Skip to main content

‘Limited scope’ for senior manager pay rises warns government

Published on: 1 Mar 2024

NHS deficits mean there is “limited scope” for senior manager pay rises, the government has claimed.

The warning was included in the Department of Health and Social Care’s submission to the Senior Salaries Pay Review Body.

The DHSC also warned – in this submission and those to the pay review bodies for medical and Agenda for Change staff – that the prospect of any pay rise above 3 per cent was “extremely constrained” by high inflation and unbudgeted pay rises in previous years.

HSJ has reported previously that integrated care systems are on course to report a total deficit above £1.5bn. The senior managers’ submission said: “The financial position currently suggests that a significant number of ICSs are headed for an overspend in 2023 to 2024… it indicates that ICS budgets have a limited scope of affordability for the pay and reward of senior managers.”

The 2021 spending review set budgets for a three-year period from 2021-22 and assumed pay rises of no more than 3 per cent a year.

All three DHSC submissions said it is vital the pay review bodies “consider the historic nature” of the 2023-24 pay deal. AfC staff received a 5 per cent pay rise this year, consultants 6 per cent and junior doctors 9 per cent.

This was £2.6bn more than had been budgeted for, leading to “tough decisions” and cuts to some central spending. This week, for example, it emerged capital budgets had been raided to help prop up day-to-day spending.

The submissions added: “As we enter the final year of the spending review settlement… and despite additional funding that has been made available in the intervening period, the NHS England and DHSC settlement is stretched. The recurrent impact of the 2023 to 2024 pay awards continues to affect budget capacity in 2024 to 2025 and means flexibility beyond the planned affordability at the 2021 spending review (SR21) is extremely constrained.

“The ongoing impact of inflation and industrial action is also putting unforeseen pressures on all budgets, including the costs to trusts of covering strike days. Inflation over the course of 2023 has proven more persistent than previously expected and is significantly higher than the assumptions in which the SR21 settlement was made within. These pressures have necessitated the reprioritisation of budgets for 2024 to 2025 even prior to subsequent decisions on this 2024 to 2025 pay award.”

The government also warned unaffordable pay rises could increase borrowing at a time when “headroom against fiscal rules is historically low”.

Today, the British Medical Association announced specialist, associate specialist and specialty doctors had rejected the government’s latest pay offer.

Meanwhile, junior doctors remain in dispute, and the BMA’s consultants committee is in talks with the government following a narrow vote to reject a revised offer for 2023-24. The Royal College of Nursing has called for the AfC pay award to be reopened, following the offer to consultants.

Pension boost for senior managers

The evidence to the SSRB also suggested the pensions changes introduced at last year’s budget will help to keep senior earners in the health service.

These changes included abolishing the lifetime allowance and increasing the annual allowance – the amounts a person can save into their pension tax-free during their lifetime and each year respectively.

The SSRB evidence document acknowledged DHSC believed “these changes will help to ensure that many experienced very senior managers and executive senior managers are not incentivised to leave the NHS for tax reasons”.