Comment

Pay and reward in the NHS needs to be taken seriously

Ben Gershlick, senior economics analyst at the Health Foundation, examines the new pay deal for NHS staff. 

More than £50bn is spent on the pay bill for the NHS’s 1.2 million staff, more than is spent in many government departments, and more than twice the revenue of Starbucks.

But because it is the biggest single cost in delivering health, it is often one of the first ways in which costs are contained. Until a new pay deal was agreed last year, pay in the NHS for most roles had been capped or frozen since 2010-11, resulting in the real-terms value of a nurse’s starting salary decreasing by almost 10% by 2017-18.

Of course, pay is not the main reason why people choose to work in the NHS, nor is it the main reason why most people leave. However, it does have an impact on staff experience; we know that the number of staff either ‘satisfied’ or ‘very satisfied’ with their level of pay dropped to 31% in 2017. This was its lowest level in 10 years.

The new pay deal is a welcome increase to staff salaries and may help to improve recruitment and retention. The latest staff survey saw an increase in how satisfied staff are with their level of pay, perhaps linked to the new pay deal. However, while the new deal may help in terms of retention and morale among staff, this can quickly be undone if pay growth stalls afterwards. It is important, therefore, that pay keeps up not just with inflation after this point, but also with pay growth in the rest of the economy. This would mean growth from 2021-22 onwards of around 1% a year above inflation, on average.

There are also opportunities to be more flexible and targeted – using a range of pay and reward measures to address existing shortages and problem roles for recruitment and retention. The NHS currently has shortages in specific staff groups, such as mental health and learning disability nursing. Pay could be targeted to focus on such shortage groups and specialties. Although financial incentives alone will not solve these problems – especially without overall improvements in staff numbers – targeted increases, pay premia, loan write-offs and ‘golden hellos’ should all be explored to encourage staff to join and stay in these shortage groups.

Some inequalities must be addressed urgently. Pay gaps exist in the NHS, partly as men and non-BME staff are disproportionately represented in higher pay grades. This suggests a lack of equal treatment around progression and opportunities. Inequality has a negative impact on the experience of these staff, who make up most of the workforce, and is inconsistent with the values of the NHS. Action should be taken urgently at all levels of the system to understand the causes of and solutions to this.

The NHS Long-Term Plan sets out a vision of integrated and fluid working across the health system and between health and social care. Pay and terms and conditions cannot on their own make integrated working happen – but they can be a barrier to it. If this is the future of health and care provision then pay and terms and conditions need to be taken seriously. This may sound a bit dry (and will not be straightforward) but trying to do too much too soon is likely to do more harm than good.

Looking over a longer horizon, more thought needs to go into what the publicly-funded health and care system’s offer is to staff and whether that involves guaranteed and consistent levels of pay and training. In the meantime, the NHS must ensure that pay rises continue after the current pay deal, that pay supports recruitment and retention in certain tough to fill roles, and that it does more to tackle pay inequality without hesitation. This is partly as it will help with the supply of staff, but mostly because pay and reward are tangible signs of how staff are valued.