Hospital groups should be given autonomy to set their own pay rates for senior managers and doctors, the Minister for Health Leo Varadkar has said.

He said the new groups of public hospitals around the country – scheduled to evolve into trusts – should have the authority to negotiate independent contracts to recruit managers and specialists outside of the constraints of public sector rules.

At present, pay rates for hospital consultants and senior managers in the health service are determined centrally by the Department of Public Expenditure and Reform.

A spokesman for Mr Varadkar said the Minister believed the hospital groups should be permitted to act more like existing semi-State companies and have flexibility to recruit executives and senior specialists, including the facility to negotiate individual contracts.

He said it was less about hospital groups competing with each other for staff and "more about being competitive with the private sector in Ireland and other English-speaking health services".

The issue of pay rates for hospital managers and senior consultants has been hugely controversial in the health service in recent years.

Dropped by a third

In October 2012 the Government unilaterally reduced by 30 per cent the pay of consultants appointed after that date.

It is widely believed now that this move significantly contributed to difficulties in recruiting and retaining senior medical staff.

About 300 consultant posts were vacant at one point last year.

Earlier this year the Government reversed many of the pay reductions of 2012 in a deal with the Irish Medical Organisation.

The HSE said yesterday that, following the revised pay scales introduced earlier this year, 111 consultant posts had been advertised.

It said “since the start of 2015, 52 hospital consultants have been offered contracts, of which 46 have signed and 34 have taken up duty since the recent agreement “.

The HSE, Department of Health and the Department of Public Expenditure and Reform have also sought to draw up revised pay rates for hospital and health service senior managers in the wake of the controversy over top-up payments for executives.

The Irish Times reported in September 2013 that a confidential HSE internal audit had found senior personnel in voluntary hospitals and agencies had got more than €3.2 million in allowances and benefits on top of salary.

The revelations led to the controversy over payments to senior personnel in the Central Remedial Clinic.

Hospital and voluntary health agencies’ top-up payments to managers in addition to their regular State-funded salary were considered by the Government to have been in breach of official pay policy.

In his address to the MacGill summer school on Thursday, Mr Varadkar also suggested hospital groups should be permitted to recruit their own general staff and enter into contracts independently as semi-States do now.