Hold down NHS pay to ‘catch up on lost efficiency’, says government
The government has said pay for NHS very senior managers should be held down in 2022-23, and indicated it cannot fund more than a 3 per cent cash terms rise for Agenda for Change staff.
The comments are made in submissions by the Department of Health and Social Care to the three pay review bodies covering very senior managers; doctors and dentists; and other NHS staff (who are covered by the Agenda for Change framework).
The submission to the senior salaries pay review body for the 2022-23 pay round said there was “extremely limited room for any further investment in pay and therefore… financial restraint on pay is needed”.
It said: “NHS financial sustainability is key to its post-pandemic recovery with increasing productivity crucial to restoring the performance of the NHS… There is an expectation that the NHS can catch up on some of the lost efficiency [from the pandemic period] and make productivity savings in 2022 to 2023 in order to return to financial balance. It is therefore important that the 2022 to 2023 pay awards support the government’s objective to deliver long-term financial sustainability in the NHS.”
It also said: “Any pay recommendation for this [senior] workforce [would] need to be absorbed within existing budgets. To put this into context, each additional 1 per cent of pay for the [very senior] workforce costs around £6m per year allowing for the full system costs.
“This equates to around 100 full-time nurses or 3,500 procedures. For the [hospital and community health service] workforce as a whole, an additional 1 per cent of pay costs around £900m which is equivalent to around 16,000 full-time nurses or 500,000 procedures.”
It comes as the government’s Messenger review of health and social care leadership is due to report next month, which has heard calls for better reward to help retain and attract good managers.
The DHSC’s submission to the SSRB said VSMs earned an average of just under £145,000 in the 12 months to the end of June 2021, of which £135,000 was basic pay. It said this put them in the top 1 per cent of the UK’s earners but “this does not appear to be out of line with roles in other sectors that have similar levels of experience and responsibility”.
Pensions
The DHSC’s submission to the SSRB also revealed just 44 per cent of the NHS’s top earning managers are contributing to the NHS pension scheme, which is likely to be related to pension tax issues.
Very senior managers earn over £110,000. The share paying into an NHS pension declined sharply from 85 per cent among those earning up to £125,000 to 44 per cent of those earning over £200,000, the submission showed.
However, many VSMs are likely to see cuts in contributions from October 2022 when a new tier structure is due to be introduced. For the highest paid managers, contribution levels will drop from 14.5 per cent of pensionable earnings to 12.5 per cent by April 2023.
Agenda for change pay
In its written evidence to the NHS Pay Review Body, which covers the Agenda for Change workforce, the DHSC said it could stretch to a maximum 3 per cent pay increase for 2022-23. It wrote a 2 per cent pay increase had been expected for the 2022-23 financial year, but “the department has an additional 1 per cent ‘contingency’ which it is choosing to make available for AfC pay, providing an overall affordable headline pay award of up to 3 per cent”.
Inflation measured by the consumer price index was 5.5 per cent in January, and it is forecast to rise to 7 per cent in coming months — meaning a 3 per cent cash rise would be a substantial real terms pay cut.
The DHSC’s report went on to warn that rewarding this 3 per cent maximum would mean the contingency money “will not be available for other priorities”, and that a pay reward beyond what was affordable “will lead to reduced ability to tackle the elective care backlog and expand clinical capacity to deliver a more effective health and social care system”.
Like in the other reports, it added the pressure on the NHS to achieve objectives such as addressing the 6 million procedures long waiting list and delivering on the long-term plan meant there was “extremely limited room for any further investment in pay”.
Calling the proposal “tight-fisted”, Unison head of health Sara Gorton said: “This will go down like a lead balloon with health workers struggling to fill up at the pump, buy groceries and pay bills. It would be a wage cut in all but name.”
The document also spoke of the total reward package for NHS staff, including the NHS pension scheme. It added the changes due to come into force in October, and phased in over two years, meant 40 per cent of NHS pension scheme members could expect a reduction in their contribution rates. However, HSJ reported last week the changes mostly benefited higher paid and part-time workers, while lower-paid, full-time staff may see their contribution rate rise.
The pay settlement for 2021-22 for AfC staff was 3 per cent.
Doctors and dentists
The DHSC’s evidence to the Doctors’ and Dentists’ Remuneration review body for 2022-23 also calls for pay restraint, although a multi-year agreement from 2019 will remain in place for junior doctors; a proportion of specialty doctors and associate specialists; and for GPs and dentists.
The government has therefore asked for recommendations on annual pay for consultants.
It said there is a “pressing need to reform the contractual arrangements for consultants” — but it can only “press forward” with this when unspecified “circumstances” allow. Last year, consultants were awarded a 3 per cent pay uplift.