From the TUC

Even the Pay Review Body condemns NHS pay policy

28 Mar 2017, by in Public services

Today’s NHS Pay Review Body (NHSPRB) report stands as a sharp rebuke to the government’s public sector pay policy.  Though their recommendation is for pay to remain within the cap, their comments indicate dismay at the havoc the policy is wreaking on the health service.

In 2011/12, the government imposed a two year pay freeze from which was followed by a 1 per cent pay cap on the public sector pay bill that has been extended to the 2020. All public sector employers have been required to adhere to this, either through conditions placed on negotiations between employers and unions, such as in the civil service, or through conditions placed on independent Pay Review Bodies that determine pay awards in areas such as health, education and the prison service.

Health service unions have justifiably reacted angrily to the PRB’s recommendation of a 1 per cent pay rise for NHS staff, describing the award as “a derisory amount in the face of soaring fuel bills, rising food prices and increasing transport costs”.

This is the maximum amount the PRB is allowed to recommend as prescribed by the Treasury, so we should not interpret the recommendation as an endorsement of the government’s policy of public sector pay restraint. Far from it. What is striking is the open condemnation of the policy exhibited by the report’s authors.

The report highlights the fact that the pay cap is already stretching NHS staffing levels to breaking point:

“It is clear that current public sector pay policy is coming under stress. There are significant supply shortages in a number of staff groups and geographical areas. There are widespread concerns about recruitment, retention and motivation that are shared by employers and staff side alike”.

They continue:

“There is also evidence that staff are under increasing pressure, have concerns about the quality of care they can give, and feel that they are not valued”.

As the PRB point outs, inflation is set to be significantly higher than predicted in 2015, when the current pay policy was produced. This exacerbates the damage done by a policy that was already undermining recruitment and catalysing high staff turnover.

The report makes it clear that the policy is not even achieving the economies for which it was intended. Collapsing staff numbers are driving increasing use of agency staff to plug the gaps, at a significant cost to the health service and denting NHS staff morale still further.

Perhaps most damning is the report’s view that, in the absence of genuine service transformation, wage suppression has become the only means of finding the savings needed to close the £22bn gap identified in the Five Year Forward View, stating that:

“We are concerned that holding down pay has become the default position for making efficiencies, as service transformation is not yet delivering. Reliance on pay to meet the affordability challenge risks putting further pressure on the real wages of NHS staff and creating a perception of unfairness, which could be counter-productive due to its impact on recruitment, retention and motivation.”

The PRB acknowledges the impact that sustained under-investment is having on the NHS:

There is evidence of increasing strain on healthcare providers and serious difficulties in achieving the required efficiency savings and productivity improvements while delivering good quality patient care within the funding envelope.

And it makes clear that NHS workers are paying the cost, with insufficient funds available to pay fair wages without compromising jobs or services:

“A pay award higher than 1 per cent would require trade‑offs in terms of service levels, investment decisions and potentially staff numbers, with associated implications for workload and pressures on staff and service delivery unless accompanying actions were taken to manage demand.”

But, as the report finds, this is a false economy:

“…in too many places, the default strategy to deal with significant increases in patient demand within a slowly increasing budget is by expecting NHS staff to work more intensively, in more stressful working environments, for pay that continues to decrease in real terms. We do not consider this a sustainable position.”

The toxic combination of real terms wage cuts and the government’s decision to end student bursaries is impacting on the NHS’s ability to attract staff:

“Pay matters for the attractiveness of the service. Potential future staff will be more sensitive to pay than existing staff are. The impact on supply of the changes in student funding in England is still uncertain, but there is a risk of an adverse impact and early signs of falls in application numbers. Take‑home pay is important for existing NHS staff and many saw a cut in their take-home pay in cash terms in 2016/17, whilst at the same time their workloads were increasing.”

The government’s counter-productive approach to pay is seen as part of a wider absence of an effective workforce strategy:

“There is no people strategy for the NHS linked to the delivery of the Five Year Forward View in England which is leading to workforce issues being neglected, with a piecemeal and short-term approach to the role of pay and inertia at local level.”

No wonder then that the PRB concludes that:

“Our judgement is that we are approaching the point when the current pay policy will require some modification, and greater flexibility, within the NHS.”

The TUC has long argued that it is time to lift the cap, and we recently published our report on just this issue. According to our analysis, between 2010 and 2016 a midwife at band 6 has received a real terms pay cut of £3150 when factoring in (the more conservative) CPI measure of inflation. An ambulance driver at band 3, saw their pay fall by £1213 using the same measure.

And now the NHS Pay Review Body has made it clear, pay restraint is failing patients, it’s failing NHS staff, and it’s failing even by its own measures. It’s time for the government to listen to its own review body and give public service workers a pay rise.