The NHS Confederation has issued a stark warning that further cuts to staffing and services may be unavoidable if the government approves a pay rise for NHS workers that exceeds the current health budget allocation for 2025/26.
Reports suggest the Independent Pay Review Body has recommended a 3% pay increase for Agenda for Change staff, which includes nurses, paramedics, occupational therapists, and healthcare support workers. However, the NHS budget only accounts for a 2.8% rise, creating a potential funding gap of £250 million if similar recommendations are made for doctors and dentists.
NHS leaders estimate that every additional 0.1% in pay equates to £125 million in recurring annual costs. With NHS England already asking trusts and integrated care systems to make tough efficiency savings, absorbing this shortfall could mean cutbacks in other areas, particularly in mental health and community services, which spend a larger share of their budgets on staffing.
Sir Jim Mackey, NHS England’s Chief Executive, recently praised NHS leaders for agreeing to balanced budgets despite mounting pressures. However, an unfunded pay increase risks undermining that progress, potentially forcing trusts to scale back services or delay planned improvements.
NHS Confederation Chief Executive, Matthew Taylor, commented:
“While we respect the independent pay review body process and its recommendations, any decision by government to increase NHS pay beyond the 2.8 per cent that is in the budget this financial year will result in extra cost pressures that cannot be easily absorbed.
“It is vital we continue to invest in the dedicated staff whose hard work and goodwill keeps patients safe every day of the year. We know they have faced years of limited pay increases and that is why we welcomed the government prioritising ending the industrial disputes and uplifting pay – including more generous offers for resident doctors. This will be vital for helping to boost recruitment and retention in the long term.
“However, the NHS has entered one of its most challenging financial years, with NHS organisations having to deliver unprecedented efficiency savings. These are already resulting in cuts to certain roles and services, with more cuts expected this year.
“Asking local NHS organisations to cover the difference themselves is effectively asking them to make cuts elsewhere, which is not sustainable.”
The NHS Confederation is urging the government to fully fund any pay awards recommended by the review bodies, warning that failure to do so could jeopardise patient care and staff morale. With the NHS already under strain, leaders argue that expecting trusts to absorb additional costs would be both unsustainable and damaging.
The final decision on pay awards is expected as part of the upcoming government spending review.
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