hands placing coins onto one of three piles

14 March 2023

Why do we need investment in NHS pay?

Healthcare professionals are in high demand. The UK currently has low unemployment. Vacancies in the health sector are high and growing. But working for the NHS is becoming less and less attractive, as pay falls further behind the private sector.

Cost of living pressures are hitting hard

The Office for National Statistics says that public sector workers are getting relatively poorer compared to private sector comparators, and that this phenomenon is also true across the NHS. Satisfaction with pay in the latest NHS staff survey has plummeted to a new low, down to only a quarter of staff, and the cost of living is hitting NHS staff hard.

Costs are rising, and living standards are falling. Food inflation is running at 17%, energy costs have almost doubled, and housing costs are going up fast.

Private sector employers are responding

Employers outside the public sector are responding to economic pressures. Pret a Manger recently raised wages for the third time this year – and they’re not the only ones.

Many employers are offering flexibility and softer benefits to enhance their packages, with 72% of employers now offering hybrid working and over half a million small and medium-sized enterprises (SMEs) rewarding their staff with additional days of holiday allowance. In a challenging labour market, the private sector is more flexible, responsive and able to support staff and attract new recruits.

NHS staff are leaving for other sectors

According to NHS workforce data, 1,895 people left the NHS for “better reward packages” in the second quarter of 2022, equivalent to 157 every week. The sad fact is that some can earn more working for online retailers or in supermarkets. Two-thirds of NHS trusts report a significant or severe impact from staff leaving for other sectors.

Pay rises don’t drive inflation, staff shortages drive up costs

The IFS has debunked the argument that public sector pay will create a price wage spiral. The International Monetary Fund has also found that the risks of a wage-price spiral appear limited.
Increasing NHS pay won’t increase consumer costs, but denying staff a pay award will drive up costs.

Pay awards below inflation starve the NHS of the staff it needs. Increasing pay helps retain staff and reduces recruitment, induction and staff training costs, which are expensive for the NHS. Keeping existing staff is better value for money than recruiting and training new staff.

Add to that the costs of agency and temporary staff for a service that is chronically understaffed – currently more than £6 billion a year.

Patient care is suffering

It’s not just pay. While the health service remains under-resourced, understaffed and in crisis, there is little chance of tackling the care backlog. Right now, more than 7.2 million people on NHS waiting lists in England alone, and pressure is intensifying.

In the last NHS Staff Survey just 26% of respondents felt there were enough staff at their organisation to do the job properly, the lowest level ever recorded. There is chronic understaffing, declining well-being amongst staff, and poor staff retention.

Primary care, social care, emergency care, ambulance services are all in crisis. That means increased pressure on A&E, delayed discharges from hospital, and critical incidents. The use of agency staff is increasing, infrastructure and equipment are deteriorating, key NHS targets are not being met, and patient safety is under threat.

Poor health is keeping people out of work

A functioning NHS isn’t just essential to protect us and our loved ones. It’s crucial for the economy. Keeping people healthy is key to the success of the nation. A think tank report found that poor health was affecting the ability of the ageing population to stay in work.

The UK’s unemployment rate is at near an all-time low, but employment is still below pre-pandemic levels. Thousands more people remain “economically inactive” than at the start of 2020, with many having stopped working due to health reasons.

A prescription to get people, NHS and economy back to robust health

Pay isn’t a panacea. There’s much more that can and should be done to support staff, prevent burnout and improve morale. But without a meaningful pay increase to help NHS staff cope with inflation and the rising cost of living, the workforce crisis can only get worse.

Trusts need to be able to recruit and retain workers to meet safe staffing levels and deliver good care. We need a health service we can rely on. And if the PM is going to meet his key objective to grow the economy, he needs the NHS back in robust health.