Government must fully fund the imminent pay award for NHS staff

Miriam Deakin profile picture

15 July 2022

Miriam Deakin
Interim Deputy Chief Executive / Director of Policy and Strategy


These are critical times for the NHS.

Steve Barclay's arrival in the hot seat at the Department for Health and Social Care comes as an under-pressure NHS gears up for a challenging few months. Politicians need to be focussed on supporting the big issues facing the NHS: tackling the care backlog, the spike of patients in hospital with COVID-19, and most pressing of all – a pay rise for NHS staff.

Inflation is truly biting and the high cost of living is adding to the strain experienced by many NHS staff who are working flat out to clear care backlogs and treat patients as quickly as possible. Dedicated NHS workers – in common with so many others across the public sector – are being hit by soaring household bills. Some trusts are now providing food banks so their staff can put meals on the table at home. Others have found that they are losing valuable staff to local supermarkets which offer improved pay or other conditions.

As trusts try to get on top of increasing demand and transform the quality of care for patients, they are doing so against a backdrop of dwindling morale and workforce shortages.

Miriam Deakin    Interim Deputy Chief Executive / Director of Policy and Strategy

So, the government's decision on staff pay, and confirmation of how any increase will be funded, will have a huge impact on how the NHS operates not just over the coming months but for years to come. As trusts try to get on top of increasing demand and transform the quality of care for patients, they are doing so against a backdrop of dwindling morale and workforce shortages, and with soaring inflation eating into their budgets.

There are almost 106,000 vacancies across the NHS and voluntary resignations averaged more than 7,000 a month between May last year and this January – up almost 13% on the same period in 2020. We know that the combination of complex pension arrangements and inflation also mean some senior staff are deciding that they are better off retiring earlier. In this difficult context, the government must do all it can to support the NHS with recruitment and retention. Better pay is certainly a key ingredient.

Pay rises for healthcare workers are set by government and informed by recommendations from independent review bodies. So it is in government's gift to use this lever to address the impact of sharp increases in the cost of living. An NHS Providers survey last December – some time before the steepest inflation hikes – showed that trust leaders back a higher pay award than usual this year. They know that their staff are considerably worse off financially than they were before the pandemic.

Indeed, trusts are doing everything they can within their tight budgets to help the lowest paid staff: some are moving all employees off the lowest pay bands, some are offering small staff grants where possible, or paying more expenses to cover rising fuel costs in the absence of a national policy or national support.

Inflation stands at 9% and currently there is only money in the NHS budget for a 3% pay rise. We must be realistic about the impact that this will have on morale and retention in an already severely challenged workforce. And, given how directly it will affect patients the government must engage constructively to avoid what is becoming a very real prospect of industrial action over pay.

While the NHS spending review settlement appeared generous relative to other public services, it is worth remembering this came after a decade of under investment in healthcare and has since been reduced in real terms by inflationary pressures. Our recent 'reality check' report outlines how challenging it is for the NHS to operate within this financial envelope, despite trusts putting in every effort to improve efficiencies. Every additional 1% of the overall NHS pay rise costs roughly £900m.

Unfunded pay rises also place a particular burden on NHS community providers which employ staff on local authority contracts.

Miriam Deakin    Interim Deputy Chief Executive / Director of Policy and Strategy

So, here's the rub; current levels of government funding mean that NHS England can only account for a 3% pay increase. If government approves a pay award above 3% and does not fund the difference, the money will have to be taken directly from other NHS priorities for improving patient care – such as in cancer and primary care. Clearly this will impact on trusts, their staff and their patients trying to do as much as possible with even less.

To add to this, unfunded pay rises also place a particular burden on NHS community providers which employ staff on local authority contracts, as local authorities do not receive funding for the NHS pay increases which these staff are eligible for. 

Our message to the new health and social care secretary is simple and urgent: the government must fully fund the imminent pay award for NHS staff so that trusts on the frontline can continue to deliver the quality care patients want and deserve. And trust leaders need the government to set the pay award at the right level so they don't risk losing even more staff or have to navigate the choppy waters of industrial unrest. 

The health and social care secretary will face a barrage of tough decisions. Pay is mission critical.

This blog was first published by HSJ.

About the author

Miriam Deakin profile picture

Miriam Deakin
Interim Deputy Chief Executive / Director of Policy and Strategy
@MiriamDeakin

Miriam is our director of policy and strategy and is currently leading our programme of work on sustainability and transformation partnerships and accountable care to inform our influencing activities on trusts’ behalf and ensure we are offering the support that trusts and their partners need to deliver new, collaborative arrangements. Read more

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