NHS pay: new seeds of division?

A revised pay offer for 1 million NHS staff which the unions are recommending to their members is a major step forward. The government, NHS leaders, staff and patients all want industrial action to end so that the NHS can focus on the huge task of recovering services following the COVID-19 pandemic. Whether this offer is enough to persuade staff to accept only time will tell.

The new offer consists of two one-off payments in 2022/23 worth around 5–7% of average earnings (around £1,655 to £3,789 extra per year). This is in addition to the core existing award of £1,400 or more (4–5% on average). For 2023/24, the government’s offer has increased from 3.5% to 5% – broadly matching inflation expectations. While this provides health service staff with some immediate respite from cost-of-living pressures, it doesn’t address the long-term structural decline in NHS wages.

Over the past decade, NHS nurses’ average basic earnings have failed to keep pace with inflation, meaning they have fallen in real terms. Nurses’ average basic earnings last year (2021/22) were 8% lower in real terms than in 2010/11. Before the revised offer they would have fallen by a glaring 16% between 2010/11 and 2022/23 given high inflation over the past year, and even with the newly announced one-off payments this fall amounts to nearly 10% over the 12 years to 2022/23. 

The Treasury is worried about baking in higher pay and fuelling further inflation. But there are serious risks for the NHS if wages continue to fall behind inflation, and crucially pay awards in other sectors. The Health Foundation estimates that the NHS is likely to see staffing shortfalls increase from around 100,000 in 2021/22 (around 7% of estimated demand) to over 150,000 in 2030/31 (around 9% of projected demand). How will the NHS attract and keep a growing share of the country’s workers if pay continues to decline relative to both inflation and other occupations? The risk of further strikes will only serve to undermine the message that the NHS is a good place to work. Settling this dispute is essential for patient care in the short term but it’s only a sticking plaster. A long-term strategy for determining health and care sector pay has to be the next step. 

The current industrial action was unprecedented and so whether England’s health care staff will vote to accept the offer is harder to judge; nurses have never been on strike before so history can't be our guide. While this may be the beginning of the end of the current wave of industrial action, the proposed settlement also sows the seeds of some incredibly difficult and possibly decisive changes to NHS pay in the future.

The government has written to the Royal College of Nursing in England promising to work with them to create a separate pay spine for nursing staff exclusively, for the 2024/25 pay year. There is no doubt that nursing is one of the most acute and enduring problems of recruitment and retention across the health workforce. Nurses account for over a third (35%) of overall NHS vacancies across the NHS.

The current Agenda for Change pay system was set up to address significant structural inequalities in pay across the health system. Treating all staff fairly and consistently was the goal. The founding aspirations of Agenda for Change mustn’t get lost in any new proposals. Health care is delivered by teams, some team members may be more visible than others, but good quality care isn’t just about heroic individuals, it’s about making sure that teams are working well and flexibly together. There were calls for front-line staff to be given special bonuses after the pandemic, but who was the front line? The staff on the ICU ward obviously but what about their colleagues in procurement and facilities who made sure that there was always enough oxygen? While most people clapping on their doorsteps probably didn’t think about the procurement and facilities staff, lives could not have been saved without them. A policy of divide and rule would be disastrous for the NHS.

Divisions in the pay of NHS staff across the four nations of the UK are also widening. The government in Scotland had already gone its own way of NHS pay determination. And now we are seeing further divergence across the UK in terms of government offers on pay. Scottish newly qualified nurses’ basic pay will be around 6% higher than their counterparts in England in 2023/24 if the current offers north and south of the border are accepted.

The pay award also raises the spectre of a further potentially worrying increase in differentials between the pay of NHS staff and those who work in social care. Even before this revised pay award, newly starting health care assistants in the NHS were paid an average of £1 an hour more than care workers in social care. The government is also reportedly planning to reduce the relatively modest funding it had promised for workforce improvements in social care. Without improving pay for care workers at the same time, there is a very real risk that this award, in alleviating retention problems in the NHS (assuming it is fully funded) will have the unintended consequence of exacerbating the staffing crisis in social care.

Anita Charlesworth (@AnitaCTHF) is Director of Research and the REAL Centre at the Health Foundation. 

Prof. James Buchan is a Senior Visiting Fellow at the Health Foundation.

This blog was originally published in Health Service Journal (HSJ) on 21 March 2023.