leadership and change 

Our People Plan sets out a strategic vision for our workforce and how our people priorities will deliver our transformation from a people perspective, to ensure the services we deliver are timely, focused and work in parallel with the changing needs of the business.

5. People policies and engagement

Our people are involved in a wide range of consultation and engagement on policies in areas such as organisational change and future strategic direction, to make sure all views are heard.

We recognise UNISON, the Royal College of Nursing, the Public and Commercial Services Union (PCS), Unite, and Prospect for the purposes of collective bargaining and consultation. Representatives from across the unions make up our Joint Negotiation and Consultation Committee (JNCC). CQC’s management collaborates with the JNCC on a range of issues affecting employees.

We also have a staff forum that represents the voices of all people in the organisation. Representatives come together to update the management team on the views of colleagues.

All our people management policies are legally compliant and follow the Advisory, Conciliation and Arbitration Service (ACAS) code of practice and best practice. We are currently carrying out a review of our People Management policies to check against best practice for Equality Act 2010 compliance. Supporting all our employees is at the heart of our organisational approach, including those with a disability alongside other colleagues with protected equality characteristics. More specifically, our policies on managing sickness absence, critical illness, and reasonable adjustments all make reference to the support available to employees with a disability.

Supporting and equipping line managers remains a high priority. Individual coaching and support is provided by Senior HR Advisors, with advice and guidance when a case arises, supplemented with briefings and presentations at team meetings.

We regularly review our people management policies to make sure they meet best practice guidelines, reflect changes to the culture of CQC, and enable us to support all colleagues to develop. We do this through the lens of inclusivity and caring, using qualitative and quantitative information. Our aim is to be person-centred and caring by improving the presentation, language and flow of the policy. Through our Equality Impact Assessment (EIA) framework, we ensure all our policies are accessible and that they promote inclusion for everyone. In our reviews, we always consult with representatives from the People directorate, the unions, the staff forum and the equality networks. We commit to taking action and apply scrutiny to policies and processes surrounding it to identify improvements. We will continue to engage with these groups to ensure these policies and procedures are updated in accordance with changes to legislation. The EIA framework will be refreshed annually to monitor performance and improve it where appropriate.

We currently have 5 fully supported equality networks. Our networks are key in supporting the delivery of our Diversity and inclusion strategy and Mental health and wellbeing strategy priorities and contributing effectively to organisational improvement. Our network chairs have a seat at Board meetings and are given protected time for their Chair and Vice Chair roles and network activities.

All our People Plan activity contributes to developing an inclusive culture where people can perform at their best and work in a way that supports physical and mental wellbeing.

We engage a wide network of colleagues regularly on diversity and inclusion and mental health and wellbeing to embed healthy and inclusive ways of working. Our assurance of best practice and continuous development comes through our benchmarking activity.

We continue to have good working relations with our joint trade union colleagues. We have met regularly both formally and informally discussing and exploring a wide range of topics. We are engaged fully on all aspects of the transformation, and this will continue.

6. Equality, diversity and inclusion

Our collective capacity to achieve our purpose is enabled through a healthy and engaged workforce, and as a regulator of health and social care it’s important that we exemplify good practice. Our People Plan enables a clear focus on activity that enables this, including diversity and inclusion and wellbeing strategies.

Our colleagues work in a variety of roles across the organisation including in inspection teams, in our customer contact centre and in corporate or data and insight roles to support our regulatory activity. Having highly dispersed teams creates its own challenges and complexities in ensuring our diversity and inclusion ambitions reach all our people and everyone feels a sense of belonging to the organisation.

We are fully committed to ensuring we meet our legal responsibilities under the Equality Act 2010. Our approach and commitment to diversity and inclusion includes and goes beyond our legal responsibilities.

‘Our inclusive future’ is CQC’s 3-year strategy, launched in 2020, focusing on diversity and inclusion for our colleagues and within our teams. The strategy sets out our ambition to achieve our vision of being a truly inclusive organisation where all our people are valued and make a difference.

We have 4 overarching strategic priorities to position diversity and inclusion at the heart of everything we do:

• inclusive leadership and accountability
• inclusive culture
• inclusive engagement
• inclusive policies and practices.

We believe this approach ensures that actions are not just delivered but embedded in our day-to-day work.

Through setting our priorities in this strategy, we will be open and transparent and show our commitment to providing a fair and inclusive environment for all colleagues. We will engage and work with our equality networks and locally embedded Diversity and Inclusion Co-ordinators to implement cross-organisational priorities of the strategy. Together, we will inspire and encourage colleagues to embed inclusion in their work, to make sure our workforce represents the people we work hard to protect, and to enable our people to feel able to be their best at work.

