By Anita Charlesworth
Raising people's expectations is much easier than fulfilling them. The pay expectations of NHS nurses have clearly been raised. Heavy hints have been dropped, by the secretary of state no less, that finally the pay cap will be ending. Jeremy Hunt told the NHS Confederation's conference in June that he had "a great deal of sympathy for the case that nurses amongst others have made on the issue of pay". The government recognises that it is hurting.
Nursing pay scales were held at 2010 levels until 2013 and since then have increased by one percent a year. Official government policy is that pay cap will continue until the end of the decade. The result is a six percent fall in the real value of nurse pay since 2010.
A pay freeze is never going to be popular, but in 2010 this was presented as part of the coalition government's narrative that we were "all in it together". It is certainly the case that between 2010 and 2015 few in the public or private sector were immune from falling real earnings. One of the most striking features of the decade following the 2008 recession is that, while employment has grown, earnings have not. Real earnings are not expected to get back to their 2007 peak until sometime in the next decade.
The NHS faces a recruitment and retention storm for nursing. One in ten nursing posts are unfilled and the reliance on overseas staff is at risk with Brexit and the falling value of the pound. The number of nurses arriving from the EU has fallen by 96% since the EU referendum and changes to the language testing requirements. The number of EU nurses leaving the UK is up sharply and, with a global shortage of nurses, we are struggling to attract staff from non-EU countries to fill the gaps. The government is projecting a shortage of nurses until at least 2021.
Pay is far from the only factor behind the growing crisis, and any relaxation of pay needs to be planned as part of a much wider programme to address the underlying causes of the recruitment and retention problems.
Holding down pay has been central to managing austerity. A growing and ageing population has meant a widening gap between the money coming into the NHS and the demands placed on it. The result is that, even with a growing budget, the health service has had to make big efficiencies to try to protect quality and access to care.
Delivering efficiency savings on the scale needed for such a prolonged period is proving much harder than the government – perhaps naively – thought. One of the deep frustrations for any secretary of state for health is that, while you are accountable for the NHS and in some sense 'in charge', getting the NHS to buy cheaper surgical gloves turns out to be easy to announce but devilishly difficult to deliver and doesn't add up to that much in the scheme of a budget of over £100bn. So, holding down pay has been one of the few reliable ways to make big savings at a national level in a system where two thirds of hospital spend goes on the workforce.
The pay cap was introduced and extended as part of fiscal austerity. Ending it without easing up on austerity is not going to work. This year, NHS hospitals are already saying that they can't balance their books, and that's before there is even a hint of winter pressures. The planned deficit is half a billion pounds. Hospital managers estimate it would take a further £2billion on top of that to meet A&E and surgery waiting time targets. Over the next two years, the funding plans for the NHS will see health care spending per person fall. There are around 300,000 nurses in the English NHS – restoring their pay to its real value in 2010 would cost around £700m.
If the NHS has to absorb higher pay from within the current spending plans, the funding choices are hardly going to be vote-winners – will the government cut staff numbers, ration more new drugs, allow for even longer waiting times? Of course, ending the pay cap is unlikely to deliver nurses a big one-off boost to restore their earnings. But let's say that, instead of a one percent increase this year, pay increased by two percent. That would still be a below inflation increase for nurses. Would it meet their expectations?
We will find out what is going to happen to the pay cap in the chancellor's Autumn Statement. But announcing an end to the pay cap without a commitment to fund it is not credible. If you want to will the ends, you have to provide the means.
Anita Charlesworth is the director of research and economics at the Health Foundation.
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