As this strategy comes to a close, the Equity, Diversity and Inclusion (EDI) team intend on evaluating the impact and effectiveness of the strategy. This will inform the development of our future priorities and next Equity, Diversity, and Inclusion strategy. We will incorporate specific responses to the listening, learning and responding to concerns review which explored wider issues of race and inclusion. Our focus is to increase awareness, knowledge and learning on race and inclusion. This will be delivered as a top-down approach beginning with our Board and leadership teams. It will then be cascaded throughout the organisation. 

6.1 Equality profiles

The gender distribution in CQC for each grade as at 31 March 2023 is provided below.

Figure 29: CQC equality profiles as at 31 March 2023

Age

Disability

Ethnicity

Gender

Sexual orientation

6.2 Gender pay gap

The gender pay gap gives a snapshot of the gender balance in an organisation. It measures the difference between the average earnings of all male and female employees, irrespective of their role or seniority.

As at 31 March 2023, the gender split in CQC was 71.1% female employees to 28.9% male employees, and this was closely replicated across the quartile data (31 March 2022: female 70.2%, male 29.8%).

The data shows that there is no gender pay gap in median pay at CQC, as employees are paid within salary bands and the rate of pay is virtually the same across all quartiles. When comparing mean (average) hourly pay, the mean hourly pay for women is 1.88% lower than for men, but when comparing median pay, women’s pay is 2.7% higher than men’s. This means the pay gap has decreased slightly in mean pay, our pay gap continues to be small and we therefore plan to monitor it over the coming months and put in any measures we need to if we do not see an improvement.

No data is included in CQC’s gender pay gap reporting for bonuses as CQC does not pay performance-related bonuses.

Figure 30

• Mean pay gap – ordinary pay: 1.88%
• Median pay gap – ordinary pay: -2.70%
• Mean pay gap – bonus pay in the 12 months ending 31 March 2023: n/a
• Median pay gap – bonus pay in the 12 months to 31 March 2023: n/a

The proportion of male and female employees paid a bonus in the 12 months to 31 March 2023:

• Male: n/a
• Female: n/a

Proportion of male and female employees in each quartile:

7. Trade union facility time

We work in partnership with trade union representatives on all matters affecting our people. Joint Negotiation and Consultation Committee (JNCC) meetings are held every quarter, comprising representatives from our People directorate, senior leadership team and trade union representatives from CQC alongside external national union officers. This forum allows discussion, consultation and negotiation on employment-related matters.

Our people are permitted to engage in appropriate trade union activities (figure 31)

Figure 31

8. Sickness absence

During 2022/23, the average number of long-term days of sickness per absent employee was 10 (10 days in 2021/22) and the average number of short-term days of sickness was 4 (5 days in 2021/22).

9. Health and safety

During the early part of 2022/23, we continued to implement our response to COVID-19 to support the safety of staff and the safe operation of the business, and to allow us to respond quickly and effectively to new and emerging risks. Although the requirement for mandatory PPE was relaxed following government guidance in January 2023, we continue to provide PPE to colleagues who continue to wear it for personal or ill health reasons. An inspection risk assessment was developed to ensure that inspectors were fully assessed and safe when they needed to cross the threshold of a provider’s premises. The assessment continues to evolve and has been renamed to the Infection Prevention & Control risk assessment to include other infectious diseases and to reflect new ways of working.

Risk assessments

Flu vaccination programme

A determined effort was made to encourage all colleagues to take up flu vaccinations, with 55% of colleagues vaccinated against flu during 2022/23. If colleagues have the vaccination outside of the CQC scheme, we ask them to record this, so we have as full a picture as possible.

Work-related stress

Work was started to develop an organisation-wide work-related stress risk assessment to identify the main stressors in teams across CQC. This will be used to identify ways of mitigating these risks to support colleagues.

Incident reporting

There were 191 incidents reported 22/23:

• 78 were a result of harassment and intimidation
• 71 were a result of verbal abuse/threats
• 42 included near misses, slips trips and falls and ill-health.

In addition to having a zero tolerance statement on our website contact page, support is in place for colleagues who have experienced harassment or verbal abuse.

10. Expenditure on consultancy

Total spend on consultancy services, as defined by HM Treasury during 2022/23 was £100k (£135k in 2021/22) and was subject to approval from the Department of Health and Social Care in line with our delegations. This spend was driven by the development of our new strategy.